Agribusdev needs N$8m bailout to pay wages

By Maria Kandjungu

GOVERNMENT will have to pump another N$8.1 million into the broke Agricultural Business Development Agency (Agribusdev) to pay employee salaries, just a few months after the agency was thrown a lifeline of over N$72 million by the Agriculture Ministry.

The government green scheme that is yet to pay March and April salaries to staff members at some of its projects, last month wrote to the Ministry of Public Enterprises (MPE) requesting further financial assistance, saying slow sales as a result of the Covid-19 slowdown has not only left them unable to pay April salaries but they will also not be able to pay May salaries either.

Agribusdev director Petrus Uugwanga told Confidente that their already troubled finances have been worsened by the Covid-19 impact.

“A huge part of our earnings come from those small businesses in the informal sector. Those people that sell fresh products in the streets, it may look small but those small businesses take up a lot of our stock… with the restrictions placed on them a lot of stock is unsold. On top of that the big shops are not making their usual big orders anymore because of the lockdown, so this month sales have been very slow,” Uugwanga said.

He mentioned that most of their buyers were struggling to make payment, again due to Covid-19, with some of them only making outstanding payments in the last few weeks.

In their recent request, the agency which was originally intended to be self-sustaining, also noted that salaries for March for staff members at Rundu and Ongwediva Agricultural Technology Centre and Nfongalinena Green Scheme had not yet been paid.

Agriculture executive director Percy Misika confirmed to Confidente that Agribusdev needed about N$568,000 to pay outstanding salaries for staff at Rundu and Ongwediva (ATC) and Nfongalinena Green Scheme and an additional N$ 6.6 million to cover April and May salaries for employees at their headquarters, Orange River Irrigation Project (orip) and Kalimbeza Green Scheme.

According to Masika, the ministry was in talk with the Ministry of Public Enterprises (MPE) to see how they can assist.

“They are regarded as commercial and now fall under MPE but because MPE had not made any financial provision for them, they reached out to us to see how we can help. We have already been paying their salaries for the past seven months, but the Agriculture Ministry has no contracts with Agribusdev employees. So, outstanding salaries are between Agribusdev and their staff members. We have received their requests and we will see what we can do.”

The agency has been in financial difficulty since 2018 and has been struggling to pay its employees at various green schemes due to lack of funds. As a result, government through the Ministry of Agriculture signed a N$72.6 million financial assistance commitment in November last year to assist Agribusdev to get back on its feet.

Of the N$72 million, N$14 million was spent on salaries for October to March for staff members at the headquarters, Kalimbeza and Orange River schemes. N$8.6 million was reserved for outstanding employee benefits, while N$16.9 million went to utilities. The financial commitment ended in March, at which point N$31 million was released to the agency to boost winter production.

The government green scheme agency was established to improve Namibia’s food security and provide job opportunities in the agriculture sector. It has over 431 employee countrywide, some of whom are employed during production seasons, and manages 10 green schemes, but the entity has since privatised some of its projects.

Uugwanga noted that when Agribusdev took over the green scheme projects they were instructed by the shareholder not to retrench employees at the various projects which, he says contributed to huge number of personnel and a perpetual struggle to meet their monthly staff expenses.

The director further said that the provision of services to over 120 small scale irrigation farmers (SSIFs) also contributed to the company’s cost burden and the cost of electricity remains a challenge to their operations. In May last year, electricity to its entities was cut in the northern part of the country, obliging government to pay about N$3 million to have it reconnected.

They have now directed their focus to developing a business plan for each of the projects to come up with funding models that would make the company financially sustainable, he said.