Farmland auctions: Agribank’s last resort, not the first

Agribank has responded to recent claims suggesting that the bank targets farms owned by previously disadvantaged Namibians for auctions and undermines the National Land Reform Programme. These claims are misleading and do not reflect Agribank’s intentions to provide financial support to the agriculture sector.

This clarification was issued by Dr Raphael Karuaihe, chief executive officer of Agribank, who emphasised the bank’s mandate to empower, not to auction farms.

He said that Agribank is a development finance institution established by the Agribank Act, 2003 (No. 5 of 2003). The Act mandates Agribank to advance loans to persons engaged in agriculture and related activities. Under the Act, the bank is empowered to secure repayment of loans through the registration of collateral. Where loan defaults occur and all reasonable collection efforts have been exhausted, the bank may repossess secured assets, typically through public auctions.

However, auctioning farms is never the bank’s preferred course of loan recovery.



Loan recovery

Karuaihe explained that the bank’s operating model is based on advancing loans and recovering them when due. The bank’s sustainability depends on clients’ commitment to loan repayment. Failure to meet repayment obligations means Agribank cannot extend loans to more customers in future, especially youth and emerging farmers seeking to develop their agricultural enterprises.

Capital injections, whether through government transfers or debt from financiers, are only part of the banking equation. Lenders and shareholders expect these funds to be repaid and recycled to support future generations of farmers. Increasing loan defaults affect Agribank’s creditworthiness, making it harder to raise the funding needed to transform the agriculture sector. Therefore, Agribank must strive to remain self-sustaining.

Recognising the challenges clients face, including harsh climatic and economic conditions, Agribank remains flexible in aligning repayment terms to cash flow cycles, offering loan restructuring and relief programmes. Clients, especially those with multiple income streams, are encouraged to make regular repayments to reduce loan instalments rather than waiting until the loan falls due. In some cases, this is a condition of loan approval to foster responsible financial behaviour.

The bank also offers voluntary advisory services and training at no cost, aiming to improve farm management and financial planning skills, thus boosting productivity and income growth.



Dialogue before enforcement

In cases of default or imminent default, Agribank initiates recovery efforts through dialogue. The bank engages directly with clients to understand challenges and explore viable solutions, including repayment arrangements, loan restructuring, or grace periods where possible.

Farm auctions are only pursued as a last resort, specifically when clients fail to engage or respond to the bank’s communication; repayment arrangements are made but not honoured; no payment arrangements are made at all; no payments have been made on the loan since disbursement.

Karuaihe reiterated that non-commitment to loan repayments undermines Agribank’s development mandate and jeopardises future access to affordable agricultural finance. The bank is open and ready to engage with clients and strongly encourages early dialogue to explore practical solutions before matters escalate to legal enforcement.

Early engagement helps prevent debt from accumulating beyond control, making it easier to reset or turn around farming operations.

In conclusion, Agribank is committed to co-creating solutions that turn farms into productive assets. This commitment protects individual farmers and preserves the bank’s sustainability for future generations, a shared responsibility, according to Dr. Karuaihe.