The Agricultural Bank of Namibia (Agribank) and KfW Development Bank have signed a first concessional loan of just over N$400 million.
The collaboration between the two entities aims to empower farmers operating in both communal and commercial, as well as other agricultural or food-processing MSMEs in Namibia.
As part of the agreement, Agribank will on-lend the funds for the target group of small scale farmers as well as the micro, small and medium enterprises (MSMEs) in primary agriculture and agro-processing.
“With access to needs-based financial products, the target group is empowered to use funds to expand and develop their agricultural or food processing activities, thereby generating additional income and increasing food production and income in Namibia. Furthermore, the project promotes the establishment of productive and resource-conserving agriculture for sustainability reasons,” the two entities said in a joint statement on Thursday.
After signing the loan agreement, Agribank and the National Planning Commission and KfW Development Bank also signed a grant agreement of just over N$20 million in
AgriBank’s favour to support technical and institutional capacity building for Agribank
“We all know, there is a lack of access to credit financing in rural areas, especially for young farmers, women and farmers on communal land. This prevents necessary investments to increase productivity and secure income for rural families.”
She continued stating that: “Commercial banks can only grant loans with land titles as collateral, which cannot be presented
on communal land. This is also true for agricultural and food processing companies and MSMEs in structurally weak environments. By supporting Agribank with this credit line we want to improve the livelihoods of the rural population,reduce poverty, and create income and employment.” Ulrike Metzger, Head of German Development Cooperation said.
“Commercial banks can only grant loans with land titles as collateral, which cannot be presented on communal land. This is also true for agricultural and food processing companies and MSMEs in structurally weak environments. By supporting Agribank with this credit line we want to improve the livelihoods of the rural population, reduce poverty, and create income and employment.”
KfW Country Director, Beatrice Lucke it is the goal of Agribank and German Development Cooperation to improve access to needs-based financial services for farmers and agricultural and food processing companies MSMEs.
“ A fairly big informal economy exists in Namibia. This includes subsistence farming which is still excluded from formal market participation. It is the joint developmental goal of Agribank and German Development Cooperation to address this deficiency and improve access to needs-based financial services for farmers and agricultural and food processing companies MSMEs,” she said.
Agribank CEO Raphael Karuaihe said the signing ceremony of the loan agreement symbolises a significant chapter in the bank’s commitment to sustainable and long-term funding for lending activities.
“With the infusion of funding from KfW through both loan and grant facilities, we reaffirm our commitment to Agribank’s enduring mandate of supporting the farming community at large. We are embarking on innovative approaches to collaterals and digitalisation, specifically tailored for the
target group of small-medium scale farmers and MSMEs.
This commitment aims to facilitate greater financial inclusion and accessibility for the target group of small-medium scalefarmers and MSME’s,” he said.
“Moreover, in alignment with our dedication to sustainable practices, we will encourage environmentally friendly and sustainable production methods in agriculture, food processing, and marketing. Our vision is to contribute not only to the financial well-being of our clients but also to the broader
goal of environmentally conscious and sustainable practicesin the agricultural sector. Hence funding towards sustainable agriculture practices will be looked at preferentially.”
From 1990 until today, the funds of German Development Cooperation amount to N$32.3 billion.
