Agri-assistance for MSMEs
The Agricultural Bank of Namibia (Agribank) and KfW Development Bank entered into a historic agreement earlier this week, signing a first concessional loan of just over N$400 million. This collaboration aims to empower farmers operating in both communal and commercial, as well as other agricultural or food-processing MSMEs in Namibia.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.
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. The grant money will support technical and institutional capacity building for Agribank.
At the signing ceremony, Ulrike Metzger, Head of German Development Cooperation said that it is well known that 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.
Credit line
“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 echoed her sentiments, saying that 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.”
Agribank CEO Raphael Karuaihe said that the signing of the loan agreement symbolizes a significant chapter in their commitment to sustainable and long-term funding. “Recognising the dynamic landscape and diverse needs within our farming community, we take pride in introducing innovative and inclusive loan products tailored to the unique requirements of different segments such as no collateral and women and youth scheme.”
He said that with the infusion of funding from KfW through both loan and grant facilities, the bank is embarking on innovative approaches to collaterals and digitalisation, specifically tailored for the target group of small-medium scale farmers and MSMEs.