Bank of Namibia offers loan relief to farmers hit

In response to the economic strain caused by outbreaks of Foot-and-Mouth Disease and drought conditions induced by El Niño, the Bank of Namibia has implemented new policy directives aimed at supporting the agricultural sector. Following discussions between representatives of the agricultural and commercial banking industries, the central bank released the Determination on Policy Changes in Response to Economic and Financial Stability Challenges, referred to as BID-42.

Financial relief measures

To alleviate the financial burden on farm owners and agricultural businesses struggling to meet their loan obligations, the new policy introduces measures for financial relief. Banking institutions are now obligated to offer relief options, including temporary suspension of loan repayments and loan restructuring, to clients affected by the disease outbreak and adverse weather conditions. The policy stipulates that banks must provide moratoriums on loan repayments for periods ranging from one to twenty-four months for clients impacted by Foot-and-Mouth Disease and/or El Niño-induced climatic conditions.

In addition to moratoriums, loan restructuring is available to make loan repayments more manageable, thereby enhancing the likelihood of full repayment. The interest on these loans will continue to accrue at the agreed-upon interest rate, unless the banking institution and the client agree otherwise in writing. Furthermore, clients affected by the disease outbreak and/or adverse weather conditions may be eligible for additional credit facilities, subject to their ability to service the debt and based on their risk profile.

Eligibility and client protections

To qualify for the relief measures, farmers and agricultural clients must demonstrate that their income has been negatively impacted by the Foot-and-Mouth Disease outbreak and/or El Niño-induced climatic conditions. Eligible clients include those directly or indirectly involved in the agricultural value chain, as well as businesses in other sectors that rely heavily on agricultural activity for their income, operations, or cash flow.

In cases where an application for relief is declined, the banking institution is required to provide the client with written explanations for the decision. Clients who are dissatisfied with the handling of their application may file a complaint through the banking institution’s complaints process or other applicable dispute resolution mechanisms.

Clients who receive relief under this policy will be reported as performing and will not be reported as non-performing to credit bureaus for the duration of the policy, unless there is a significant deterioration in their credit quality, as specified by BID-2.