On 14 December 2023, the Agricultural Bank of Namibia (Agribank) and KfW Development Bank entered into a historic agreement, signing a first concessional loan of just over 400 million NAD. 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 the 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 20 million NAD in AgriBank’s favour. The grant money will support technical and institutional capacity building for Agribank.
During the signing ceremony, Ms. Ulrike Metzger, Head of German Development Cooperation remarked that “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.”
KfW Country Director, Beatrice Lucke echoed her words by 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 ”Today marks a momentous occasion—the signing ceremony of crucial loan agreement that symbolize a significant chapter in our enduring commitment to sustainable and long-term funding for our lending activities. Agribank holds a critical mandate of supporting development of the agricultural sector. Recognizing 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 & Youth Scheme.
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 digitalization, specifically tailored for the target group of small-medium scale farmers and MSMEs. This commitment aims to facilitate greater financial inclusion and accessibilityfor the target group of small-medium scale farmers and MSME’s.
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 practices in the agricultural sector. Hence funding towards sustainable agriculture practices will be looked at preferentially.“
Karuaihe therefore expressed gratitude to KfW for the confidence in this new relationship as it aims to increase Agribank’s financial inclusion agenda for the underserved market segments. Additionally, The KfW assistance towards institutional capacity building is invaluable, and we look forward to a collaborative and meaningful partnership that will bring about positive change and sustainable development.
German Development Cooperation 1990 - 2023
From 1990 until today, the funds of German Development Cooperation amount to EUR 1.6 billion (approx. NAD 32.3 billion). The KfW portfolio under implementation comprises 37 projects with a total volume of EUR 666.2 Mio (approx. NAD 12.9 billion), while over 10 projects with a volume of approx. EUR 300 Mio. (approx. NAD 6.6 billion) are under preparation.