Agricultural Bank of Namibia budget analysis

Agricultural Bank of Namibia budget analysis ‘Rebuilding consumer, business confidence’ The N$90 million allocation augments existing Agribank resources to advance financing to farmers. We argue that the budget combines hope for gradual economic recovery with a caution of emerging and existing challenges. Agribank PHILLEPUS UUSIKU

The Agricultural Bank of Namibia (Agribank) made analysis on the N$ 67.9 billion budget that was recently tabled by finance minister Ipumbu Shiimi.

The bank labelled it as a budget of hope, given the huge fear that the country was moving towards a twin crisis of protracted low Gross Domestic Product (GDP) growth and an unstable health system.

Agribank’s key takeaways from the budget is the fact that it presents a credible government response to emerging challenges considering that the minister of finance had to walk a tightrope between fiscal stability and protection of the socio-economic fabric.

Remarkably, the budget acknowledges that strengthening social infrastructure in public health and education which is the central pillar of fiscal policy and of reprioritisation.

The budget seeks to create a favourable business environment for increased private sector investment to complement budgetary allocations to economic sectors, Agribank pointed.

It looks beyond the national budget to support development finance for Small and Medium Enterprises (SMEs). “We commend the impressively invented project preparation fund that is expected to foster private-public partnerships on needed development projects,” Agribank added.

‘With all that said, we argue that the budget combines hope for gradual economic recovery with a caveat of emerging and existing challenges. Much more work remains to be done and fiscal support for a positive growth trajectory in 2021, should not deflect the public and private sectors from resilient and efficient business operations,” Agribank said.

Budget impact

The minister announced that the non-mining company tax will be considered for reduction during the MTEF period. These sparks hope that there is a tax relief for businesses on the horizon. There is surely a growing recognition by the public sector that businesses need support although at a small scale. Tax relief coupled with low interest rates should provide impetus to struggling businesses. In addition, the Continental Free Trade Area presents an opportunity for the nation to leverage foreign and domestic investments due to an expanded export market, Agribank said.

With regard to households, the budget helps to rebuild consumer confidence in the sense that the low monetary policy rate, other regulatory and policy relief measures such as the loan repayment holidays, and liquidity relief measures have been extended to individuals, SMEs and corporations. These are necessary while households recover and build resilience from the impacts of the economic downturn coupled with pandemic related effects on incomes and jobs.

It is noted that since the pandemic, Agribank has extended up to N$200 million new loans and restructured arrear payments for over 200 farmers to cope with the impact of Covid-19. The current budget offers an amount of N$90 million to Agribank for credit advances to the agricultural sector. This allocation augments existing Agribank resources to advance financing to farmers. Despite the toughest time in Namibia’s economic history, this budget allocation to Agribank reflects that there is policy appreciation for the pivotal role that agriculture, and those that work in the sector, plays in ensuring food security and economic resilience.