Date: November 11th 2016
Source: The Economist Namibia
Resettled farmers cannot access the loan facility fund offered by Government and Agribank as part of land reform attempts by the Ministry of Land Reform.
Estimates show the revolving fund should be at the N$60 million mark but a lack of oversight and a defunct land reform process has stalled progress. The bank is the only financial institution tasked with the appropriation of land for resettlement purposes via the Land Acquisition and Development Fund that forms part of the government’s willing-seller willing-buyer system for the transferring of commercial agricultural land. These conditions still prevail with the land reform process effectively stalled, a Parliamentary Committee on public accounts was told two weeks ago.
The Auditor General’s report on the Ministry of Land Reform for the period 2010/11 to 2012/13 states the Post Settlement Programme was created with an initial injection of N$10 million from the Ministry of Land Reform and Agribank, with a commitment that both would contribute an additional N$10 million per year for the next two years after.
Over a period of three years, the government spent N$357.5 million on 77 farms. The audit measured the trend of land appropriation with more recent data for the Office of the Auditor General’s investigation.
Referring to post-settlement funding, the report states “This would create a fund that would be N$60 million stronger at the end of three years with a maximum loan amount limited to N$200,000 per borrower.”
The exact loan amount given to a resettled farmer would be determined by the Agribank based on lending requirements and cash flow of the applicant at an interest rate of 4 percent. These initial loans were however limited to N$65,000 per borrower to first assess the performance of the individual farmers before further loans could be given.
“Agribank was entrusted with the mandate to administer the fund and to ensure that loans are utilised for the purpose for which it had been obtained for, thus the bank considered it practical to make payments directly to the suppliers wherever appropriate” the Auditor-General’s report found.
Inspection and valuation of agricultural land by the Directorate of Valuation and Estate Management in the Ministry of Land Reform, headed by the Valuer General, tasked with valuations on immovable property, at that time found that the sales comparison method was deemed most appropriate. According to this method, the current value of any farm is in part determined by considering the value of adjacent farms.
This lead to discrepancies and disputes, and according to the Auditor General, farmers tend to inflate their prices far above fair market value. Considering that the farms are big, once the calculations are made over the total number of hectares for a specific farm the differences in the prices became huge, at times double the initial price offered.
“The differences in prices is mainly due to the fact that the land owners normally give prices without valuation advice, while the government does valuation on the property to arrive at a most favorable or suitable price to acquire farms” valuations officials in the ministry said.
The budget for the Directorate of Resettlement has since seen a steady decline in its Operational Budget, decreasing by N$9,5 million due to a separation between the Regional Programme Implementation and the Land Regional Offices budget.
It was also found that the high prices offered by Agribank ultimately lead to the demise of the willing-buyer willing-seller process.
The Permanent Secretary in the Ministry of Land Reform, Peter Hamutenya said the valuations and payment of loans through Agribank took into consideration neighbouring property prices which drove up the prices for land.
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