Namibia country report

The second stage of the ‘cyclical’ trajectory involves the farmer buying a commercial farmwith an AALS loan. The most important requirement is sufficient livestock – at least 150head of cattle or 800 small stock. The loan repayment period in all cases is 25 years. Forfull-time farmers, the first three years are free of both capital repayment and interest, andthe capital amount is repaid over the remaining 22 years at an escalating rate of interest.Part-time farmers usually start paying interest in the first year.During the third stage, many farmers, particularly full-time farmers, start to experiencefinancial and cash-flow problems, and find it difficult to keep up with the loan repaymentand payments in general. This is related to the gradually increasing rate of interest on theAALS loan. In 2007 the rates were set at 2% in years 4-6, 4% in years 7-8, 8% in year 9, andAgribank’s full commercial rate of 12.68% as from year 10.Apart from gradually increasing financial commitments, the financial difficulties of manyAALS beneficiaries are exacerbated by external threats to their farming activities. The mostprominent of these is drought, but in Hardap, unseasonal climatic conditions such as frostin November have also caused big losses of livestock.The ‘cyclical’ trajectory is completed when the farmer is unable to honour his/her financialcommitments and the farm is attached by court order. Having defaulted on repaying theAALS loan, the farmer loses the farm and moves back to communal land.Abraham, who owned two small businesses in Mariental and a herd of livestock in a Hardapcommunal area, bought a farm under the AALS in 2000, located in the Swartrand area,40 km south-east of Maltahöhe. Intending to farm full time, in his first year he farmedpart time while continuing to run his businesses. He had no problem with paying the AALSinstalment in the first year. In 2001, having attended a funeral in Maltahöhe District, hereturned to Mariental to find that the town had been severely flooded and both of his businesspremises had been damaged. Having no business insurance to cover his losses, he appliedto his local commercial bank for a loan of N$20 000, which was granted.In the following year he defaulted on the repayment of this latter loan, and hence owedthe commercial bank a total of N$47 000, which he could not pay. In 2007 the bank issuedsummons, obtained judgement against Abraham, attached his AALS farm and auctionedit in execution for the whole outstanding amount of N$47 000. After the sale, Abrahamwas given seven days to vacate the farm with his animals. His only option was to take theanimals back to the communal area. During the trek he incurred further losses as someof the animals died. As a temporary measure he applied at the MLR office in Marientalfor resettlement. By the time of the survey in early 2008, his application had not beensuccessful, but he had not given up hope. He had closed both of his businesses but hadestablished a new one in Mariental. Determined to buy another commercial farm within fiveyears, Abraham stated that he had learnt his lesson and would not make the same mistakesin the future.76 ● Livelihoods after land reform: Namibia country report (2010)