The Bank of Namibia has directed banking institutions to grant borrowers affected by the ongoing foot-and-mouth disease (FMD) crisis to provide loan repayment moratoriums ranging from one to 24 months.
The new regulatory measures also require commercial banks to provide relief to the farmers and agricultural businesses affected by El Niño-induced adverse climatic conditions.
The determination, known as BID-42, aims to ease financial pressure on distressed borrowers while protecting the stability of the banking sector.
Bank of Namibia Deputy Governor Leonie Dunn said the determination follows consultations with representatives of the agricultural sector.
Dunn noted that the intervention recognises agriculture's contribution to employment, food security, and economic growth.
"Through this measure, the Bank seeks to support the continued viability of the agricultural sector and the wider agricultural value chain, preserve livelihoods, and mitigate potential risks to the broader financial system arising from the combined impacts of the food and mouth disease outbreak and El Niño-induced adverse climatic conditions."
Banks may also restructure loans to make repayments more manageable, although interest will continue to accrue at the agreed contractual rate unless the bank and borrower agree otherwise in writing.
The relief is available to farmers, agricultural businesses, and other enterprises operating directly or indirectly within the agricultural value chain, including businesses in other sectors whose income, operations, or cash flows depend significantly on agricultural activity.
To qualify, borrowers must demonstrate that their income has been adversely affected by the foot-and-mouth disease outbreak or El Niño-related climatic conditions.
"When an application by a client is declined by a banking institution, they must provide the client with written reasons for the decline. Clients who are dissatisfied with the handling of an application they have lodged with the banking institution under BID-42 may lodge a complaint through the banking institution's complaints procedures or any other applicable dispute resolution mechanism, including that offered by the Bank of Namibia."
The central bank will maintain supervisory oversight through reporting, monitoring, and review to assess the implementation and effectiveness of the relief measures.
The intervention comes as FMD outbreak and adverse climatic conditions place additional pressure on farmers and businesses across Namibia's agricultural value chain.