Despite a massive R7 billion bail-out by national treasury early this year to be paid in the next three years, the agricultural state-owned bank’s financial woes are far from over.
The Auditor General office reported to Parliament last week on the financial challenges of the bank which has caused it to falter in delivering to its mandate of assisting farmers and the sector at large.
Painting rather a blurry picture to the nation, the state’s financial audit firm said the Land Bank had received a disclaimer of opinion in the areas of great concern and on the credibility of the loan book.
“The implementation of the remedial plan took longer than expected, resulting in the bank being unable to submit financial statements for audit purposes by the legislated deadline of 31 May.
“The financial statements of the Land Bank were only submitted for auditing on 31 July 2021. The bank has still not finalised the liability solution to address the going concern it is facing,” the auditor general report stated.
‘Think about support differently’
Meanwhile organised agriculture has called on government to prioritise stabilising the embattled Land Bank to ensure that the institution can continue fulfilling its important developmental role as major financier of the sector.
Calls come hot on the heels of the Auditor General’s report which indicated that the state-owned entity had not finalised dealing with the liabilities on its balance sheet to address the bank’s liquidity challenges.
Agricultural Food and Allied Democratic Workers Union secretary general Mlamleli Pukwana says the collapse of Land Bank would be the end of farmers’ development and growth.
Pukwana says the bank is a very strategic institution that needs to be protected and it needs more attention than just being left to deal with its own liquidity woes.
“The reason why we are saying the bank is very important to us in the sector is that it is funding commercial farmers to run their businesses, which in the process those farmers are creating much needed jobs in the sector. So, failure for the bank to be supported and be financially stable will cripple the industry,” he says.
Pukwana says the financial instability at the bank was a grave concern to them and they were calling on government to urgently intervene.
Saamtrek Saamwerk coordinator Sehularo Sehularo says the bank’s mandate needs to be reviewed for it to function properly, he indicated that the institution needed to look at funding and assisting smallholder farmers who need assistance, however the requirements are just too high.
“We are equally concerned that such a big institution in the industry it is on its knees while many farmers were hopeful to go knock on its doors.
“It is time to revamp the institution, they need to think of other ways of helping farmers like assisting in purchasing equipment and infrastructure. But importantly the bank needs to bring their house in order, we still need it,” he says.
Plans for recovery
Acting executive manager for strategy and communications at Land Bank, Dr Litha Magingxa, says the institution is in a sensitive stage of negotiations with lenders, funders and investors to finalise the liability solution.
“Part of this process is ensuring there are appropriate measures in place to support the financial sustainability of the bank,” says Magingxa.
He says the bank had not been able to fund farmers since it defaulted on debt obligations in 2020, because it was financially constrained to commit to anything.
Magingxa says in the financial year under review the bank had not dispensed any amount to farmers, however plans were in place to kickstart working relations once the finances were stable.
“The conclusion of the liability solution with the lenders will be a significant milestone in that regard. Some of the expected shareholder support announced by the Minister, will be directed towards these development funding partnerships,” he says.
Land Bank has added its name on the long list of state-owned entities which are barely coping financially. This follows two years of not making any profit.
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