Smallholder farmers who are clients of the Land Bank and who are in financial distress due to the impact of the coronavirus pandemic can now apply for a new covid-19 relief grant scheme worth R100 million.
The relief scheme, driven by the department of agriculture, land reform and rural development through the state-owned Land and Agricultural Development Bank (Land Bank), is also aimed at relieving the economic effects of the prolonged coronavirus lockdown regulations on qualifying farmers.
The funding will be made available to existing Land Bank farmers with an annual turnover not exceeding a R10 million, as well as similar farmers who are serviced through the Bank’s intermediary partners, the Land Bank announced in a news release.
The covid-19 relief fund will be used to waiver no more than one annual loan instalment due per client whose business operations have experienced distress due to the impacts of covid-19 and the associated intervention measures implemented by government.
This concession will be applicable for instalments due from 1 April to 31 December 2020. The amount that a single client may access for this non-repayable financial support is limited to a maximum of R2 million.
According to the news release, the rest of the Land Bank customers who are affected by covid-19 may be assisted through the bank’s normal forbearance programmes. This support will be made to covid-19 affected customers on a case by case basis, and will amongst others, consist of the following potential solutions, as appropriate:
• Restructure of repayment terms, including offering repayment deferrals or holidays;
• Carrying over of debt and modifications of current loan agreements to address immediate cash flow stress.
Land Bank clients who qualify and wish to access assistance on the restructuring of their debts, may make enquiries directly with their account management specialists at Land Bank branches. However, over-indebted customers or those in distress not caused by covid-19 does not qualify for this relief.
The application for funding is open until 16 October 2020, and can be accessed by contacting the client’s commercial banker in the respective Land Bank office or through email on firstname.lastname@example.org.
Land Bank’s financial woes
The department of agriculture land reform and rural development’s covid-19 grant scheme comes as a relief for small holder farmers, but there seems little relief in sight for the Land Bank’s own financial woes.
The Bank has been experiencing a liquidity crisis for most of the year since Moody’s downgraded its global credit rating to junk status. It defaulted on debt repayments earlier this year.
One of Land Bank’s lenders, Standard Chartered, is even suing the bank to recover debts, after the state-owned agricultural lender defaulted on interest payments to the lender.
Finance minister Tito Mboweni said in June the state would inject R3 billion to save Land Bank, the country’s largest agriculture focused lender, which had been in talks with creditors on a restructuring plan.
However, the Land Bank said it is working with its advisers and will be opposing Standard Chartered’s application, adding it was continuing to work with creditors towards a solution.