Following the earlier warning by Futuregrowth that all South Africans should hope that the Land Bank will be rescued from its financial woes, Agri SA says they support the bank’s request for an R18-billion equity injection”.
Agri SA calls on National Treasury to urgently consider supporting the Land Bank’s request “to ensure the bank’s sustainability”. The new request is three months after the bank was granted a R3-billion lifeline from government.
Christo van der Rheede, executive director of Agri SA, says over the last few months they have come to learn of the increasing liquidity constraints of the Land Bank resulting in the risk of inability to support the agricultural sector.
“Currently, the Land Bank finances 29% of the agricultural debt, making it a critical contributor to food security,” says van der Rheede.
According to Agri SA the bank could not service its debtors since April 2020, placing the going concern status of the Land Bank at risk. “Currently, no new clients are being considered and clients are encouraged to seek financing from other financial institutions. Moreover, the critical development role that the Land Bank needs to fulfil, is compromised.”
‘Important vehicle to finance new agri entrants’
Kulani Siweya, agricultural economist at Agri SA, adds that as an institution the Land Bank is “an important vehicle to finance new entrants into the sector”
In a recent Land Bank presentation to the parliamentary select committee on finance, the bank’s funders have indicated that they will only recommit funding on the back of state guarantees.
“Agri SA encourages the agricultural community to step into conversation with the Land Bank on the status of their facilities,” says Van der Rheede.
This echoes an earlier statement by Futuregrowth, an asset management group, that believes the Land Bank is a “strategic contributor to agricultural development. Land Bank has a long history of operations and, post its restructure in 2006 to 2007, has shown itself to be largely self-sustaining, profitable, and with a suitable credit focus.”