Ayanda Mdluli
The Land Bank’s profit for the year increased 40 percent and it was setting up a pilot project to provide government-backed loans to emerging farmers looking to enter industries that might only generate profit after three to five years, chief executive Phakamani Hadebe told Business Report yesterday.
Speaking at the bank’s annual results presentation in Pretoria, he said
the programme would be established in partnership with the Department of Rural Development and Land Reform, as well as the Department of Agriculture.
This was flagged by Finance Minister Pravin Gordhan in the bank’s annual report, where he said about R1 billion would be spent on projects to develop, fund and create new emergent farming industries.
“Greater resources need to be directed to development, and the government will provide the support necessary to achieve this goal,” he wrote.
Gordhan explained that the Land Bank would use a social accounting matrix methodology, which would assess the impact of its funding.
“The methodology takes into account key economic variables such as gross domestic product, job creation, capital utilisation and income accrued to households,” Gordhan added.
Hadebe said credit to emerging farmers was central to the agricultural sector’s development prospects, as well as the country’s food security.
This new model of providing government-protected loans would also see some significant changes as the government aimed to move away from “just giving land” to providing funding and support to emerging farmers with the right expertise.
Explaining the rationale behind the guaranteed loans, Hadebe said the most successful agricultural sectors in the world had received financial backing from state institutions. The success of the white commercial farmers in South Africa could also be attributed to state support during the apartheid era, he said.
Rural Development and Land Reform Deputy Minister Thulasi Nxesi mentioned in an interview that the Land Bank was created just before the 1930 Land Act with the sole purpose of funding farmers.
He said the bank should continue with that mandate and fund emerging farmers. However, the core issue with emerging farmers was that when land was transferred to them it should remain productive and financial support was essential for the realisation of that objective.
Some of the highlights indicated by the bank at the results presentation were that its annual profit increased as a result of a decline in non-performing loans and that its net income for the 12 months to March climbed to R269.5 million. Non-performing loans dropped by 5.6 percent to R1.7bn.