The role of agricultural finance is as critical now as in the past to ensure food security
The Land & Agricultural Development Bank of SA has faced numerous challenges in its 110-year existence. Still, the entity remains vital to SA’s agricultural sector and the economy at large.
While it is true that Land Bank has in recent years underachieved, particularly on its development objectives, it remains the only public institution that can play this role and was established solely for this purpose. Our focus is on reviving the entity and ensuring it is appropriately positioned to achieve its development objectives.
The first relates to the Bank’s current state of default and the restructuring of its debt. In April 2020 the bank defaulted on its debt obligations, and since then the entity and its lenders have been in negotiations to restructure outstanding debt. Significant progress has been made in ensuring continued solvency and reducing outstanding debt from R41.35bn in 2020 to R24.2bn presently.
To gain a greater level of control over its loan book and enhance its performance, the bank has terminated agreements with most of its intermediaries and deployed a range of forbearance solutions to restructure the loan facilities of farmers experiencing financial difficulties. Unfortunately, not all forbearance efforts are successful, and at times the bank faces a lack of co-operation from clients with whom it or its previous intermediaries have contracted.
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