NEWS & ANALYSIS

Land Bank: Strong leadership and blended finance only solutions – Noko Masipa

DA MP says more than a R7bn bailout is needed for long term sustainability

Strong leadership and blended finance are the only solutions to the Land Bank’s financial woes

12 January 2021

The Democratic Alliance (DA) has noted reports of National Treasury and the Minister of Finance, Tito Mboweni’s intention to save the Land Bank from its liquidity challenges with a bailout of R7 billion. We will submit written parliamentary questions to interrogate the validity of such a plan.

Financial liquidity is far from the only trouble the Land Bank is facing. The Auditor-General (AG) of South Africa’s report indicated that the Bank’s leadership has failed to implement effective human resource management to ensure that there are stability and a succession plan for key positions – a problem that has plagued National Treasury and the Land Bank board as well.

For the Land Bank to achieve long term sustainability, it would require far more than a R7 billion bailout. What’s needed is strong and effective leadership that understands banking and agriculture/development finance. Government, as the shareholder, and the Bank’s board are equally liable for the demise of the Bank. There are clear indicators that Minister Mboweni failed to provide proper oversight for this very important strategic agricultural institution.

As such, the DA will submit written parliamentary questions to both Minister Mboweni and the Minister of Agriculture, Land Reform and Rural Development, Thoko Didiza, to ascertain the following:

How much is left of the R3 billion that the State allocated to the bank during the first bailout request of 2020, and how was the money spent;

With regard to the requested R7 billion, the Minister must provide a detailed current arrears position of the Bank with various lenders and a further breakdown of the amount to be used to finance the arrears, farmers and the operation of the Bank;

What support is The Bank providing to commercial farmers who have been instrumental in subsidizing agricultural and land reforms programmes;

During the last presentation to the National Council of Provinces (NCOP) part of the bank’s plan was to sell off its R18 billion asset book. What progress has been made in this regard; and

The DA would further ascertain how the Land Bank is going to mitigate the potential increased food prices, job losses, and food imports as a result of farmers that have stopped farming due to disruptions

The Bank’s mandates are to ensure food security, grow the agricultural economy, and create sustainable jobs. All these are under threat due to leadership crisis at a governmental and institutional level.

The long-term sustainability will not necessarily be solved by the R7 billion injection. Experience has shown that bailouts to failing State-owned enterprises (SOEs) at the expense of South Africans never ends well and government should stop employing this failed strategy. Farming requires long term planning; therefore, long-term capital injection is required coupled with strategic plans to support the long-term needs of the farmers. The DA remains of strong view that the bank needs a sustainable blended finance model for all farmers in South Africa that would reduce risks to the Bank and allow it to participate in the bonds and capital markets.

The Land Bank needs sound leadership from its board and National Treasury, complimented by the Department of Agriculture, Land Reform and Rural Development (DALRRD) through their expertise in agriculture. If the leadership is not shaping up for the new norm of blending the fiscus with private funding, the State might as well write off the Land Bank from its constitutional mandate and include it in the list of failed State-owned enterprises (SOEs).

Issued byNoko Masipa,DA Member on the Portfolio Committee on Agriculture, Land Reform & Rural Development, 12 January 2021