South Africa's Land Bank improves performance

by Hopewell Radebe

South Africa's Land Bank has increased its performing loans by 14,3%, having lent R13,6bn compared to R11,9bn during the financial year ending on March 30 this year.

With the problems of maladministration behind the Bank and the new management facing an uphill battle of remaining self-sustainable while focusing on the mandate of supporting mostly emerging farmers, CEO Mr Phakamani Hadebe said they decreased the non performing loans by 5,6%, from a debt of R1,8bn to R1,7bn.

The number of non-performing loans as a percentage of the loans book decreased to a manageable 11,1% in this reporting year compared to 13,15% last year.

Hadebe expressed hope that they will achieve their target of disbursing R1bn over the next two years to emerging farmers. He said the bank has adopted a Social Accounting Matrix (SA_SAM) to measure the Land Bank’s development impact. According to SA-SAM estimates, for every R1m the Land Bank invested in agriculture, at least 10,8 jobs were created compared to 5,7 jobs in the mining sector.

The bank group profit was 24,5% lower this year at R286,1m compared to R379,1m last year.

Mr Hadebe expressed concerns about the impact of transport on agricultural input costs saying it was the most expensive of all the input costs for the farmer, stopping short of mentioning the likely impact of proposed toll fees that the farming unions have condemned.

He said fuel oil, logistics and transportation to storage as well as to the market eventually added costs for the farmer and reduced the sector’s profit. He said the net farm income has been coming down and the financial institutions were realising that this was not going to be sustainable in the long term. "Sooner or later the number of non-performing loans will grow."

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