The Land Bank is currently in the consolidation phase of a three-stage recovery plan, following a stabilisation period that ran from 2023 to 2025.
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The Land Bank is intensifying efforts to tackle its elevated non-performing loan (NPL) ratio while scaling up support for farmers, as it continues its recovery from the 2020 default.
Presenting the bank’s Annual Performance Plan for the 2027 financial year to Parliament’s Standing Committee on Appropriations on Wednesday, acting CEO Jabu Mphambo said reducing bad loans and strengthening farmer support are central to the institution’s turnaround strategy.
The Land Bank is currently in the consolidation phase of a three-stage recovery plan, following a stabilisation period that ran from 2023 to 2025. This phase, which will continue until 2028, is focused on implementing key reforms to reposition the bank as a sustainable development finance institution.
A major challenge remains the bank’s high NPL ratio, which stood at 51.2% at the end of the last financial year. Mphambo said the bank is targeting a reduction to 44% in the current financial year, acknowledging that the goal is ambitious but necessary.
“We are conscious that we want to set a stretch target. Psychologically, it helps us drive internal focus with our staff to have a stretch target, because we need to get below that 50% quickly,” he told MPs.
Mphambo explained that the sharp increase in NPLs was largely a consequence of the bank’s restructuring process following its default. In order to repay lenders, the bank sold off a significant portion of its performing loan book, leaving behind a higher proportion of distressed loans.
“When the bank defaulted, lenders required that we had to repay them. Part of how we unlocked liquidity or capital to repay lenders, we had to sell a portion of our book,” Mphambo said.
“By definition, it meant you are reducing a huge part of what is a performing book while you are still keeping the non-performing. So by derivation, the non-performing loan ratio spiked as a result of that.”
To address this, the bank is implementing a range of measures, including stricter credit risk management and more proactive interventions in problematic accounts. Mphambo said the bank is taking a firmer stance on “stubborn” loans where there is evidence of deliberate non-payment.
“We need to take a different posture with some of these clients. Even how we restructure some of those loans to ensure that we don’t drag the process,” he said.
The bank is also exploring more innovative solutions to resolve legacy debt, including faster restructuring processes and legal interventions where necessary.
At the same time, improving the quality of new lending is seen as critical to lowering the NPL ratio over time. As the bank originates more performing loans, the proportion of non-performing assets is expected to decline.
Beyond managing bad loans, the Land Bank is placing renewed emphasis on supporting farmers, particularly those facing financial distress. Mphambo said the institution remains open to restructuring loans for farmers who encounter difficulties, especially emerging producers.
“Currently, with farmers that run into trouble, the bank is open to proactively consider those farmers for a restructure of their loans,” he said.
He added that in some cases, grant funding is required to make these restructures viable, particularly for black farmers and small-scale operators.
“Typically, with emerging farmers, there may be a need for some grants to enable that restructure to take place,” he said.
In addition to financial relief, the bank is expanding its non-financial support through pre- and post-finance programmes, often delivered in partnership with external stakeholders. These initiatives aim to improve farmers’ operational capacity, market access, and long-term sustainability.
Mphambo acknowledged that access to resources remains highly unequal in the agricultural sector, with black farmers contributing less than 10% of output value across most key commodities. He said addressing this imbalance is a core part of the bank’s mandate.
The Land Bank’s broader strategy also includes strengthening its funding model, which Mphambo described as “not optimally funded” due to a mismatch between short-term liabilities and long-term lending.
“Our current funding is short-term in nature, and yet we are funding long-term investments or assets,” he said, noting that the bank is engaging National Treasury and international development finance institutions to secure longer-term funding.
Despite the challenges, the bank has made progress in expanding its lending activities. In the past financial year, it disbursed R1 billion in blended finance loans, more than 70% higher than the previous year, alongside significant growth in other lending categories.
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