The Land Bank last month launched a revolving credit facility for farmers which makes it easier for the farmer to access loan financie than was previously the case. Previously, the farmer would have to reapply for a loan after completing a full, administratively burdensome, application process.
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The Land Bank is in talks to raise an about R20 billion loan from development finance institutions and other organisations, and it will also need to secure R10bn from the government to strengthen the bank’s balance sheet.
This was said by Land Bank acting CEO Jabu Mphambo, who spoke at a Parliamentary Select Committee of Finance meeting on Tuesday.
He said the bank had made significant progress on its financial turnaround since it defaulted on a debt repayment in September 2024. For instance, its debt had been reduced from R41bn to to R7.6bn currently, with most of the repayment derived from the bank’s own cash resources.
Mphambo said, however, the bank needs to finalise its additional funding requirements before the 2028 financial year because a significant debt would reach maturity in that year. Some of the R20bn raised would be used to refinance this debt; the debt maturity would be extended to possibly between 15 to 35 years, and it would also be drawn down in the two to three years thereafter.
He said the additional R10bn funding from the government should not be viewed as a “bailout,” as these funds would be used to strengthen the bank’s balance sheet and it would help the bank grow its developmental mandate, which is to provide funding and land to emerging farmers and to promote transformation in the agriculture sector.
Mphambo said emerging farmers typically cannot afford normal commercial lending rates. For instance, the bank's blended finance product, which relies on a grant as part of the loan and enables the loan to be repaid at single-digit interest rates, had proved to be very successful with emerging farmers, so far.
He said the bank also required some form of regular funding, perhaps every few years, from the government, as this type of funding is typically required for any provider of development finance, to ensure the sustainability of the developmental activities.
The blended finance product for emerging farmers had already attracted support from about 600 emerging farmers — emerging farmers being defined as having annual revenue of less than R50 million per year—and over R3bn had been disbursed to these farmers.
Some 54% of the bank's current loan book was to emerging farmers.
Mphambo said the Land Bank was in various stages of discussions with institutions such as development finance institutions and sovereign development funds, where funding can typically be obtained at less than normal commercial rates, and the bank hopes to have a closed this transaction by the end of the year.
However, these funders had indicated they needed a government guarantee before they provided the finance, and the Land Bank was working with the Treasury towards this.
“The direct role of the Land Bank is when we finance land acquisitions for agricultural production. It is not enough (of a role) though, because the need is bigger. I reference Land Reform; before this is where it becomes critical. From our current perspective, we do productive land acquisitions. In addition, we play a more advocacy role in broader forums to reflect the importance of land moving into the hands of black farmers,” he said.
“Half of our loan disbursement target is for blended finance beneficiaries. The broad demand for this type of finance is huge. However, there are also some emerging farmers who can afford 100% commercial agriculture loans.”
Mphambo said the bank had done much to improve its products and services since the debt default in 2024, although more needed to be done. He said, for example, that the bank became aware of complaints among clients that the bank sometimes disburses its production finance loans too late.
To address this, the bank last month launched a revolving credit facility for farmers. In this product, funds simply become available once a portion of the previous loan is repaid. This substantially reduces the time taken to obtain loan finance, in that the farmer does not have to reapply for a loan every time he needed it; funds simply become available once a portion of the previous loan is repaid.
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