The Land Bank has admitted in an answer to a parliamentary question by the Democratic Alliance (DA), that it is placing all its trust in Parliament to phrase the Land Expropriation Bill in such a way to protect the Bank’s rights as a creditor. Previously, the Bank indicated to the market that if expropriation without compensation (EWC) happens without the protection of the Bank’s rights as a creditor, the Bank would be required to pay R9 billion immediately, and if unable to do so, a Cross Default clause would be triggered resulting in the immediate repayment of the Bank’s R41 billion funding portfolio.
This again demonstrates that if the populist proposals from the radical economic transformation faction of the ANC and the EFF succeed in pushing through the ill-conceived Expropriation Bill, the Land Bank, commercial banks and other mortgage lenders would be in very deep water. When asked if the Land Bank had any policies or plans in place to mitigate the risk of EWC of land indebted to the Bank, it answered: “Currently, Land Bank does not have any policies in place that would mitigate the risk of expropriation, without compensation, of land over which Land Bank holds mortgage bonds as security.”
The uncertainty regarding the policies as it pertains to EWC will put the final nail in the coffin for the Bank.
Already, investors that are interested in agricultural reforms have expressed their concerns about the Bank’s failure to attract any support from government over the past few years; its liquidity issues; the Bank’s support for disastrous land reform projects which so far made no meaningful impact; the lack of political will do make a success out of the failed blended finance initiative; the fact that the Bank was without a CEO for the last two years; and its recent downgrade to junk status.
Should the amendment of section 25(1) of the Constitution indeed come to pass, not only will landowners suffer, but the Land Bank will as well. Therefore, instead of waiting for intervention from Parliament to protect its rights as a creditor, the Bank should voice its concerns about the amendment of Section 25 of the Constitution.
Speedy and meaningful land reform is possible without having to amend the Constitution. The following are some of the DA’s recommendations in this regard:
- That the amendment of Section 25 of the Constitution be stopped and that government instead prioritise dealing with corruption that resulted in failed land reform progress;
- Government must bring back the Agriculture Credit Board that provided opportunities to many successful commercial farmers in the country;
- Key reform plans should be implemented immediately including, blended finance for the Land Bank and other commercial banking partners, and sectoral interventions proposed in the National Development Plan on agriculture;
- Government coordinate in its relief efforts when assisting the agriculture sector through crises it might face;
- Government must speed up the release of state-owned land to address land shortages in residential areas;
- Farmers must own the title deeds to the land they work; and
- Government must implement the commodity support model such as The Witzenberg Partners in Agri Land Solutions (PALS) and Nick Serfontein commodity approach to reform.
EWC will not only fail to address the challenges at the Land Bank and plunge it further into financial distress, it will also deepen the nation’s economic disaster which has been brought about due to the years of economic mismanagement, looting from state coffers and the poor Covid-19 lockdown management on the part of the ANC.
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