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Land Bank manages to pay off R11.4bn after defaulting last year

But its financial woes are still far from over.
The bank expects to record a loss of more than R1bn for its 2021 financial year. Image: Waldo Swiegers/Bloomberg

The embattled state-owned Land & Agricultural Development Bank says it has paid R11.4 billion to its lenders, which has resulted in a 28% reduction of its debt since it defaulted on its funding liabilities in April last year.

Read: Land Bank misses March 31 deadline

The bank says it has been able to reduce the funding debt through its normal collections of client instalments, settlement of facilities as clients move to other financial institutions, and disposal of non-core assets.

“Some of this funding has been used to provide much needed support to the existing clients of the Land Bank,” the bank said.

“The bank has geared itself to fully support existing clients with working capital and production facilities in the planting season that is upon us.”

Land Bank’s turnaround strategy comes after it asked creditors about two months ago to approve a debt repayment plan that would run over the next five years and save it from collapse.

Read: Land Bank seeks support for split to repay debt

Its financial position has been boosted by a government bailout of R3 billion from last year and another R7 billion early this year, which will be paid out over the next three financial years.

The Pretoria-based bank, which provides loans to both emerging and established farmers, says this capital injection is intended to reduce debt and provide a baseline for its future growth.

Although its financial distress is declining, the bank still expects to record a loss of R1.06 billion for its 2021 financial year, which will mark its third consecutive year of failing to turn a profit.

“The event of default has caused considerable strain on the bank’s operations and reduced its ability to support the sector and service existing debt,” it said.

Read: Futuregrowth sees Land Bank as threat to state lending

“In the absence of any new funding flowing into the bank, the ability to perform these key functions remains significantly constrained.”

Nonetheless, the bank says it is adamant about turning the dire situation around and has “recorded some progress in critical areas of the stabilisation exercise, in collaboration with the lenders and funders with the support of its shareholder”.

The bank says it has embarked on a process of insourcing some its externally managed loan books while implementing the approved Remediation Plan in response to the negative findings of the Auditor-General of South Africa.

Read: Greater oversight required to fix the Land Bank

“The bank has also developed and approved its Vision 2025, a strategy to repurpose the bank in line with its mandate,” it added.

“The focus in the medium term is on supporting the growth of the Development and Transformation business through partnerships with both the public and private sector.”

The bank is yet to confirm the balance of its current debt.

Palesa Mofokeng is a Moneyweb intern.

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The Land Bank is supposed to be a Development Finance Institution, but it acts more like a commercial bank.

The core mandate of the Land Bank, should be the transformation of the agricultural sector, but only 24% of it’s funding went to black farmers.

The Land Bank is complicit in upholding the status quo in farming.

Thank goodness only 24% of their book is to your Comrades! Imagine the financial position if it was more….

LOL. if it acted more like a commercial bank, why is it in such financial trouble?

And the Spin Doctors said that judging skin colour stopped in 1994!

In 27 Years both Germany and Japan rebuilt themselves to be world powers once again after both countries were decimated and bankrupted by war.

Here a perfect infrastructure was taken over and all that was done was bitch about the country’s legacies, ie look back and not plan ahead!

That is why the Land Bank and most other SOE’s are where they are.

LOL – If you are not bankrupt then you cannot be part of the ANC SOE’s.

So 10 billion from us taxpayers to provide more dubious ‘loans’ to ‘one mielie farmers’ ?

If only Duncan. I suspect that is what the LB try and portray. I reckon reality is that “loans” go the ANC cadres (Zweli Mkhize types), never to be repaid. The taxpayer just tops up the trough.

End of comments.

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