Land Bank Back on its Feet: Will Provide DALRRD With Finance For Emerging Cannabis Farmers
The South African Land Bank and Department of Agriculture are to provide a blended finance scheme for emerging farmers. Among those who will qualify for financial assistance are aspiring cannabis and hemp farmers.
Garth Theunissen, Business Day
25 October 2022 at 08:00:00
Business Day reported on 25 October 2022 that the Land Bank is set to resume lending to the agricultural sector more than two years after it missed a loan repayment that triggered a cross-default on nearly all of its R50bn in borrowings.
The state-owned lender, which used to account for almost 30% of agricultural financing in SA before its default, announced on Monday that together with the Department of Agriculture, Land Reform and Rural Development (DALRRD) it was launching a R1.95bn blended finance scheme to resume its lending activities. Under the scheme the Land Bank and DALRRD aim to deploy R1.95bn over the next three years to enable emerging farmers to participate in the mainstream agricultural economy.
“We will soon be making an announcement on the participation of other financial institutions,” Agriculture, Land Reform and Rural Development Minister Thoko Didiza, said after the launch of the scheme on Monday, 24 October 2022. “We want to ensure people who enter the scheme really allow our industry to grow.”
The scheme will start off with an initial minimum annual grant allocation from the DALRRD of R325m for three financial years starting in the current fiscal year with the Land Bank matching the grants with loans on a rand-for-rand basis. The Land Bank is also engaging with other strategic partners to complement the funding from DALRRD to further boost funding to emerging farmers under the blended finance scheme.
“Notwithstanding its challenges, the Land Bank, after two years of hiatus can credibly say it is back in business and ready to play its role in the market of agricultural finance,” Land Bank chair Thabi Nkosi said. “The nearly R2bn joint financing programme from the Land Bank and the DALRRD will make a meaningful contribution to SA’s overall agriculture finance market.”
The Land Bank was forced to stop lending after liquidity challenges saw it default on a loan repayment in April 2020, triggering a cross default on the majority of its debt load. By October 2022 the bank had managed to repay about R17.3bn of the roughly R40.2bn defaulted capital amount, thanks partly to the roughly R10bn in bailouts it received from National Treasury.
Nkosi said the launch of the blended finance scheme would serve as a “credit enhancement tool” that would help the Land Bank reduce the risk of repayment failure by borrowers as it would result in agricultural transactions being structured with comparatively lower gearing than would be possible without the grant component. The grant contribution by the DALRRD will not require financial returns and shall be treated as an equity contribution on behalf of black agriculture producers though it will be bound by certain terms and conditions.
One such condition is that the grant component cannot be used to fund any project on a stand-alone basis and will have to be blended with a loan component from the Land Bank or other stakeholders with the express goal of the scheme being to support the sustainable commercialisation of black farmers to transform the agriculture sector. Targeted commodities under the scheme will include red meat, poultry, grains, sugar cane, cotton, dairy production, vegetables, citrus, deciduous fruit, viticulture, nuts, forestry and cannabis or hemp production.
Only South African citizens with a valid identity document will be considered though black-owned and managed farming enterprises that are seen to be commercially viable will be prioritised. In the case of joint ventures the non-black partner should not have more than 40% ownership of the enterprise and no less than 26%.
The scheme will also not be open to politicians or employees of government or SOEs as well as politically exposed people that pose a reputational risk. Joint ventures involving farm workers who are not involved in the management of the operation will also not be eligible.
Nkosi said the blended finance scheme was the “first of many” similar funding structures the Land Bank is currently considering for future implementation. Even so, she cautioned the state lender’s journey to full recovery is still ongoing and it still faces a number of challenges.
Hamas Attacked Israel's Top Cannabis Facility, Murdered an Unknown Number of InterCure's Staff and Took Two Hostage During the October 7 Terror Incursion.
Israel's biggest cannabis company, Intercure, has been hard hit by Hamas terrorist attack on 7 October 2023. Its facility at Kibbutz Nir Oz, two kilometres from the Gaza border, is now under the control of the Israeli Defence Force and the company is unable to access it.
Cannabis in South Africa: The People’s Plant
We are a civil society organisation with the interests of the existing Cannabis industry and the Human Rights of ALL citizens at heart.
Resources & Equipment
Explore cannabis growing equipment for growing weed at home.
Whether you’re just starting out, or you’re looking to enhance your outdoor or indoor weed grow setup – we have the perfect range of cannabis growing equipment to match your marijuana growing ambitions.
Find everything from LED grow lights, grow tents, fans, and hydroponic setups, to environmental equipment and controls, harvesting accessories, extraction equipment and plenty more.
Design your ideal cannabis growing setup with high quality growing equipment available in South Africa.
Explore cannabis growing equipment we’ve curated from reliable online suppliers in South Africa