We catch up with Nchocho at the bank’s headquarters at Centurion in Pretoria, following President Cyril Ramaphosa’s recent State of the Nation address and the subsequent national Budget for 2018 tabled by former finance minister Malusi Gigaba.
In the Business Report interview, Nchocho makes references to the Ramaphosa and Gigaba speeches, and said he appreciated the sense of optimism in them as they addressed issues pertaining to growing the economy, creating employment, transformation and improving the governance of state-owned enterprises to curb wasteful expenditure and corruption.
Ramaphosa said agriculture presented one of the greatest opportunities to significantly grow the economy and create much-needed jobs.
He’s also acknowledged the crucial role the sector played in helping the economy clamber out of a technical recession last year.
Ramaphosa said they would accelerate the land redistribution programme, not only to redress “a grave historical injustice, but also to bring more producers into the agricultural sector and to make more land available for cultivation”.
Nchocho speaks frankly about challenges confronting the country and said that he welcomed South Africa’s prospects as the government anticipated an economic growth of 1.5percent in 2018, 1.8percent in 2019 and 2.1percent in 2020; and the projected Gross Domestic Product growth from 0.7percent to 1percent.
However, Nchocho’s main focus is on the developmental agenda he’s pursuing at the Land Bank in order to transform the agriculture sector and help grow the continental superpower’s economy.
He said the development bank had over the past two years handled more than R1.2billion in empowerment equity finance; its loan book grew from R33bn in 2015 to R45bn currently, and it achieved a net growth of about R4bn per annum.
“That’s a lot for an organisation our size,” he said.
Nchocho explained that the developmental portion of their loan book was 6percent in 2016, but was now around 13percent.
He said: “Our target in the next two to three years is to have 30percent of our entire portfolio made up of transformation and/or developmental issues in terms of loans and investments.”
He said the bank managed to raise R7.7bn in new financing last year from development finance agencies, including the World Bank, KfW Development Bank, the European Investment Bank, Standard Chartered, and through local bonds.
“The ability to raise money is indicative of the healthy state of the Land Bank,” says Nchocho proudly, adding that for the past eight years they had achieved clean audits from the Auditor-General. “We remain on a clean path when it comes to governance.”
For 2018/2019 more than R2.5bn would be set aside for transformative developmental initiatives and that 50percent of funding would go towards helping black entrepreneurs. “That’s how bullish we are in driving transformation,” said Nchocho.
He said the Land Bank was currently in talks with the Department of Agriculture, Forestry and Fisheries to implement a blended financing facility, “whereby you take a grant and combine it with a loan for maximum impact".
"Essentially, what this means is that you blend grant money with debt money. If you do that, can you imagine the impact that you can achieve, because you are basically using different types of money to achieve more impact and finance more blacks and beneficiaries.”
Nchocho talks passionately about the bank’s Vision2020, the bank’s blueprint aimed at driving in the back-breaking agricultural sector, transformation, sector growth, employment quality, food security and sustainable development.
He admits that transformation is a thorny issue.
“One of the challenges we have struggled with as an organisation is that the key stakeholders in the form of organised agriculture are formed along racial lines - AgriSA for whites and Afasa for blacks. These are two constituencies with very different expectations,” he said.
But Nchocho is uncompromising in his stance of driving much-needed transformation in the sector.
“Our view is as follows: Our country has a particular racial history, where it’s undisputed that black people were unfairly discriminated against from owning land. So, we must start there.
“It’s not sustainable for the status quo to remain. Continuing on the status quo can only cause major socio-political risks for the country.
“Land reform has to be tackled with vigour and with aggression. Those who want the status quo to remain must ask themselves: do they want to participate in a constructive land reform or do they want to face social civil unrest. It’s happened in other parts of the world. So, it’s real.”
Land Bank’s focus areas for 2018 include increasing its corporate social investment expenditures to R2.1m; partnering with other development finance institutions and intermediaries to co-fund programmes, and enhance funding and expand its reach in communities, among others.