CAPE TOWN - The National Emergent Redmeat Producers’ Organisation (Nerpo) said yesterday the Land and Agricultural Development Bank of South Africa “is the last hope for small-scale farmers, and we trust the government will act in the best interests of the poor and marginalised communities”.
The government-owned Land Bank has defaulted on interest payments on its bonds over the past week, and its management is in talks with the government and other lenders to recapitalise the bank.
The liquidity shortfall arose after two credit ratings downgrades by Moody’s Investors Service. Nerpo said the government should focus on rescuing the bank, because the government and other international funding institutions needed a vehicle such as the bank to lend to farmers and other strategic sectors.
Nerpo managing director Aggrey Mahanjana said the organisation believed that the bank was still a viable and appropriate vehicle to support agriculture, in line with the bank’s developmental mandate.
The bank had “inadequacies”, ranging from its lending criteria; turnaround time for approval of loans; and almost operating like a commercial bank; but despite that the bank remained a viable institution, said Mahanjana.
He said there was little appetite for agriculture by the commercial banks because of the complexity of the industry.
Finance Minister Tito Mboweni said this week the government would “do whatever it takes” to ensure the survival of the Land Bank.