LETTER: Dire state of Land Bank is due to Treasury’s oversight failure
Investors want clarity and an implementation plan, but the ANC government keeps making statements with no implementation intent
The DA has taken note of the auditor-general of SA’s disclaimer of the audit opinion findings on Land Bank. The findings are of great concern for everyone in the agricultural sectors. They highlight many issues, including the leadership’s inability to implement effective human resource management to ensure that there is stability and that proper succession planning is taking place.
The situation Land Bank finds itself in is as a result of the Treasury neglecting its oversight role of this strategic institution. Many of the bank’s continuous problems stem from the lack of political will to support it in fulfilling its mandate. This was demonstrated when the Treasury allowed the former CEO of the bank, TP Nchocho, to leave without having an immediate replacement or succession plan in place.
The bank has had three acting CEOs since the departure of Nchocho. No institution can attain normalcy under three different acting CEOs in one year. Twelve months later the bank still did not have a CEO. This resulted in a number of downgrades by the Moody’s ratings agency that caused panic and resulted in many investors withdrawing their funding from the bank, with no new investors on the horizon.
This leadership vacuum was created by the ANC’s lack of political will to see Land Bank fulfil its mandate of supporting qualifying farmers and not just the few politically connected farmers. This is the final nail in the coffin for this institution with its proud legacy of developing new farmers.
According to the SA Reserve Bank Regulatory Consistency Programme, the total capital adequacy ratio of the SA banking sector is well above the regulatory requirement of 10%, averaging below 15%. This means all banks are compliant with the Basel III capital adequacy requirement, and that the same capital adequacy is applicable to Land Bank. The lack of leadership and political will has ensured that the bank isn't able to source funding from the open market.
Emerging and small-holder farmers can be supported through programmes such as blended finance. The DA has always been in support of the blended finance because it mitigates the bank's risks. The ANC government allowed President Cyril Ramaphosa to make a bold R3.9bn blended finance commitment while knowing Land Bank was about to collapse because they failed to provide the support that it needed. In turn the sole shareholder being government, it is expecting the bank to fulfil its mandate of supporting agricultural reforms, grow agriculture economy and food security.
For Land Bank to find investors and continue with its mandate the bank needs to restore faith in the local and international market. There are two policy certainties that must be addressed with immediate effect:
- Expropriation of land without compensation must be scrapped. It is going to kill agricultural jobs and the SA economy. The constitution makes sufficient provision to address land reform in SA.
- Land Bank’s mandate must be clear as to whether it is supportive to both commercial and emerging farmers. The uncertainties created by agri finance programmes designed to support the bank’s land reform agenda that are never implemented is causing confusion in the market about the government’s seriousness about agriculture reforms. Land Bank must be clear about its support towards commercial farmers.
Investors want clarity, bold statements and a robust implementation plan, but the ANC government keeps making statements with no implementation intent. This has led to the failure of the bank.
The Treasury and the department of agriculture, land reform and rural development must ensure that farm jobs are protected, farmers’ contribution to the economy is prioritised and the country’s food security is protected.
While the concerns raised in the auditor-general’s disclaimer audit opinion report is alarming, the problem lies in leadership at senior level of both national treasury and Land Bank. The Treasury failed to play its part of conducting proper oversight, which led to the departure of many senior staff. Both the Treasury and Land Bank must address matters raised urgently, with an immediate focus on the bank’s ineffective human resource management.
Noko Masipa, MP
DA member of the portfolio committee on agriculture, land reform & rural development
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