What can farmers expect from the new Land Bank board under your leadership?
What we start we will complete. We will restore the credibility of the institution, build up the necessary mechanisms to support farmers, black and white, and partner with co-ops and many other agricultural institutions to ensure the business is done.
The bank’s reputation is in tatters. What are you doing to rescue it?
We can’t rescue something that has sunk to the bottom. We must rebuild the bank to regain the confidence of the markets.
How will you rescue the bank?
We have created an operations committee. We are talking to experienced bankers, one [of whom] will be appointed adviser to the committee for our turnaround strategy to be presented to Treasury. Part of it will be to look beyond the farmgate, at agribusinesses, where risks are lower. There are new technologies that add value. We must support local beneficiation more aggressively. The Land Bank can contribute toward poverty alleviation and revitalisation of the rural economy.
We can play a catalytic role in development of emerging farmers. We will also partner with co-ops, universities and other institutions to provide the necessary aftercare. Productive farms must not become dissolute. We don’t have the capacity to ensure they don’t, but we will find partners who do. The new board’s open attitude will encourage business partners to come to us. It’s time to do business. We are also relooking liquidity issues. We are expected to perform a development role without state aid. But first we must ensure state money is managed properly, according to sound market principles.
The key to turning the Land Bank around is appointing a competent CEO. When can we expect this to happen?
The Achilles’ heel of the Land Bank has been management. We are going to the market to find the right candidate. We are looking for someone with really strong, hands-on banking experience who can say: this is how it’s done.
he bank has been without a CEO for nine months. Why the delay?
We’ve gone to head hunters, but so far we’ve come up with nothing. A lot of people wouldn’t want to touch the Land Bank. Also, the appointment is at the discretion of the minister [of land and agriculture, Lulama Xingwana], which makes it more complicated.
So there are no frontrunners yet?
No.
What principles will apply when appointing new executives?
Those best-suited to run a particular function will be chosen. We want the top talent.
Farmers’ unions say the board doesn’t have enough agricultural expertise. Agri SA’s only candidate was rejected. Why?
Their criticism was not well thought out. We have Otto Mbangula, a farmer representing emerging farmers, Prof Herman van Schalkwyk, a farmer himself and an influential agricultural academic, and Jesmane Boggenpoel, a director of Senwes, representing co-ops.
Lax credit controls and poor financial management cost the bank R2 billion in equity in the last five years. What are you doing to fix these problems?
We are reviewing our credit and risk procedures to make sure they are sound. Yesterday we placed a moratorium on all decisions of the Credit Risk Committee, which authorises loans up to R100 million. All loans, whether R7 million or R70 million, will have to go through the board until the checks and balances are in place.
We put a moratorium on procuring goods and services, employing consultants, salary adjustments and bonus payments. The bank has hired 144 consultants. Payment of outstanding consultants’ fees will be subject to submitting proof of terms of reference and deliverables. There’s a great deal of corruption going on there. The Achilles’ heel of the Land Bank has been management.
What if politicians interfere with your choices? Will you resist?
Political interference is unavoidable, but we will manage it.
How much do you want from Treasury? I’ve heard R6 billion.
More than that. We need double figures. Cosatu is bringing the point home that we need state aid to shore up emerging farmers, black and white. We can’t offer soft loans when we are raising money on the market.
Why not shut the bank down and save taxpayers some money?
We need a land bank more than ever with spiralling food prices and millions of hectares not being farmed. We’ve seen that the cooperative system works. Established co-ops would be more than willing to help us ensure this land is used productively. We just need to convince the finance minister.
What do you regard as the bank’s core mandate?
There are three. We want to maintain a clear division of mandate so the markets understand what they are. At the bottom end is the grants space, for community upliftment and household food security. In the middle is development of emerging farmers. At the top end is commercial agriculture. South African farmers provide food for the entire region and we need to support them.
Are you exploring new funding models?
Yes. We should have three funds performing these different roles, so one sector does not flow into the other. We are looking at international and state aid for our development function. Right now we are raising money for this on the market. This is expensive, and is why emerging farmers are not getting soft loans. When we approach the market, investors must know if we are raising money for a development fund. When funders and creditors have clarity on these issues it becomes easier to raise money on softer terms.
Will the bank change from retail to wholesale lender?
No. We need more branches in the former homelands. We won’t succeed in the old Transkei and KwaZulu-Natal if we don’t have branches there, so we are planning to expand to those areas. But we want to bulk lend to co-ops to assist emerging farmers.
Many co-ops plan to take their business to commercial banks. You risk losing R6 billion in wholesale loans.
How do you plan to stop the stampede?
We must demonstrate the commitment of the new board to turning the bank around. I’m going to the Free State next week to meet the CEOs of the big co-ops and the CEO of the Agricultural Business Chamber, Dr John Purchase. We’re going all out to establish our credibility.
Cabinet promised criminal proceedings against executives named in the bank’s forensic audit, then backtracked. When can we expect prosecutions?
We will appoint senior council next week to advise the board on laying charges and what we can do to recover losses. We expect to report to Cabinet within months. This board wants to dispose of this issue as quickly as possible. |fw
