By Thapelo Molefe
The government has reaffirmed its commitment to supporting the Land Bank’s turnaround strategy, following the successful conclusion of a landmark debt restructuring solution with all its lenders.
Finance Minister Enoch Godongwana announced on Monday that the government had provided R10 billion to help steady the situation.
“Government provided R10 billion to stabilise the situation and alleviate the state’s contingent liabilities through the settlement of the state-guaranteed lenders, and to allocate R3.7 billion from these funds towards the blended finance scheme to support the bank’s agricultural development and transformation mandate,” Godongwana told reporters on Monday.
He added that the government had also ensured that the bank found self-help measures while keeping fiscal support to a minimum. He said moving forward, the bank’s funding model remained a priority.
The move comes after the Land Bank successfully concluded a landmark debt restructuring solution with all its lenders, paving the way for its recovery from its debt default position.
The debt restructuring solution, which takes effect on 16 September, spans multiple financial instruments and ensures equitable treatment of all lenders. Scheduled repayments to lenders will occur every six months until March 2028.
Godongwana said the board’s focus would be to ensure that the bank’s strategy was effectively and successfully executed.
“A closer relationship between the bank and the Department of Agriculture, as well as relevant department entities is required to ensure coordinated efforts…,” he said.
Land Bank board chairman Thabi Nkosi reflected on the complexity of the process.
“This has been one of the most intricate and extended debt restructuring efforts in South Africa’s financial history. Coordinating a large number of lenders consisting of local lenders, a multilateral development finance institution and international banks, as well as the different types of debt instruments, and tenures added to the
challenge,” Nkosi said.
However, she said all parties showed remarkable patience and good faith with lenders respecting a stand still arrangement since the bank defaulted on its debts.
“We believe the solution we’ve reached is in the best interest of all stakeholders and the agricultural sector,” she said.
The turnaround strategy is divided into three phases including stabilisation, consolidation and growth.
Nkosi said that with the liability solution finalised, the bank was now focused on executing this strategy to drive development and transformation within the agricultural sector.
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