Land Bank shows promising turnaround signs, but faces long road to recovery

Has the Land Bank finally turned a corner? Possibly.  

The state-owned company, which provides loans to established and emerging farmers, is profitable again after being on a money-losing streak for two years since 2020. The Land Bank pencilled in a profit of R1.39-billion for the year to 31 March 2022, from a loss of R711-million in 2021, and a loss of R905-million in the previous year. 

The Land Bank’s latest profits were largely driven by crafty but legitimate accounting practices. The Land Bank quickly wrote off soured loans of farmers to ensure that manageable and not large losses were recorded — an exercise that contributed to about 93% of its profits. Also boosting its profits were gains or income it received on its investments and the reduction of company expenses, mainly managing its loan book worth more than R20-billion internally rather than paying fees for someone else to do so.   

The Land Bank’s financial books received a clean audit from the Auditor-General as they were presented in a way that reflected the company’s true financial state. Another sign of progress at the Land Bank is that the company resumed its lending activity after two years of rejecting loan applications from farmers because it was broke. The Land Bank’s operations are important for SA’s food security system as it provides 30% of the country’s agricultural debt. 

When a private sector company records such progress, it is usually nothing to write home about. But when one of SA’s state-owned companies does this, it is an event, considering the dire performance of such companies. 

Problem areas at the Land Bank  

Exodus of Land Bank staff and debt problems