New Land Bank CEO has his hands full

Ayanda Kanana, current CEO of the Joburg Fresh Produce Market, is to be appointed as the new CEO of Land Bank, the first permanent CEO since December 2018 when the incumbent, Tshokolo Nchocho, was appointed CEO of the Industrial Development Corporation.

Kanana’s appointment was confirmed at a Cabinet meeting on 12 February 2020, but officials at the Land Bank could not confirm this because his appointment letter has not been signed by the Minister of Finance, Tito Mboweni.

The appointment has been confirmed by sources within South Africa’s development finance community, who say it is an “open secret”.

A chartered accountant by profession, Kanana will be assuming the reins at a troubled time in the organisation’s history.

In January 2020, the Land Bank was downgraded to junk status by Moody’s rating agency.

The agency blamed the downgrade on South Africa’s ongoing fiscal challenges, saying the fiscally constrained South African government is expected to be more selective in dispersing financial support to state-owned enterprises, including the Land Bank.

Specifically, the agency noted the bank’s declining quality of assets, marked rise in non-performing loans (and impaired loans) and lower-than-average capital adequacy levels as concerns, which make the bank’s profile riskier than the general banking sector.

In addition, the extended period of uncertainty caused by the absence of a permanent CEO who would ensure sustained oversight of the bank’s operations and strategic direction was a cause for concern, Moody’s said.  

The agency revised the Land Bank’s outlook to negative, based on its concerns about the country’s fiscal challenges.

The problems at the bank go far deeper than SA’s “fiscal challenges” and into the heart of the organisation itself. 

What Kanana will have to address could be dubbed a “fish or fowl” crisis. In other words, what exactly is the bank’s mandate? If the mandate is to support emerging farmers – as it is – then this costs money, both in the form of soft loans and the provision of extension services to the farmers.

But if the Land Bank is paying commercial rates for the money it borrows, it follows that this is not a sustainable model. It must either receive funding from government or must make profits from commercial farmers in order to support emerging farmers.

The truth is that neither of these is happening. Funding from government is drying up and so are commercial profits as competition from commercial banks and emerging Land Bank competitor, GroBank, increases.

At the same time expectations from emerging farmers continue to increase.

Kanana will need to address these issues.

He will also need to address low staff morale which is leading to an exodus of institutional knowledge from the organisation.

In his favour is the fact that the Land Bank is generally well-governed, with good people implementing robust procedures and policies, which by and large have prevented the organisation from being captured by the kleptocrats – though this pressure remains constant. 

In his favour is also a strong and supportive board. 

He will need all the support he can get. It is not an understatement to say that Kanana holds the future of emerging farmers in his hands, making it important that what is wrong at the Land Bank needs to be righted. BM