Treasury has responsibility to help Land Bank function, says Mboweni

It is the responsibility of the National Treasury to do whatever it can to support the Land Bank.

Finance minister Tito Mboweni said this on Friday after reports that the bank had warned those holding R50bn of its bonds that it was in default after failing to pay its obligations this week.

“The Treasury ... and some of the key banks that the Land Bank has credit facilities with, have been engaged in lengthy consultations to ensure that the bank is able to function,” Mboweni said.

He said those consultations were ongoing.

“One thing is for certain. The Land Bank has difficulties, is in trouble and our responsibility is to do whatever we can to support the Land Bank,” Mboweni said.

When news emerged earlier this week that the bank might default, Agri SA called on government to show the necessary leadership and vision to urgently support the agricultural sector to resolve the Land Bank's current default crisis.

Agri SA said the Land Bank was a significant player in the agricultural sector, with a strong market share of 29% of SA’s agricultural debt.

“The bank is an important line of credit for agribusinesses to finance the buy-in of harvests at silos and for production credit which the bank channels to farmers via agribusinesses.”

It said a Land Bank failure could expose the country to a substantial systemic risk with dire consequences for commercial farmers, job creation and food security and should be avoided at all cost.

“We encourage the Land Bank Board and National Treasury to constructively engage with Land Bank clients and agricultural lenders to mitigate the systemic risk,” Agri SA said on Wednesday.