Agriculture minister John Steenhuisen would like political responsibility of the Land Bank, which currently rests with finance minister Enoch Godongwana, to reside in his department, saying the move would provide synergy within the reconfigured office.
President Cyril Ramaphosa announced the new cabinet of the seventh administration in June, which included the spilt of the department of agriculture, land reform and rural development (DALRRD) into two separate departments. PAC leader, Mzwanele Nyhontso, now leads the department of land reform and rural development.
The DALRRD housed 11 entities, including the Agricultural Research Council, Commission of Restitution of Land Rights and the Ingonyama Trust Board. Ramaphosa is yet to issue a proclamation of the delineation of responsibilities of the spilt ministries.
Steenhuisen’s office expects Ramaphosa to issue a proclamation where a delineation of responsibilities to be outlined by the end of March 2025.
The Land Bank finances the agricultural sector in line with government policy objectives. The entity, which was established in 1912, has defaulted on its debt since 2020. Since then, R18.1bn has been repaid and interest payments continue to be serviced.
The bank and its lenders are expected to conclude agreements to end default during 2024/25, according to the Treasury’s budget documents.
The bank recorded a R97m loss in nine months to end-December 2023 when it had budgeted to make a small profit. It also has R9.7bn in nonperforming loans (loans that are unlikely to be paid back) from Land Bank customers.
Business Day previously reported that the bank was in search of a buyer for its loan book. The flight of high-quality customers from the Land Bank has affected the quality of its loan book, contributing to the increase in the nonperforming loan ratio, which stood at 51.9% at the end of the previous financial year.
The deterioration of the quality of the loan book has been partially attributed to the manner in which service level agreements were concluded, managed and monitored.
Ramaphosa’s office is, however, yet to receive Steenhuisen’s formal request, according to spokesperson Vincent Magwenya. Section 97 of the constitution empowers the president to transfer the administration, powers and functions of state-owned enterprises (SOEs) from one cabinet member to another.
The president recently invoked the legislation and reassigned the responsibility for SOEs from the defunct public enterprises department to their respective line departments.
Monitoring and evaluation minister Maropene Ramokgopa has been assigned the responsibility of finalising the National State Enterprises Bill, which was recently re-introduced before parliament.
The legislation aims to restructure SOEs into a single shareholding company where the state will be the sole shareholder of the asset management company, but the door is open for strategic equity partners to be brought into the underlying SOEs.
With Kabelo Khumalo
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