Land Bank Concludes Debt Restructuring, Paves Way for Sustainable Future

Nkosi announced that the debt restructuring solution, which involves both international and local lenders, will take effect on 16 September 2024.

The Board of the Land Bank has successfully concluded a comprehensive debt restructuring solution with its lenders, marking a significant turning point for the institution. During a media briefing in Pretoria on Monday, Land Bank Chairperson Thabi Nkosi confirmed that official notices have been issued, signalling the start of the bank's new strategic direction.

Nkosi announced that the debt restructuring solution, which involves both international and local lenders, will take effect on 16 September 2024. This resolution addresses the bank’s debt default, which first occurred in April 2020.

"The debt restructuring encompasses various financial instruments across all lenders, ensuring equitable treatment regardless of the type of debt or jurisdiction," Nkosi explained. The repayments are scheduled to be made bi-annually, concluding by March 2028, with a significant contribution from the government’s equity injection aiding the bank's sustainability.

Nkosi acknowledged the complexity of the restructuring process, which involved coordinating a large number of lenders, including multilateral development finance institutions and international banks. She commended the patience and cooperation of all parties involved, noting that the standstill arrangement had been respected since the bank’s default.

Finance Minister Enoch Godongwana expressed concern over the prolonged negotiation process, emphasizing the impact it had on the Land Bank's vital lending activities. At its peak, the bank contributed R45 billion to South Africa’s agricultural debt finance, representing nearly 28% of the sector’s debt.

Despite the default, the bank has repaid over 60% of its debt, reducing its loan book from R45.2 billion in March 2020 to R17 billion by June 2024. Limited lending activities resumed in October 2022 through the Blended Finance Scheme, supported by the Department of Agriculture.

Godongwana highlighted the government’s support, including R10 billion to stabilise the bank and R3.7 billion allocated to the Blended Finance Scheme. He stressed the need for the Land Bank to adhere to the restructuring agreement and focus on a sustainable funding model to avoid similar challenges in the future.

With the debt crisis resolved, the Land Bank is now focused on executing its turnaround strategy, with a new operating model aimed at driving development and transformation in South Africa’s agricultural sector. The CEO, executive team, and the board are committed to leading the bank into a more sustainable future.