Land Bank capital injection needed to avoid funding shortfall crisis
By Larry Claasen
THE National Treasury has not yet provided a much needed capital injection to the Land and Agricultural Development Bank of South Africa (Land Bank) to help prevent an impending funding shortfall.
The state-owned lender, which has a mandate to support agricultural development in South Africa, warned that it would face liquidity issues, as it would have a surplus of only R158 million in 2028 if it did not receive a much-needed capital boost from the national government.
Without this cash injection, the surplus is projected to become a R1,96 billion shortfall in 2029, which would then grow to R4,2 billion in 2030, according to its corporate plan for the financial years 2026 to 2028.
Land Bank Capital injection urgent to meet debt and liquidity needs
The bank said it needed to raise new funding by 2027 to maintain “a reasonable level of liquidity” and meet its debt capital repayments due in 2028. It must resolve this issue before the debt restructuring agreement reached with its lenders — which saw them provide R10 billion in funding — comes to an end in 2028.
When asked about the bank’s funding, National Treasury said it was in talks with the bank on the matter but had yet to resolve the issue. “Discussions between the Land Bank and National Treasury are taking place with regards to the form of support the Land Bank can receive from the government. We are optimistic that we will reach an agreement soon,” it said in a statement in response to CBN.
Although the statement from National Treasury did not provide details, it indicated that National Treasury was at least prioritising the bank’s funding concerns. This follows the lender’s saying in its 2025 annual report that it had submitted a capital allocation request to National Treasury through the 2024/25 Medium-Term Expenditure Framework (MTEF) process. It noted that the application appeared unsuccessful, as it was not included in the 2025 National Budget. No allocation was made by the National Treasury to the bank in the 2026 budget either.
Land Bank Capital injection efforts expand to global funding sources
Aside from seeking state support, the Land Bank said in its annual report that it was also looking to external funders for financing. “Engagements are underway to explore alternative sources of funding, including potential funders who may require state guarantees.”
A local lender to the bank said it was looking for support from global institutions such as the World Bank and the International Monetary Fund. According to the Land Bank’s corporate plan, it had not yet secured funding from these institutions.
The group’s role as a development finance institution, which involves supporting emerging farmers and agri-businesses, limits its ability to generate income from operations.
In addition to the commercial revenue limitations arising from this developmental mandate, the bank defaulted on its R50 billion loan book in April 2020 due to a high number of non-performing loans, poor governance, and a shrinking loan book.
This default led to the R10 billion debt restructuring agreement with its lenders in late 2024.
