Land Bank woes heap more troubles on reform
We don’t need to create new institutions with large overheads to bring about rapid, sustainable land reform
The debate about the amendment of section 25 of the constitution is getting more technical by the day, locating it increasingly in the realm of legal and constitutional philosophy. However, there are other just as important issues in the land reform space that need attention to complete the important task of land reform.
With agricultural economist and Business Day columnist Wandile Sihlobo, I have argued in past articles published in that newspaper why expropriation of land without compensation (or with nil compensation) is a mistake from an economic perspective. Expropriating land will not deal with the slow progress of land reform; it is a red herring. As many scholars from all sides of the ideological spectrum have noted, the problem is not the constitution but poor delivery of land reform through the government machinery. This is the real issue, a reality that has been further compounded by three recent events.
First is the reported loss by the Land Bank of R184.7m for the six months ending September and the decision by Moody’s Investors Service in late January to downgrade the bank’s bonds to junk status. The interim loss is attributed to the worsening of the Land Bank’s financial situation due to slow loan book growth. Non-performing loans rose to 9.9% from 5.8% of the portfolio. Another 9.1% of loans are under-performing. This reality informed Moody’s decision to downgrade the bonds...