South Africa Banking on Black Owned Farms

By CultureBanx Team

  • Only 7% of South Africa’s arable land was initially allocated to black people

  • Lenders have $10B outstanding in agricultural loans

Land reform in South Africa has been a hotly contested issue over the past several years and now banks in the region plan to start a joint fund, as a way to protect their farm loans. Bloomberg reported lenders have around $10 billion outstanding in loans for agricultural land, according to the association that represents 35 local and international lenders.

Why This Matters: The Natives Land Act passed in 1913 only allocated 7% of South Africa’s arable land to black people, leaving more fertile land for white minority farmers. This is all changing now with the government and banks trying to accelerate the transfer of land to black people.

Local banks plan to find ways of supporting efforts to transfer more land to the black majority. They want to do this while avoiding possibly undermining property values and risk financial stability.

Local banks plan to find ways of supporting efforts to transfer more land to the black majority

The consortium of banks involved with talks about a joint fund have called for a national land audit to identify unproductive land. Absa the country’s largest agricultural lender, suggested two separate funds, one to focus on rural land and another on urban projects.

Absa’s rural fund will create more black owned commercial farms by funding the purchase of land. On the other hand, the urban fund will target forming more black-owned property developers by providing guarantees against some losses for high-risk residential projects, according to Bloomberg.

What’s Next: Negotiations on the formation of a fund are still being discussed. The African National Congress would support any effort in contributing to the transfer of land to dispossessed South Africans.

CBx Vibe:Talk is Cheap” JMSN