Source: Noko Masipa, Daily Maverick, 10 January 2020, photo credit: Aspire Systems
The Auditor-General of South Africa’s disclaimer audit opinion findings on the Land Bank are of great concern for everyone in the agricultural sector. They highlight many issues that include, among others, the leadership’s inability to implement effective human resource management to ensure that there is stability and proper succession planning.
The situation the Land Bank finds itself in is a result of National Treasury neglecting its oversight role of this strategic institution. Many of the bank’s continuous problems stem from the lack of political will to support it in fulfilling its mandate. This was demonstrated when National Treasury allowed the bank’s former CEO, TP Nchocho, to leave without having an immediate replacement or succession plan in place.
The bank has had three acting chief executives since the departure of Mr Nchocho. No institution can attain normalcy under three different acting CEOs in one year. Twelve months later, the bank still did not have a CEO. This resulted in a number of downgrades by Moody’s credit rating agency, which caused investor panic, resulting in many investors withdrawing their funding from the bank.
This leadership vacuum was created by the ANC’s lack of political will to see the Land Bank fulfil its mandate of supporting qualifying farmers, rather than a handful of those with political connections. This is the final nail in the coffin for this institution and its proud legacy of empowering new farmers.
According to the South African Reserve Bank regulatory consistency assessment programme, the total capital adequacy ratio of the South African banking sector is well above the regulatory requirement of 10%, averaging below 15%. This means that all banks are compliant with Basel III’s capital adequacy requirement and that same capital adequacy is applicable to the Land Bank. The lack of leadership and political will has ensured that the bank isn’t able to source funding from the open market.