South Africa: Lease land to black farmers, says bank

South Africa should consider leasing farms to previously disadvantaged black farmers with an option to buy to speed up land reform, a financial institution which gives loans to farmers said in a report.

South Africa set a target of handing over 30% of commercial farmland to blacks by 2014 as part of a plan to correct racial imbalances in land distribution caused by apartheid.

But so far only about 7% of the commercial farmland has been transferred to black farmers with government saying lack of funds to purchase land has constrained the process.

“The government should consider renting farms for a few years, with an option to buy. This will accelerate the process of transferring land to black farmers,” Land Bank, which reports to treasury, said in a report on financing problems facing emerging farmers in the country.

A new South Africa draft land policy proposes limits to land ownership by its own citizens and foreigners, as part of plans to resuscitate its flagging land reform programme.

The bank also said about 53% of farmers who are just starting out have failed to repay their loans with the bank and it would consider writing off more debt for accounts opened between 1997 and 2005.

According to the bank’s chief executive officer Phakamani Hadebe the institution has written off about R3.5 billion (US$501 million) to R4 billion of debt in the past six years.

“We have now reviewed our business model . . . we have reached a stage where we can no longer take the risk on the balance sheet,” Hadebe said.

The bank said farmers needed to be provided with post-settlement support to help them succeed and lower interest rates for small farmers should be considered.

Government has acknowledged that very few of the farms transferred to blacks under the country’s land reforms were productive, partly owing to poor management.

Land reform is a sensitive issue in South Africa and has been brought into focus by the decline in agriculture in neighbouring Zimbabwe, where white commercial farmers were often evicted violently by President Robert Mugabe’s government. (Reuters)