Expropriation may have dire consequences
If expropriation without compensation is not handled carefully, the likely consequences don’t bear thinking about, says Land Bank CEO Tshokolo Nchocho.
“They are just too dire to contemplate.”
President Cyril Ramaphosa has given assurances that land expropriation will not harm the agricultural sector or the economy.
Nchocho says he doesn’t know, “to be honest”, if such consequences can be avoided.
“We have taken a view that we have no reason to doubt the bona fides of the leaders of government when they make such a public declaration, but we cannot prophesy what is going to happen in parliament when politics plays itself out.”
Nine years ago, the Land Bank was on its knees after years of corruption, looting and maladministration.
It had to be taken under management by the National Treasury.
The then finance minister, Pravin Gordhan, said he hoped new leadership would steer the bank “safely through the challenges that lie ahead”.
Nchocho, 51, and his chairman, Arthur Moloto, who were appointed in 2014, have done that, turning the Land Bank into SA’s only professionally run and profitable state-owned entity.
But at the presentation of its annual results last week, they warned that the biggest challenge facing it now was the state’s land expropriation policy, which could bankrupt it.
Nchocho says they were not being unduly alarmist.
“Policymakers have to be made aware of what the financial consequences would be if the creditor status of a bank such as ourselves is not duly protected in the expropriation policy framework.”
Legislation must “explicitly state” that the providers of finance to the agriculture sector will be compensated for what they’d be exposed to when expropriation gets under way, he says.
The Land Bank is owed R49bn from farmers, which will be at risk if their farms are taken.
“Every cent we have lent to the sector is backed up by a mortgage on a piece of land.”
Where compensation would come from is “something the policymakers will have to answer”, he says.
The Land Bank is a critical funder of commercial and emerging farmers. –