New fund to boost black farm ownership mooted

South African banks are in talks to start a special fund to accelerate the transfer of land to black people in an effort to protect billions of rands in assets tied up in farm loans.

Lenders are wading into the racially charged land reform debate as the governing ANC embraces calls to change the constitution to allow expropriation without compensation.

While the ANC sees the step as a means to improve equality 24 years after the end apartheid, the main opposition party, the DA, says the former is trying to deflect blame from its failure to properly manage earlier land reform efforts before elections next year.

Banking Association SA (Basa) managing director, Cas Coovadia, said: “We’re absolutely convinced as an industry that for the longterm sustainability of economic and social wellbeing in SA, we do need to address the serious problems and inequities we have.

“There could be various mechanisms through which we do that. A joint fund could be one such mechanism.”

South African farmers own almost three-quarters of agricultural land, according to an audit by lobby group AgriSA published last year, down from 87% during white rule.

Laws passed in 1913 allocated only about 7% of arable land to the black majority, leaving more fertile land for whites.

Lenders have R148 billion outstanding in loans for agricultural land, compared with R1.07 trillion for residential mortgages, according to Basa, which represents 35 local and international lenders.

While the industry supports the ANC’s desire to correct skewed ownership patterns, the constitution already makes provision for expropriation and any changes should avoid undermining property rights, Basa said in a submission to parliament earlier this year.

President Cyril Ramaphosa has repeatedly said land reform would be done in an orderly fashion.–