Worries over Land Bank when Hadebe goes

SPECULATION is mounting that when Land Bank CEO Phakamani Hadebe leaves in December he will join Absa, headed by Maria Ramos, his former boss at the National Treasury.

There is concern in the agriculture sector over lack of clarity about who will succeed Hadebe at the Land Bank. He rescued the bank from near collapse in 2009, when he was seconded from Treasury.

It is feared that without Hadebe at the helm the bank might return to its old ways.

Hadebe said: “It is not only now that my name is linked to [Absa].

“Even when I was still at the National Treasury these rumours were always there.

“Yes, I had a very good working relationship with Maria.

“But all I can say for now is that I always [want] to be in the economics and finance space all the time.

“That is all I am going to be thinking about until I go in December,” he said.

When Hadebe arrived at the Land Bank from the National Treasury, where he was deputy director-general for asset and liability management, the institution was near bankruptcy.

Rogue officials were dishing out loans to friends and financing their homes and vehicles through the institution ’ s funds.

When the Land Bank was still managed by the Department of Agriculture and Land Affairs, with Lulu Xingwana as minister, a remarkable 22.5% of the bank’s loan book was non-performing — essentially bad debt.

Hadebe’s presence was felt quickly — for the 2012 financial year, the non-performing loans had dropped to 6.4% of the total loan book, while the bank’s performing loans improved markedly by 54.5% to R21-billion.

In what could be seen as an indication that his successor is likely to come from within the Land Bank, Hadebe said that the time had come for him to hand the baton over to someone else because his “mission is complete although not 100%”.

Hadebe said: “My departure does not spell any problem because I am confident I am leaving behind a welloiled machine.

“Remember that there have been people who have been running the bank in middlemanagement prior to [my] arrival . . . these people have played a significant role in the turnaround of the institution,” he said.

Hadebe and his board have been working on a “2016 corporate landscape ”, which is intended to grow the bank’s book to just below R50-billion and grab 35% of the agricultural banking market.

“This is not a fallacy because we are already at 31% in terms of capturing the market share,” he said.

But the vision of the Land Bank needs to be clarified.

Is it a development institution that provides finance where others will not, or is it a bank competing with the mainstream banks that must make a profit?

University of Stellenbosch agricultural economist Nick Vink said that what happened next would be important, because, ideally, the government would first decide what it wanted the Land Bank to do, and then it would go out and recruit the appropriate person to execute that vision.

“The vision should be informed by what the National Development Plan says about land reform and about job creation in agriculture,” he said.

“This means of course that the Land Bank has to be subsidised by the taxpayer, because these responsibilities cannot be done on a costrecovery basis. If they could, the commercial banks would be in that business,” Vink said.

“The problem at the moment is that the Land Bank is competing with the commercial banks in lending to both black and white commercial farmers, but mainly white . . . it is expected to at least break even, which is an impossibility if it is to fulfil its development mandate.

“Appointing a replacement CEO and confronting her or him with this same impossible equation is a recipe for future disaster. ”

Andre Louw, who holds the chair in agribusiness management at the University of Pretoria, said the bank needed an outside strategic leader with agricultural and banking experience.

“Mr Hadebe did well — give him credit.

“The bank is extremely relevant to transformation in agriculture because it is a very specialised institution. It definitely needs an outsider with relevant experience, credibility and standing.

“If the wrong person is appointed, it will slip back,” Louw said.