The Land Bank has warned that the state’s plan to expropriate land without compensation could trigger defaults that could cost the government R41-billion if the bank’s rights as a creditor are not protected.
The Land Bank provides financial services to the commercial farming sector and other agricultural businesses.
Investors are concerned that the ANC’s reforms could result in white farmers being stripped of land to the detriment of the economy, as was the case in Zimbabwe.
President Ramaphosa has repeatedly said any changes would not compromise food security or economic growth.
Land Bank Chairman Arthur Moloto said in the company’s 2018 annual report that the bank has approximately R9-billion of debt, which includes a standard market clause on “expropriation” as an event of default.
Moloto said if expropriation without compensation were to materialise without protection of the bank’s rights as a creditor, it would be required to repay R9-billion immediately.
“A cross-default clause would be triggered should we fail to pay when these debts fall due because of inadequate liquidity or lack of alternative sources of funding,” Moloto said.
“This would make our entire R41-billion funding portfolio due and payable immediately, which we would not be able to settle. Consequently, government intervention would be required to settle our lenders.”