Washington, January 23, 2017 – South Africa’s efforts to support emerging farmers got a lift today following the approval of $93 million in long-term financing support by the World Bank Group Board of Executive Directors. This will contribute towards the Government’s aim to promote agriculture and rural development to create jobs, reduce poverty and lessen inequality.
The objective of the Land Bank Financial Intermediation Project is to back the Land Bank to sustainably scale- up its agriculture financing, specifically to benefit historically disadvantaged members of the population who are starting out in commercial farming, by providing medium to long-term loans. It will also assist the Land Bank, the country’s leadingfinance institution in the rural and agricultural sector, to diversify its funding sources.
“This project will support the Land Bank to increase the access to affordable working capital particularly for emerging farmers and facilitate their integration into established value chains,” said Ivan Velev, the World Bank Acting Country Directorfor South Africa. “It contributes to the World Bank’s twin goal of eradicating extreme poverty and increasing shared prosperity which is fully in line South Africa’s National Development Plan (NDP)”.
According to the NDP the economy will target to create 11 million new jobs by 2030, 1 million of which will be in agriculture. It counts on small-scale and emerging farmers for over 35 percent of this job creation target. This loan will also benefit small and medium-sized agricultural enterprises in general.
The project consists of a Line of Credit for Agricultural Financing which will support Land Bank in refocusing its operations on wholesale lending and its newly piloted approach to help integrate emerging farmers into established value chains in a sustainable and financially viable manner.
“Up to now, the Land Bank has predominantly relied on short-term funding sources for lending to the agricultural sector due to limited availability of medium and long-term financing. The availability of long-term financing under the project will help Land Bank in improving its asset-liability management and in deepening its financial intermediation capacity,” said World Bank Senior Financial Sector Specialist, Gunhild Berg.
About the World Bank Group
The World Bank Group plays a key role in the global effort to end extreme poverty and boost shared prosperity. It consists of five institutions: the World Bank, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Working together in more than 100 countries, these institutions provide financing, advice, and other solutions that enable countries to address the most urgent challenges of development.