LAND BANK

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LAND BANK

• Presentation to Parliament standing committee
• 9 November 1999

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Content Outline

• Introduction
• Introduction of Members
• Purpose of the Presentation
• Development commitment
• Presentation outline
• Yesterday - background
• Strauss Commission
• Government Mandate
• Legal Framework
• Inheritance since 1997
• Ministerial Relationships
• Today
• Achievements
• Challenges

• Future
• National Strategic Intent
• Strategic Intent
• Principles
• Strategic Initiatives
• Discussion Way Forward
• Conclusion

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Introduction
4
Introduction

• Members of the team
• Purpose of the Presentation
• Development Commitment
• Presentation Outline

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IntroductionMembers of the Team

• Ms. Sharon February Non Executive Director
• Mr. Ted Kekana Manager
• Mr. Masipula Mbongwa Non Executive Director
• Ms. Totsie Memela Executive Director
• Mr. Brendan Pearce Executive Assistant
• Mr. Adrian Toms Executive Director

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IntroductionPurpose Of the Presentation

• To share the history of the Land Bank with the
  committee
• To develop a common understanding of the role of
  the bank between the Committee and us
• To understand what the committees goals are for
  Agriculture and the Land Bank
• To develop approaches and programmes for the
  mutual support of the Land Bank strategy

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IntroductionDevelopment Commitment
Agricultural Development Bank
Sustainable
People First
Development Commitment
Socially Responsible
Enhance Environment
Competitiveness Inclusiveness
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IntroductionPresentation Outline
Yesterday
Development Commitment
Tomorrow
Today
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Yesterday
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Yesterday - Background

• Strauss Commission
• Government Mandate
• Ministerial Relationships
• Legal Framework
• Inheritance From 1997

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Yesterday - BackgroundStrauss Commission

• Appointed By President Mr. N R Mandela from
  January 1995 to September 1996
• The Brief Was
• To investigate the provision of Rural Financial
  Services, within the context of the Rural
  Development objectives of the RDP, and make
  recommendations for policy, legislative and
  institutional measures to improve Financial
  Services for Rural Households, Farmers, and other
  entrepreneurs.

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Yesterday - BackgroundStrauss Commission
Recommendations

• Maintain existing clients while providing support
  to new clients, especially previously
  disadvantaged
• Improve outreach
• Change financial mechanisms to create access
• Focus on core mandate

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Yesterday - BackgroundGovernment Mandate

• Continue to provide support to commercial Farming
• Deliver appropriate services or products to new
  mandate clients
• Achieve efficiency and cost effectiveness of
  service delivery
• Benchmark with other similar institutions
• Therefore
• Fulfill a wider development mandate to stability,
  job creation and best practice

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Yesterday - BackgroundMinisterial Relationships

Statutory Bodies
Departmental
Agricultural Financial Services

• Policy
• Facilitate
• Promote

Ministry of Land And Agriculture
Land Bank
Facilitate Agricultural Marketing
Department of Agriculture
National Agricultural Marketing Council

• Land redistribution
• Restitution
• Tenure reform
• Land Development Support

Provide research services to Agriculture
Department Of Land Affairs
Agricultural Research Council
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Yesterday - BackgroundLegal Framework

• Governed By the Land Bank Act of 1944
• Act has become outdated, restrictive, and out of
  step with current and future realities
• Adhoc Amendments
• Permit women in customary marriages to borrow in
  own right
• Lend to all legal persons, including
• Companies
• Common property associations
• Co-operatives

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Yesterday - BackgroundLegal Framework - Continued

• Permit wider range of lending
• Agriculture
• Agri-related business
• Alignment of the act with the other related
  legislation
• Constitution
• Governance act
• Human Resources legislation

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Yesterday - BackgroundInheritance in 1997

• Bloated Bureaucracy
• Exclusively white male management
• None or little services to previously
  disadvantaged
• Inefficient and outdated banking management
  systems
• Over staffed by about 35
• Low levels of productivity
• Rigid product range

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Yesterday - BackgroundInheritance in 1997 -
continued

• New and Transformed board of directors
• New governance structures
• New management
• A need to service new mandate clients
• Administration factory
• Non-aligned pricing

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Today
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TodayAchievements - Outline

• Transformation
• Product Portfolio
• Branch Redesign and outreach
• Systems Modernization
• Alignment
• Financial Performance
• Update the act

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Today AchievementsProduct Portfolio
Securely Resourced
Platinum
Gold Platinum
Gold
Promote Demote
Silver
Bronze
Step Up
Poorly Resourced
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Today AchievementsBranch Redesign

• Decentralization to improve turn around
• Unbundling to achieve
• Sustainability
• Access to clients
• Human resources development to improve skills
• Consultative forums
• Provincial Advisory Forums
• Outreach
• Appointment of agencies

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Today - Achievements Systems Modernization

• Information Technology
• Peoplesoft Integrated software to replace old
  system
• Real-time processing to improve customer service
• Automation of manual processes
• Human Resources
• Attract scarce skills from commercial market
• Preferred employer status
• Address salary anomalies
• Align Compensation with the market
• Staff Development

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Today - Achievements Alignment

• Focus on value adding core business activities
• Customer service orientation
• Team processes
• Compensation alignment to market rates
• Interest rates to market rate and fluctuations
• Right sizing of head office
• From 300 in 1997
• To 130 in 1999
• Credit policies

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Today - Achievements Financial performance

• Retail Expense Ration
• From 1997 105 to 1998 at 54
• Retail performance
• Containment of costs
• Branch Positive Contribution to surplus
• 1997 3 out of 25
• 1998 13 out 0f 25
• Growth
• Capital Adequacy

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Today - Achievements Financial performance Growth
Loan Book
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Today - Achievements Financial performance Growth
NET Surplus
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Today - Achievements Financial performance Growth
Capital Adequacy Ratio
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TodayChallenges

• Sustainability
• The right Price
• Reaching Mazondo
• Visibility
• Impact Delivery
• Representative Employee Profile
• Market Confidence
• Promoting Subsistence Farmers to Commercial
  Status
• Efficient Service Delivery
• Relevance of Land Bank Act

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Future

• National Strategic
• Strategic Direction
• Strategic Principles
• Strategic Initiatives

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Future

• National Strategic
• Vision
• Goals
• Strategic Direction
• Vision
• Mission
• Values
• Services or Products
• Goals of Land Bank
• Strategic Principles
• Pricing
• Sustainability
• Intermediary Strategy

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National Strategic IntentVision
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National Strategic IntentGoals

• Good Governance Through
• Stakeholder Consultation
• Accountability
• Ethical Behaviour
• Transparency
• Accelerated Service delivery that results in job
• creation
• Deliver social Impact in the following aspects
• Groups - PDI, Gender, Youth, etc.
• Areas - Informal sector, Rural, etc.

• Transformation through
• Equity in the workplace
• Affirmative Procurement
• Batho Pele
• Human Resource Development

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Land Bank Strategic IntentVision

• A provider of world-class, quality finance for
  sustainable agriculture and agribusiness through
  creative flair and compassion for agricultural
  entrepreneurial development by wealth-creation
  for social upliftment in South Africa

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Land Bank Strategic IntentMission

• To provide world-class, quality finance
  services for sustainable agriculture and
  agribusiness for all South Africans.
• This will be achieved by
• Being transparent
• Act with integrity
• Being visible
• Recognizing performance
• Meeting Client Expectations
• Stakeholder involvement
• This will be implemented with flair for
  entrepreneurial development by wealth-creation
  for social upliftment through competent people,
  intermediaries or partnerships using appropriate
  tools.

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Land Bank Strategic IntentValues

• Transparency
• Integrity
• Visibility
• Recognize Performance
• Meet Client Expectations

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Land Bank Strategic IntentServices or Products

• Agricultural and Agri-business Loans through
• Retail Network
• Wholesale
• Equity finance for BEE or Development projects
• Agri-business
• Insurance
• Short Term Through third Parties
• Long Term Through SAVVEM - a LB Subsidiary
• Capacity Building Through Third Parties
• Information

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Land Bank Strategic IntentGoals

• To be a financially sustainability agricultural
  development bank
• To deliver services that result in social impact
• To achieve results through competent People
• To deliver services in an efficient manner
• To meet our client expectations
• To meet Stakeholder expectations

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Future Strategic PrinciplesPricing

• Sources of Funding
• Land Bank raises money on Money Capital Markets
  which influence its Interest Rates
• Land Bank receives no government funding
• Own reserves
• Pricing
• Land Bank prime interest rates are consistently
  lower than that of The Commercial Banks.
• Land Bank category of Prime Gold clients is much
  broader than that of the Commercial Banks.
• Land Bank does not load clients with transaction
  charges
• Leverage pricing to support social impact

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Future Strategic Principles Sustainability and
Leverage
Commercial Agricultural Segments
Growth in Loan Book Value and Selective
Clients Sustainable Profitable Business
Objective Resource Generation
Platinum
Facilitate a positive credit rating to leverage
borrowing of funds with lower cost of capital,
e.g. tax/ dividend pool
Resource Generation Flow
Gold Premium
Gold
Product/ Client Portfolio
Organisational Capacity Fund
Silver
Resource Battery
Profitable and Sustainable Loan Book Growth
Tax/ Dividend Benefit
Bronze
Training Capacity Building Fund
Operational expenses and financing of growth and
efficiency initiatives
Social Accountability Fund
Surplus
Step Up
Black Economic Empowerment Fund
Partial Agricultural Market Segments
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Future Strategic PrinciplesIntermediary
Producer of Products
BENCHMARK PERFORMANCE
Wholesaler
INDIRECT
Product 1
Product 2
DIRECT
Supply Intermediary
Financial Intermediary
Sector focused Capacity Building through Intermed
iaries
Product 1
Product 2
Beneficiary
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Land Bank Strategic IntentGoals

• To be a financially sustainability agricultural
  development bank
• To deliver services that result in social impact
• To achieve results through competent People
• To deliver services in an efficient manner
• To meet our client expectations
• To meet Stakeholder expectations

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FutureStrategic Initiatives

• Implement Social accountability strategy and
  measurement
• Development of new products
• Review of The Land Bank Act
• Accelerate the implementation of Intermediary
  Strategy
• Implementation of Human Resource Legislation
• Leverage Technology to achieve efficiency
  effectiveness
• Continue with Transformation
• Accelerate service delivery to new mandate
  clients create jobs
• Human resources development
• Accelerate the implementation of development
  programmes Black Economic Empowerment
• Improve Stakeholder relations

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Discussion Way Forward
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Conclusion
Yesterday
Development Commitment
Tomorrow
Today
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Conclusion

• National Strategic
• Strategic Direction
• Strategic Principles
• Strategic Initiatives