1. DATE: 27 August SUBTROP TRANSFORMATIONTATION SUMMIT

2. BACKGROUND  Land Bank as a player in the development spectrum, it has been unsuccessful in responding to its mandate of developing emerging farmers.  While there are black farmers who have managed in some way to become commercial farmers through the Bank’s finance, their success has been more of their own commitment than by any action of the bank.  By and large, the attempts to engage with emerging farmers have been dismal failure.  A lack of committed focus, governance issues and dedicated processes and procedures have contributed to this lack of success on this segment.

3. Land Bank Presentation 3 BACKGROUND - Continues  Land bank has not been successful in creation of commercial black farmers.  There were 3 reasons for this: 1.We were security based lenders. 2.We did not ensure that the required support is provided. 3.We priced according to risk.  In many instances, even with having a tangible secondary source of repayment, farming ventures were not successful (balance sheet based lending)  The above was due to the fact that there was no end to end business support.

4. Land Bank Presentation 4 SOLUTIONS  Create a product range with features that will allow Black Emerging Farmers to access finance without the stringent terms of Commercial Banking requirements.  Ensure that there is end to end business support to farmers.  Pricing at concessionary rate.  Commercial and Development Banking business unit aims to, in the face of market failure, assist black emerging farmers to become established retail farmers through the provision of tailored development financing solutions.

5. Land Bank Presentation 5 TARGET MARKET 1. CUSTOMER PROFILE  Black emerging farmers – farming on a full time basis or part-time  Asset base does not exceed R3m for individual’s & R5m for groups  Active in primary agricultural sector  Unable to secure commercial financing due to lack of traditional forms of security  Scale of operations is too small to attract the provision of services from commercial financing institutions  Insufficient access to resources - infrastructure, equipment, capital and technology  Relative lack of managerial, financial and/or agricultural skills to sustain a farming enterprise  Clients will include farming projects where land has been acquired through the land reform programme

6. Land Bank Presentation 6 TARGET MARKET 2. CUSTOMER VALUE PROPOSITION  Traditional commercial collateral is not a prerequisite for financing  Alternative forms of collateral considered to secure facilities  A lending product at preferential rates  Repayment structured according to cash flow cycles  Mostly cashless disbursement methods  Proper due diligence and business casing is compulsory  Advisory support, funds disbursement administration and after- care services by agricultural agents will be mandatory

7. Land Bank Presentation 7 MODES OF ACCESS TO FINANCE There are two access points to provide finance to Farmers: (i)Direct Lending The points of representation i.e. the Provincial Offices and Satellite Offices, New Business Development Specialists, Commercial Bankers and AES Origination Officers The required information is the same as Commercial Banking except that a tangible secondary source of repayment is not a pre-requisite and end to end business support is a key requirement

8. Land Bank Presentation 8 MODES OF ACCESS TO FINANCE (ii) Indirect Lending This credit facility is a Wholesale Finance Facility (WFF) The Land Bank will lend to institutions that are capable of managing the end to end credit process as well as providing the required support to the farmers These institutions act as “agents” for the Land Bank and on-lend to Farmers

9. Land Bank Presentation 9 PRODUCTS OFFERED Product TypePurposeTermCondition precedents 1.Short Term LoanProduction credit - Production inputs costs (seeds, fertilizers, labour and etc) 1 yearCessions, Bonds on assets etc. 2.ISF LivestockCattle (extensive)8 yearsISA and SNB 3.ISFMovable assets e.g. tractors, bakkie, implements 5-7 yearsInstalment Sale agreement 4.Medium Term LoanFence, irrigation system, boreholes, fixed improvements 5-10 yearsCession on produce, Bonds on assets etc. 5.Wholesale facilityOn-lending5 yearsReversionary cessions & other available security

10. Land Bank Presentation 10 CONCLUSION  The objective of this model is commercialisation of primary producers  Promoting BEE in all related industries in Agriculture  Job creation in SA through the Agricultural Industry, which includes Enterprise Development  Ensurance that the impact created has a significant/satisfactory impact on the economy of the area in which the business takes place and ultimately the GDP of South Africa

11. THANK YOU!.