Land Bank has defended the sustainability of the Blended Finance Scheme in response to concerns raised by Parliament’s Portfolio Committee on Agriculture over funding shortages, project oversight and the programme’s ability to meet growing demand from farmers.
By Lebogang Mashala, editor at African Farming
The Blended Finance Scheme, which combines grant funding from the Department of Agriculture with loan finance from Land Bank, has become one of government’s key instruments for supporting black commercial farmers, smallholders and other historically disadvantaged agricultural producers.
During a recent briefing to Parliament’s Portfolio Committee on Agriculture on the performance of the scheme, the Department of Agriculture and Land Bank faced questions about whether the programme could remain sustainable amid growing demand, limited grant allocations and reports of delays in disbursements.
In response to questions from African Farming, Land Bank said it recognised the importance of ensuring the long-term sustainability of the programme but maintained that the scheme remained operational and effective.
According to Land Bank, a 10-year memorandum of agreement signed with the Department of Agriculture during the 2023 financial year provided an annual grant allocation of R325 million for the programme.
“The strong demand for the programme reflects both the historical under-inclusion of historically disadvantaged persons in commercial agriculture and the positive impact the programme has had in enabling broader participation in the sector.”
Land Bank acknowledged demand currently exceeds available grant funding but said it was working with the Department of Agriculture and other stakeholders to secure additional funding partnerships and strengthen blended finance mechanisms.
Also read: Parliament sounds alarm over Land Bank Blended Finance Scheme funding gap
More than 500 farmers supported
Since its launch in November 2022, the programme has approved about 610 blended finance applications, with 539 farmers receiving funding support.
Most beneficiaries are black commercial, smallholder and medium-scale farmers.
Among the approved transactions, 179 involve women-owned farming enterprises and 107 involve youth-owned businesses. In addition, 179 people have received support for land and farm acquisitions in various provinces.
These figures demonstrate the programme’s contribution to agricultural transformation and the commercialisation of black farming enterprises, Land Bank said.
Concerns over project performance
The Portfolio Committee on Agriculture’s concerns also centred on the oversight and monitoring of funded projects, including specific references to the Ditaung Cooperative and M-Way Trading projects.
Land Bank did not provide details on the individual projects, but it acknowledged that some funded enterprises face operational, climatic, infrastructure and market-related challenges.
Interventions in affected projects include enhanced monitoring, technical assistance, mentorship, restructuring assistance and engagement with strategic partners.
Importantly, Land Bank stressed that most funded projects continue to operate and contribute towards agricultural production, transformation and rural economic participation.
Also read: Patient capital critical to unlocking agricultural finance
Turnaround times remain a concern
One of the recurring complaints from farmers has been the time it takes for funding applications to be processed.
Land Bank reported that its current average turnaround time is 59 working days from initial application assessment to credit decision.
The bank noted, however, that processing periods vary significantly depending on the complexity of the application, the quality of supporting documentation submitted and the developmental support required to prepare applicants for financing.
Many emerging farmers require multiple engagements with the bank to strengthen their business plans, meet due diligence requirements and improve the quality of information submitted.
To improve efficiency, Land Bank has introduced several operational improvements, including process automation, enhanced monitoring systems, increased operational capacity and revolving production facilities for qualifying clients.
Improved monitoring and support
To improve the success rate of funded enterprises, Land Bank has expanded both pre- and post-finance support interventions.
Measures currently in place include increased site visits, mentorship programmes, technical support, stronger due diligence processes, improved market access support and the use of monitoring dashboards to track project performance.
Land Bank said it continues to refine its developmental support model based on lessons learnt during the programme’s implementation.
Also read: ‘How I navigated the GDARD-NEF Blended Finance Programme successfully’ – Quinty Rabophala
Demand continues to outstrip resources
The programme’s achievements demonstrate progress in advancing agricultural transformation, but discussions in parliament highlighted a persistent challenge: Available resources remain insufficient to meet demand.
Land Bank confirmed that the annual grant allocation remains R325million and acknowledged that developmental financing needs in agriculture continue to exceed current funding levels.
The bank said it was exploring opportunities with government and other stakeholders to expand blended finance mechanisms and secure additional funding sources.
As pressure mounts to accelerate land reform, farmer commercialisation and agricultural transformation, the sustainability and expansion of the Blended Finance Scheme are likely to remain key issues for policymakers and the agricultural sector alike.
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