CORPORATE PLAN
PRESENTATION TO THE
PORTFOLIO
COMMITTEE
04/09/2007
TURNAROUND STRATEGY
 BANK HAD IDENTIFIED 6 ISSUES TO TURN
AROUND ITS BUSINESS
• PEOPLE
• SYSTEMS AND PROCESSES
• RISK
• BRAND
• COST AND REVENUE
• CAPITAL
Current Posture
Current Posture
Commercial
Emerging Farmers
Subsistence Farmers
Not To Scale
Bottom Line
 Our Customers
• Commercial Farmers
– (food security at national level)
• Emerging Farmers
– (Equitable access and empowerment Issues)
• Small scale farmers
– (food security at household level)
Expectations
 Commercial Farmers
• Disaster Relief and Structural Support
• Role to play in the transformation of the sector
• Speedy Resolution of Empowerment Deals to
include Land related matters
Expectations Conti….
 Emerging Farmers
• Consideration of Land Bank and Products
– And repayments (livestock etc.)
• Value Chain Participation
• Issues around debt development which has failed them
so far
• Lack of Extension and Business Support
• Empowerment to allow for engagement with the
commercial sector (AgriBEE)
• That the Land Bank should play its historic role
Expectations Conti….
 Small scale farmers
• Rural Development Issues
• Food Security
• Jobs / Regular Income
• Skills and Support
• Development for them should not be just about tilling the
soil
• Sustainability of Projects
• That the Bank should do for them what it did historically
Expectations Conti….
 Government
• Land Bank Act (15 of 2002)
• Strauss Commission
• Sector Strategy
• Support Structures
• IRDS
• Alignment Processes
• SPV and AOSS
• Job Creation and Rural development
Development imperatives
Vision
We aspire to utilise the Bank’s financial resources
towards the development of farmers and the rural
economy
Mission
To support economic growth in South Africa
through the development of farmers and rural
economies by way of prudent investments to
support the agricultural sector
Development Imperatives - Objectives
The Bank must promote, facilitate and support:
Ownership and access by previously disadvantaged groups
of agricultural resources such as land is increased.
Indicators
 Number of emerging farmers supported to acquire land
 Increase in land ownership by previously disadvantaged
individuals (PDI’s)
 Increased production by black and emerging farmers
Development Imperatives - Objectives
The Bank must promote, facilitate and support:
Agrarian reform and development programmes that are
aimed at previously disadvantaged groups are
implemented.
Indicators
 Number of programmes targeting PDI farmers
 Number of farmers benefiting from such programmes
 Number of farmers who show increased productivity and
profitability
 Number of support programmes dealing with rural poor and
farm dwellers
 Improved access by rural poor to services of Land Bank
Development Imperatives - Objectives
The Bank must promote, facilitate and support:
Financial services which are provided to the
agricultural sector of rural South Africa in a
manner that stimulates the establishment of
enterprises
Indicators:
 Number of agricultural entrepreneurs supported
 Number of enterprises established
 Number of jobs created
Development Imperatives - Objectives
The Bank must promote, facilitate and support:
Commercial agriculture to ensure food security at
national level is enhanced and maintained
Indicators:
 Number of commercial agricultural ventures
supported
 Value of production stimulated
 Tonnage produced in various areas to support
grain, diary and animals
Development Imperatives - Objectives
The Bank must promote, facilitate and support:
Creation of employment opportunities in the
agricultural sector
Indicators:
 Number of permanent jobs created
 Number of temporary or seasonal jobs created
The Response
 That the Land Bank is by its nature a DFI
 That the Strauss Commission Report further
entrenches this perspective
 That the Land Bank is part of the South African
Agricultural Support Structure (OBP, PPECB,
NAMC, ARC etc.)
 That the institution has historically played a role in
Agrarian reform and the expectations are still the
same.
Response
 That the nature of the sector has changed particularly around
coops
 That the Bank needs to find space in assisting the national
agricultural program as articulated among other policy
documents, the Sector Strategy
 That the opportunities for the Bank lie in the proper
understanding of the value chain internally initially and SADC
and NEPAD secondarily.
Response
 DFI network to include provincial, local and
international
 Rural Development Issues
 Proper understanding of Policy and integration
 Development of appropriate products
 Alignment with Government objectives of
economic empowerment, agriculture development
and poverty alleviation
Product Orientation Model
Product Orientation Model
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Aligning with Government
 Product Orientation Model
 The case of Dairy

Producer

• Cooperative

• Common Purpose


• Household Food
security
 Land Bank
DOA/DLA

• Catalyst

• Targeted people

• Specific Purpose


Dairy
Processing

Land Bank

Consumer

• Food security

• Market balance

Market
Equitable Access and Rural Development Drive
New Modus Operandi
4
3
2
Commercial banks
or
syndicated loans
Commercial
Emerging Farmers
100% loans
100% loans
60% Loan
40% Grants
1
Subsistence Farmers
100% Grants
desired posture of resource allocation and expected
outcome
Reduced Growth
Subsistence
farmers
Increasing
Growth
Growth in
Commercial
business
Emerging
Farmers
Commercial
farmers
Corporate structure
Land Bank
LBIC
Risk mitigation products
For small enterprises
Commercial
10% Capital
Adequacy
Development
20% Capital
Adequacy
Commodity
Trading
Funding
Expected Outcomes
 All projects will assume a commercial posture
(emerging farmers)
 Branding of all Land Bank Products
 Partnerships with other state organs and Coops
(old and new)
 Partnership with other DFI’s and Commercial
Banks
 Agree on development targets
Accountability Indicators







Employment creation and maintenance
Establishment of emerging farmers
Conclusion of BBBEE transactions
% growth in the development loan book over three years
Performance of the development loan book
Provision of advisory services
Geographic spread
Way Forward
 Development of implementation plans for the new
business model
 Operational and financial strategies to be finalised
by 30 November 2007
 Outcome of the forensic audit and the review of
DFI’s mandate to be taken into account
The Land and
Agricultural
Development Bank
BUDGET PRESENTATION
4 SEPTEMBER 2007
Key Assumptions
 Roll actual experience for the loan book
 Development to grow by R300m in 2008, R1bn in
2009 and R2bn in 2010.
 Detailed review of operating expenditure required
to support the revenue stream still to be done
Income statement - Budget 2008
Budget
2007
R’m
Interest Income
Actual
2007
R’m
Budget
2008
R’m
1,693
1,744
1,940
(1,162)
(1,279)
(1,417)
Net interest income
531
465
523
Impairment of loans
(48)
(369)
(124)
Non interest income
57
267
64
Operating expenses
(562)
(462)
(537)
(22)
(99)
(74)
Interest expense
Net profit / (Loss)
Land Bank – Key Ratios
Budget
2007
Net Interest income as a % of
Interest Income
Actual
2007
Budget
2008
26.97%
36.64%
37.24%
12.2%
13.12%
13.19%
Cost to Income
91.44%
75.00%
61.14%
Total Loan Book
R19.2bn
R17.1bn
R18.1bn
NIR as a % of Net Interest
Thank You