Land Bank’s Mr fix it moves on

The term of Phakamani Hadebe who was seconded to the Land Bank by the National Treasury to turn around the fortunes of the state owned development finance institution (DFI) came to an end yesterday with Hadebe bowing out ‘gloriously’ in a way fitting for a Mthimkhulu.

Lindiwe Mdlalose, the Bank’s Chief Risk Officer (CRO) since 2009, has been appointed acting CEO. The statement announcing the departure of Hadebe noted that “The Land Bank Board, in consultation with the Minister of Finance, Mr Pravin Gordhan, are working hard to finalise the appointment of the new CEO of the Land Bank. It is expected that the process will be completed soon.”

Some observers will say that after the excellent house cleaning operation the tougher job of growing the business of the Land Bank, finding and funding bankable projects, beckons.

Hadebe’s tenure was largely inwardly focused as he himself states in the latest annual report. “Over the past five years, it (the bank) has been working hard to resolve issues of previous mismanagement and stabilise its core operations. It has put in place systems for management and human capital development, and a funding strategy. What remains now is to implement and refine these systems while honing the company’s focus on sustainability and development.”

In the same 2012/13 annual report Land Bank’s chairperson Ben Ngubane takes more or less the same position. “Much has been achieved over the years, but there is still much to be done.”

Hadebe was seconded by the National Treasury to turnaround the fortunes of the Land Bank after the state owned development finance institution (DFI) had been visited by a string of allegations of mismanagement and underperformance. It would seem the era of a Land Bank that ventures into luxury property development is over. Thanks largely to Bhungane.

The statement suggested that Hadebe’s mission has been accomplished. “He was originally seconded from the National Treasury in 2008 to deal with the challenges at the institution and subsequently appointed as the CEO of the Land Bank.”

Upon arrival, said the statement, he put together a formidable team which successfully turned the institution into the thriving business it is today. In the same 2012/13 annual report, finance minister Pravin Girdhan said “Importantly, the Bank is making strides in delivering on its development mandate. Since 2009, the Bank has disbursed R1.58 billion and launched several initiatives to achieve the target of R6 billion disbursed by 2016/17”

Jerome Mthembu, Land bank Chief Legal Officer and Acting Chief Strategy Officer said “The Land Bank is far much better today than it was 5 years ago. We have managed to build a financially viable institution and managed to restore investor confidence and this was due to the sterling leadership from the CEO, Mr Phakamani Hadebe. He has left a solid foundation on which we can build greater successes.”

Key indicators from the 2012/13 annual report support the praise. Land Bank showed 88.7% growth in group net profit from R161.4 million in 2011/12 to R304.6 million in 2012/13. In these results Hadebe does note that profitability was buoyed by stock-market performance. But then Land Bank also recorded a remarkable (26.2%) improvement of its performing loan book from R21 billion to R26.5 billion. This item did record growth of 54.5% for the 2011/12 financial compared to the previous year. Land bank also reported that its market share improved from to 30% from 28%. It reduced its non-performing loan book to 4.9% of the total loan book including insolvencies but excluding the discontinued operations.

Hadebe said the bank has accelerated the disbursement of loans to emerging farmers. This was achieved partly via new partnerships with four intermediaries in the finance, development and agricultural sectors to identify suitable applicants and administratively manage the disbursements. “A further four partners have been identified. By the end of the financial year, R139 million had been disbursed through these partnerships.”

The bank also directly disbursed R24 million to emerging farmers during the year.”

The complements have also come from Ngubane who says “It is largely thanks to Mr Hadebe’s exceptional work that the bank has recovered from previous mismanagement and now stands ready to help the agricultural sector reach its potential.”

The accolades are perhaps befitting for the man who fixed what arguably should be the most important DFI in the country. The importance of the Land Bank is underlined by the corporate activity sweeping through South Africa’s agri sector. Local and international corporations are combing the market for assets on belief that the future South Africa holds great potential to become an even bigger African agri giant. The setting is influenced by a globalised threat to food security. As such you could say the agri sector is currently positioned on interesting ground, if you like the best times on one side, the worst of times on the other, to bastardise Charles Dickens.

Hadebe captures the pivotal role of the bank in his 2012/13 annual statement. “The Land Bank, by providing loans to help establish emerging farmers and support established farmers in times of expansion or difficulty, plays an important part in creating such a sector. Without development finance institutions like the Land Bank, South African agriculture would be untenably vulnerable to the vagaries of drought, floods, market changes and exchange-rate fluctuations. Small scale farmers would struggle to survive and established farmers would struggle to maintain their operations. Neither would they be able to grow or contribute to the country to their full potential.”

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