Transformation activities & AgriBEE Fund: Land Bank briefing

Agriculture, Land Reform and Rural Development

15 October 2019
Chairperson: Mr Z Mandela
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Meeting Summary

The Committee received presentations from the Land Bank and the Department on their efforts to bring about transformation in the agricultural sector through development programmes and financial support.

The Land Bank described how it receives funds from the Department to distribute to deserving farmers, cooperatives and entrepreneurs. It conducts due diligence on the applications received by the Department, after which it was up to the Department to decide whether the bank should receive the required funds. The bank’s operations with the Department had been suspended for three years following departmental concerns over the criteria for access to the AgriBEE Fund. The bank and the Department had recently signed a new agreement after the suspension had been lifted. The Land Bank was currently sitting with R251 million that belonged to the AgriBEE Fund, but which had not been used.

The Department reported that since 2012, 178 proposals had been received for consideration by the Department, and 18 had gone through the due diligence process of the Land Bank. The funding required and the amounts provided were shown, and the impact of the support was described.

Members questioned the variance in the criteria applied by the Land Bank and the Department when considering applications for support. They felt the Department was not doing enough to market the AgriBEE programme, and that the Land Bank needed to increase its reach into the deep rural areas. Statistics that did not correlate came under scrutiny. They said that considering the urgent need for transformation, the fact that only 18 proposals had been accepted in the past eight years was totally unacceptable. A Member strongly criticised the Department for their lack of preparedness to answer questions at the meeting, saying they were providing old data and had little idea about their programmes. The Committee was adamant that if this was the pace that these two entities were working at, then they were not doing much for transformation and development in the sector.

Meeting report

The Chairperson said the Land Bank was one of South Africa’s most important development finance institutions and had a pertinent role to play in the achievement of transformation and development of the agricultural sector. He invited the bank’s delegation to address the meeting.

Land Bank briefing

Ms Konehali Gugushe, Acting Chief Executive Officer (acting CEO), Land Bank, introduced Mr Sydney Soundy, Executive Manager: Strategy and Communications, who would be making the presentation. She said the Land Bank aimed to give context to the key activities of the bank in the agricultural sector. It would touch on the AgriBEE (Agricultural Broad-Based Black Economic Empowerment) Fund, and place a specific focus on two of the transactions or projects that Members of the Committee had visited in June 2018.

 

Development and transformation/Challenges of new entrants

 

Mr Soundy described some of the challenges faced by those who want to enter the sector, and said they involved the lack of affordable finance for the new generation of farmers. This provided an indication to the Bank of what needed to be done in order to deal with the objectives of transformation. New entrants did not have equity resources that were required, and were looking for affordable finance. Generally, there was no affordable finance in the industry – from either the commercial banks or the Land Bank – unless the banks leveraged the grant component offered by the state. These entrepreneurs did not have the net assets to provide for collateral purposes, as they did not have property. Therefore, when transactions were considered, they were considered a risk to the bank. To transform the sector, some form of contribution and support was required by the state to ensure the level of affordability required for transformation actually to take place. On that basis, the bank had introduced a number of initiatives which involved a subsidisation methodology whereby the bank would take a loss on the products it provided, and make it up with the profits that it derives from the commercial side of the business. Support would come from the state to complement the Land Bank’s loan activities.

For every 100 development customers that the bank receives, an average of 50 have sufficient collateral to progress to the next stage of the loan assessment, and ultimately only 15 are successful and funded by the bank. This was the criticism the bank receives due to the number of people that apply being so high, but only 15% get funded. Despite these challenges, the bank had made strides towards changing the dynamics of its loan book to the extent that in the last financial year to March 2019, the book on development and transformation was close to R8 billion. To provide leverage, the bank had made grants available from the state part of its loan activities. Apart from the Department’s blended finance scheme, the Land Bank also had the AgriBEE Fund, and had recently approached the Jobs Fund for various types support in an attempt to ensure appropriate funding for the sector.

The Black Producers Commercialisation Programme Blended Finance Facility had been put on hold, with a specific review to be undertaken, and was due to be introduced once all the appropriate policies had been agreed upon.

A statement by the President had been made on R3.9 billion being allocated to the Land Bank to support black commercial farmers over the next three years. This was funding allocated to the Department, which would then get transferred to the Bank, which would decide what to do with the funds. The bank had to agree to a specific mechanism, parts of which included the blended finance facility.

AgriBEE Fund

The AgriBEE Fund’s objective is to improve transformation in the agri-sector, focused on agro processing. This fund is a programme of the Department, and the Land Bank is the facilitator/administrator. The funds are intended to be utilised for acquisition in post-production, which includes agro processing and infrastructure. The current balance in the fund is R251.2 million.

The two companies that were visited by the Portfolio Committee in June 2018 were Cavalier Group and Majesty Oils (Pty) Ltd. They fit into the transformation space of the development.

Cavalier Group

The Cavalier Group is a white-owned enterprise, and one of the largest integrated producer, packer and processor of lamb and beef products in South Africa.  The Land Bank and Cavalier have agreed to facilitate the introduction of a workers’ trust by the Bank disposing of its 19.9% shareholding to the Cavalier Employee Trust (CET) representing black employees who make up 90% of the Group’s 1 400 employees. It was expected that by the end of 2019 the trust would be in place. In partnership with companies such as Woolworths, the Industrial Development Corporation and the Bank, the Group had been able to increase the number of employees from 300 to 1 400. The usage of labor brokers had been stopped, and the company’s skills development programmes have elevated over 100 employees into skilled positions over the past two years.

Majestic Oil

Majestic Oil is a totally black-owned entity which commenced operations in 2005. The group’s current operations focus mainly on processing soya bean and sunflower seed into a variety of products for both human and animal consumption. It has the largest sunflower and soya crushing plant in the country, and has an annual turnover in excess of R2.4 billion. It is under pressure to expand further and requires the assistance of the bank. The community of Krugersdorp relies on this company for employment significantly. R110m was disbursed on 3 September, and the remaining R100m will be disbursed within the next six months.

 

Discussion

Ms A Steyn (DA) asked whether the criteria used by the Land Bank to become involved with these two companies for funding had been drawn up by the Bank itself, or in conjunction with the Department of Agriculture and Rural Development. Who decided on the criteria, and how did it work? She thought the target of this programme was smaller scale farmers, and wanted to know whether small farmers could get financial help under the criteria used by the bank.. It looks like it was easier for businesses that were already well established. She asked whether the R3.9 billion mentioned by the President fell under the blended finance programme, or was separate, She wants to see the link. What was the ratio between the grant and the loan under this programme?  She did not know how the Bank would be able to assist all these farmers in terms of their capacity, seeing that they had had to close some of their offices in the past year. As the blended finance initiative had been stopped due to challenges pertaining to due diligence, when did it see the programme starting again? Did the Land Bank not think it would be advisable for the private sector to sit in on the approvals of the screening committee, to stop what she thinks might have happened with issues that were linked to due diligence. What was happening with the people that were already approved or rather were put on hold -- were there other ways that the Land Bank was assisting in terms of financing? Lastly, she wanted the Committee to get involved in an issue involving the Land Bank not assisting farmers if there was a drought in their area.

A Member wanted to know if it would not be advisable for the Land Bank to expand their mandate and help the Committee with its review of the National Credit Act, which primarily determines what the Bank can and cannot do. The House would then be able to support the programme of the Land Bank. The second question was about due diligence and the turnaround time. Farmers were worried about the time it took for it to approve their applications. It was his view that the Land Bank should consider localising credit underwriting in the province in order for them to make quick decisions so that farmers were supported. Farmers were complaining that Land Bank took a year or two years to give a final answer, and by the time of planting they had already made losses.

Ms T Breedt (FF+) said her fear was that developmental farmers were not assisted in getting to know how to apply to the Land Bank for loans – was the bank helping in this regard? What help was the Land Bank was giving to the small organic farming sector, if any? Had the Land Bank noticed the severe drought in the Eastern Cape, and was it giving any support to those farmers?

A Member said he had the feeling the Land Bank was talking about implementing transformation, and not talking about undergoing transformation. It seemed like it was not doing what it was supposed to be doing which was helping developing farmers.

Mr M Montwedi (EFF) said a lot of issues had been identified in the legacy report, and he wanted to know if the Land Bank would continue to be accountable for these. He asked if issues like commercialisation initiatives, farming opportunities and criteria support, and the monitoring and reporting framework for all monies transferred to the Land Bank, were being followed up on, as these had been raised as issues of concern in the last Parliament. Referring to the presentation, he asked for an explanation for the long turn around time, where farmers had to wait for a very long period without knowing what was happening with regard to what they had applied for. On the issue of the loan book referred to in the presentation, it does not cover emerging farmers. It seemed like the Land Bank did not cover emerging farmers in the loan book, as it did not refer specifically to them. Was the Land Bank not supposed to be helping emerging farmers, because farmers at grassroots had to be nurtured so that they could grow?

He wants to check the Land Bank’s application process for AgriBEE funding, as they were the administrators of the AgriBEE Fund. The problem was that there was no designated official at Land Bank offices that was focused or equipped to deal with the AgriBEE programme. When farmers go to the Land Bank even at the provincial level, there was no one to give them help. Why did it not have any designated officials who could take farmers through the process? Farmers who were supposed to be benefiting through this programme were not actually benefiting. After the Land Bank’s due diligence process and recommendations, the project still has to be approved by the Department, and he believed that this was where the problem lay.  Why did the Land Bank not just finalise it so that the transformation process could move ahead?     

Ms M Tlhape (ANC) referred to the challenges facing new entrants, and drew attention to a passage from the presentation that read:  “to address all of the challenges faced by new entrants was costly and requires funding support for the bank to provide affordable financing, absorb the credit risks associated with new entrants and provide pre- and post finance support services. She asked what happened in the case where farmers do not have equity and collateral -- did that mean the Land Bank could not assist? Regarding the R3.9 billion allocation from National Treasury for support to emerging farmers, the presentation indicated that the agreement between Land Bank and the Department still needed to be concluded on the application of the allocated funds to specific programmes. In light of this, she wanted to know the turnaround time for the commercialisation programme, as those who wanted to be assisted were waiting. When was this process going to be finished? How long would applications for blended finance take to be finalised?  What was the turnaround time for grants, and if farmers do not spend the grant, does it go back and roll over? Must they apply for a roll over, or it was still okay because the money was still in the bank? She wanted to know what the Land Bank’s 19.9% stake in Cavalier was in monetary terms, as the point had been made that this stake would be turned into a loan for the employees of Cavalier, so this would be the amount the employees would have to pay back. Also, with the increase in the number of employees, was there a strategy for them to become shareholders?

The Chairperson referred to the presentation graph which indicated the contribution by the Land Bank to development and transformation, given the bank’s mandate as a developmental institution in finance. How did it explain that since 2008, funding to commercial farmers had grown from 15.9% to 37.3% in 2019, yet in the same period development and transformation grew from 0% in 2008 to 7.9% in 2019. Regarding corruption, the Land Bank stated that during 2007 to 2008 there were a number of fraud cases that had led to convictions, and he would like to know who the culprits were, what they were convicted for, and how long their sentences were. Which offices of the bank had been closed, which offices were they retaining, and how did they render their services to farmers, particularly in regions that were located in rural areas where they do not have any offices?  What were the constraints hindering the Land Bank’s implementation of development and transformation, and what measures and strategies were in place to address this?  He wanted to understand the relationship between the Land Bankand other developmental finance institutions, such as the BRICS Bank and the China-Africa Agricultural Fund. How did the Land Bankassist farmers to access that institution and other institutions with which it had links in order to help farmers to gain access to funding, whether through the Southern African Development Community (SADC) region, Africa or the African Union (AU), and other entities globally.

Land Bank’s response

Mr Soundy said he thought there was a misconception as to how funds from the Land Bank were structured. The facilities that the Fifth Parliament had visited had not been financed through the ArgriBEE or blended finance -- in fact, not with any grant. Those facilities had been financed by the bank’s normal operations. The purpose of that visit had been for the Committee to get a view and experience some of the operations that had been funded by the bank, but not necessarily the AgriBEE fund. It was just to see what it was that the Land Bank was doing for transformation. It was important to understand that blended finance was a support programme which was different from the AgiBEE, and had different criteria. He referred to the R3.9 billion allocation for transformation, and said R2.8 billion of this was for restitution and land reform grants, which were managed by the Department, not the Land Bank. The Land Bank was involved with the Department in the Department of Agriculture, Forestry and Fisheries (DAFF) portion, which was where the agreement was in terms of providing a support mechanism for the black producer programme. This section was exclusive of the AgriBEEE fund, and was not part of the R3.9 billion.

He explained that the Land Bank, as the administrator, was allocated funds by the Department, and in many instances could not authorise those funds themselves without approval from the Department. The bank did not get given money and receive the go-ahead to utilise the money in terms of its focus. It had to constantly get the approval of the Department from a grant perspective. He also explained the source of its funding, and the interest rates it had to recoup. It could not make pure grant allocations, because it was a bank. It receives funding from commercial investors who want to be repaid. Therefore the amount that is generated must be sufficient to repay those investors. However, it had a business unit that focuses solely on development, and it checks what is required from investors and the state to make the development aspect work. The other part of the business was commercial -- the part that raises commercial funding and repays it.

Regarding the criteria for approving AgriBEE and blended finance, the AgriBEE had its own criteria which were set by the Department in consultation with the Land Bank to see what was achievable and what was not.. The AgriBEE criteria were thus different to those for the black development programme, which had now been re-titled the blended finance scheme. They were two different programmes with different requirements or criteria. The reason the blended finance programme was put on hold last year was to review the criteria to ensure that emerging farmers were the ones who would largely benefit from it.

There were different screening committees for the different funds. The AgriBEE had its own committee, not at the Land Bank. The Land Bank deals only with the due diligence aspect, and then takes it back to the Department. The Department makes the final decision and brings it back to the bank, and the bank transfers the money to the beneficiary that was involved. With the accounts relating to the AgriBEE, there was no loan involved and the bank just does the assessments and due diligence. The AgriBEE was not, and had not been, put on hold. With the blended finance, there were six transactions that were with the Department.

Regarding involving the private sector in terms of dealing with due diligence, the Land Bank did not require that. He thought the Land Bank had the capability and skills to do that, but maybe the Department might want to consider this for its own committees.

The question of providing drought support was another aspect that needed to be understood. The Land Bank had raised some funding through colleagues in development finance institutions. With support from the IDC, they were able to create a fund within the bank to correctly identify the areas that had been affected by drought and help with soft loans at low rates.

Ms Gugushe stressed the importance of making sure that the areas that were being supported through this programme were those that had been affected by drought. The Land Bank had a process of analysing farmers’ grant applications, and could assess whether their requirements were the result of drought conditions or financial mismanagement. Those who were genuinely affected by drought were assisted as quickly as possible.

Mr Soundy responded on the closure of some offices, and said the Committee would be provided with a list of where the Land Bank’s offices were located, as well of those of the bank’s partners. The nature of the business was that the more offices created, the more expensive and difficult it was to manage the, and staffing becomes a problem. Institutions that face this type of challenge usually partner with other stakeholders to take on some services on their behalf, and the Land Bank does this through partnerships. It has what is called a wholesale funding facility, as well as service level agreement partners which it uses to increase its reach into the community.

He responded to the Chairperson’s question regarding the difference between the growth rate of the bank’s funding to commercial farmers had compared to its funding for development and transformation. It had been at a time when the bank had issues of sustainablitiy, and the National Treasury had deployed a respresentative to ensure that it had sufficient scale in terms of its loan book. The bank had had to expand its book through loans to corporate institutions to make it grow, and those corporates were white-owned.  .

The bank was open to advice and guidance as to whether the National Credit Act needed to be reviewed. There were specific reasons as to why the Act had been instituted, and that had been to ensure reliable lending. However, this was an area that required constant review.

Regarding the time taken to finalise due diligence assessments, the bank finds having a centralized unit was the most efficient method of conducting them. If the responsibility is spread around, it becomes more risky, because there is not the same level of collaboration. The extent to which turnaround times could be improved was related to the availability of the information provided by customer. The longer it takes to get the information, the longer the due diligence would take. Part of what the bank does to help emerging or small farmers is to look at the structure of their organisations from developmental point of view, and provide pre- and past financial support, as it appreciates that funding on its own does not help. Proper preparation is important, and in many instances the nature of the business plan determines the prospect of success in terms of providing that funding.

Given the challenges in the funding structure of the bank, this support does come at a cost. However, it does help in the sense that it provides learning activities, ensuring that good ideas are developed that can lead to funding.  

Mr Soundy said it had been suggested that the Land Bank should take into account the comments of the Committee on the Fifth Parliament, as spelt out in their legacy report, but this was a report he did not know about.

The Chairperson said it was an internal document of the Committee from the Fifth Parliament.

Mr Soundy said the question had been whether its presentation would have looked different if the bank had understood the legacy report. To answer this question, the bank did not have access to the legacy report, and its presentation was in response to the letter it received, which was specific about what information it wanted from the bank, and the transactions that the bank had dealt with. This had been particularly confusing, because all of these transactions were not part of any grant funding by the Department or the bank -- they were purely commercial, but development-oriented transactions.

The bank feels the pressure for transformation from all angles -- the leadership of the bank and all the stakeholders, including Parliament and investors. They all want the bank to put its focus on transformation

 

With regard to the blended finance scheme, its criteria had become a problem and as a result, the Department had instituted a review process. When the blended finance scheme was tested, specific criteria were set and applied by the bank. However, those who should not have been eligible were qualifying – and the criteria were allowing it. This had led to the suspension and review.

The Chairperson asked that the remaining unanswered questions be responded to in writing by 19 October.

Implementation of Transformation Activities through AgriBEE Fund

The Committee was briefed by the Department on the implementation of transformation activities through the AgriBEE Fund.

The AgriBEE Fund was a support intervention emanating from theempowerment framework to enable participation of businesses owned by Africans, previously excluded from mainstream economic activities. The “Department of Agriculture, Forestry and Fisheries” had appointed the Land Bank to manage the Fund.  Among the functions were to assess applications received and give an opinion on their economic and financial viability. The relationship between the two institutions was governed by a Memorandum of Agreement (MoA). The current MoA was concluded in January 2019 for a period of three years. The Fund is capitalised annually by National Treasury.

The objectives of the Fund were to support the economic empowerment and successful entry of black people into the agricultural, forestry and fisheries sectors, thus ensuring that there was an increase in the number of black people who own, manage and control sustainable enterprises within the sector, and to promote entry and participation of black people in the entire agriculture, forestry and fisheries value chain through provision of funding for equity acquisition, enterprise development, agro-processing and value addition.

Since 2012, 178 proposals had been received for consideration by the Department, and 18 went through the due diligence process of the Land Bank. The beneficiaries listed in the presentation were Tropical Mushrooms, Valley Farms Processing, Starking Fruit Packers, Siyavuselela Agricultural Cooperative, Thokozani Staff Holdings and Solly’s Boerfery. The funding required and the amounts provided were shown, and the impact of the support was described.

The Department reported that:

  • Supported businesses had managed to increase turnover post intervention.
  • There had been an increase in job opportunities created post support.
  • The acquired marketing infrastructure had afforded the businesses an opportunity to improve competitiveness.
  • The businesses had been able to penetrate and access new markets due, among others, to compliance to health and safety standards.
  • In cases where equity was acquired, beneficiaries were empowered in terms of the “Ownership and Management Control”, showcased by representation on the board and having voting rights.

 

A three (3) year contract between the Department and Land Bank had been concluded. Currently, six proposals to the value of R44.869 million were undergoing evaluation processes at various stages. The majority of the projects being considered require value adding/agro-processing infrastructure.

Discussion

Ms Steyn (DA) asked for details of the criteria used by the Department when considering applications for financial support from the AgriBEE Fund. This was related to the Department stating it had received 178 applications, but had somehow reduced the figure to 18. Were the criteria be different from those used by the Land Bank? She sought this clarity, as she did not understand how the Department got 178 application and they were narrowed down to 18. Also, the last company that was funded was in 2016 -- what happened after that period?

Ms Breedt added that they continued to hear that there were criteria, but they had never seen them, and asked the Department to enlighten them. They also heard that there was a committee for assessment and approval, but it was not clear if 178 proposals had simply been received, or whether they had all automatically been approved. Did the Department actively market their initiatives, considering that the Northern Cape had submitted only three in eight years? The figure of 178 may look good, but if it was looked at over an eight year period, it was worrisome, and was the reason why they had not seen any change in the development of farmers.

Mr N Masipa (ANC) queried the difference in the value of applications listed by the Land Bank and the Department. Was the  Department going to pay for the transactions that had been approved or recommended by the Land Bank. Were there sufficient funds in the account of the Land Bank to support these transactions?.

Mr Montwedi was worried that people were not taking part in the programme, and he was not sure why that was. He asked whether the problem was because the programmes were started at the national or provincial office level, and were not brought down to district or even local levels where the farmers were, so that they could take advantage of the programme. The Land Bank was the administrator of the programme, yet in the Land Bank offices in North West province, nobody could give one information about it. Was this why farmers had not taken advantage of the programme?. There were farmers in every province that could take advantage of this programme. He also commented that the Land Bank’s figures did not collate with those of the Department, and criticized the processes involved that were responsible for delaying approvals.  

Mr Xaba said he found it interesting that the highest number of proposals came from the Western Cape and Gauteng, and he wondered if this was due to the presence of metros in those areas. What were the issues that put certain regions at an advantage, and caused shortfalls in others? He referred to the challenges at Valley Farms Processing, such as sourcing raw material, an commented that the Department was sometimes so preoccupied with marketing or processing that they forgot about primary production. The Department also mentions the destruction of infrastructure at Siyavuselela Agricultural Cooperative, and wanted to know the cause of this.  

Ms Tlhape asked how the Department markets the services of the programme. The provincial breakdown showed a lack of impact. How do farmers get to know about the programme? How were beneficiaries held accountable?  What had happened to the R6.9 million that was not implemented because of the infrastructure being destroyed at the cooperative? The provincial distribution of support was somewhat skewed. She commented that this would be a good programme if it was implemented properly, but at its current pace hardly any transformation was taking place at all.

The Chairperson asked for details of the projects and proposals under consideration, and whether they involved 100% black ownership, majority-owned black businesses, or empowered BEE companies. What percentage of the AgriBEE Fund had been used to support black farmers in the agri-processing sector, which was a major growth area? How many jobs had the Fund created, particularly those at senior management level, for historically disadvantaged individuals (HDIs). What percentage of the funding received by the Department to date had been allocated? As the AgriBEE was seriously under-funded, what strategies were in place for the Land Bank to ameliorate the situation?

Department’s response

The Department said that they would try to address Members’ questions, but some would require them to still do some work, and they would provide answers to them in writing to the Committee.

The Director General responded on the criteria for funding. These were available but had unfortunately not been forwarded to the Committee, and would be submitted. The criteria were used for pre-screening, and whoever met the criteria were referred to the Land Bank to conduct due diligence.

To promote the programmes to farmers, they were working in alignment with the provincial governments. They had quarterly engagements on topics to ensure everyone was on track in terms of monitoring and moving together with the Department. She believed that this programme was well known in the provinces.

She confirmed that the R6.9 million that had been allocated to one of the projects where the facility had been demolished, had not been transferred, as this had impacted on the qualifying for the project.

Regarding the difference in criteria used by the Department and the Land Bank, it was clarified that Department uses its criteria to assess applications from farmers and entrepreneurs, and those applicants with potential are forwarded to the Land Bank, which conducts due diligence according to criteria to ensure only those with the potential for success were funded.

The Department had been asked what it was doing to market the programme. Although the programme was well known, there was still a need for a dedicated programme of regularly informing the provinces about it in a marketing form, even if they had to develop pamphlets of some sort to explain it. They agreed there was still a need to market and educate farmers about the programme.

Regarding the distribution of the applications, and whether the presence of metros was a factor, the Department acknowledged that this might be the case.  It was their responsibility to go out and educate farmers and to provide them with knowledge on how to complete the application forms.

The fact that the Department had received 178 applications and only eight had been approved could not be defended. It could probably be attributed to what Members have said -- that they were not doing a lot of marketing and education as a Department, and needed to go out there. There had to be proper programme to teach farmers about the AgriBEE Fund.

Regarding the observation that the Department’s figures did not correspond with those of the Land Bank, they would have to investigate to see where the various differences were.

The Department also conceded that the assessment of applications took too long, to the extent that the farmers needed to consider other avenues. This was a message that they needed to take from the Committee -- that they had to review their assessment process.

Ms Gugushe said the Land Bank acknowledged that the figures indicated they could not be said to have had an impact on the development and transformation of the sector. Regarding the Chairperson’s request for details of the projects and proposals under consideration, and whether they involved 100% black ownership, majority-owned black businesses, or empowered BEE companies, these would be provided in a written response.

A Department official said that although his colleague had indicated that the R6.9 million had not been transferred to the cooperative, there was still a need to establish exactly what had happened. The Department also needed to provide the Committee with details of the funding requirements for the AgriBEE project in order to deal with the shortfalls.

Mr Montwedi said he hoped the review would not affect projects where due diligence had already been completed, and that the funding would take place so that due diligence could be carried out on new projects. People should not have to wait any longer, on top of the years they had already waited. It was not right that public money was just sitting there and not getting used just because some official was not happy with something

Ms Steyn expressed concern over the kind of presentation the Committee had received. It had made it clear that when a Department received an invitation, the least they could do was give Members the current status of what was going on. It was unacceptable that Members had to sit there and the Department were unable to answer questions. When officials came to a portfolio meeting, they should make sure they knew what was going on. It looked as if it was the first time the Department had ever seen this project, and this was not good enough. The message needed to go out, if not from the Portfolio Committee, then it would come from herself. It was no wonder that things were not working on the ground. Transformation was a very important aspect, and the Department was responsible for that. This situation was unacceptable.

Mr Soundy said he wanted to clarify the question about the Land Bank just sitting with the money. He said the funds were in the account of the bank and at the moment the amount was R251 million. However in order for the bank to disperse the funds, it had to go through the process they had explained, of the Department selecting those that had to undergo due diligence from the bank. It was then up to the Department to give the instruction as to whether the money should be disbursed, so that they could pay the beneficiaries.

A Department official said he could not give reasons for the three-year suspension of the programme, as this decision had been made by the Director General after he assumed office. One of the things that he had done was to apply his mind and assess the problem, so probably that was a question that could be answered by him. He agreed with Ms Steyn that when they came to the Committee they should be more prepared, and they took that message very seriously.

The Chairperson asked the presenters to respond in writing to all the unanswered questions, especially the one on the suspension, by no later than 25 October.  

The meeting was adjourned.

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