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LAND BANK Presentation to Parliament standing committee 9 November 1999.

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Presentation on theme: "LAND BANK Presentation to Parliament standing committee 9 November 1999."— Presentation transcript:

1 LAND BANK Presentation to Parliament standing committee 9 November 1999

2 Content Outline Introduction –Introduction of Members –Purpose of the Presentation –Development commitment –Presentation outline Yesterday - background –Strauss Commission –Government Mandate –Legal Framework –Inheritance since 1997 –Ministerial Relationships Today –Achievements –Challenges Future –National Strategic Intent –Strategic Intent –Principles –Strategic Initiatives Discussion & Way Forward Conclusion

3 Introduction

4 Members of the team Purpose of the Presentation Development Commitment Presentation Outline

5 Introduction Members of the Team Ms. Sharon FebruaryNon Executive Director Mr. Ted KekanaManager Mr. Masipula MbongwaNon Executive Director Ms. Totsie MemelaExecutive Director Mr. Brendan PearceExecutive Assistant Mr. Adrian TomsExecutive Director

6 Introduction Purpose Of the Presentation To share the history of the Land Bank with the committee To develop a common understanding of the role of the bank between the Committee and us To understand what the committees goals are for Agriculture and the Land Bank To develop approaches and programmes for the mutual support of the Land Bank strategy

7 Introduction Development Commitment Development Commitment Agricultural Development Bank Sustainable People First Competitiveness & Inclusiveness Socially Responsible Enhance Environment

8 Introduction Presentation Outline Yesterday TomorrowToday Development Commitment

9 Yesterday

10 Yesterday - Background Strauss Commission Government Mandate Ministerial Relationships Legal Framework Inheritance From 1997

11 Yesterday - Background Strauss Commission Appointed By President Mr. N R Mandela from January 1995 to September 1996 The Brief Was: To investigate the provision of Rural Financial Services, within the context of the Rural Development objectives of the RDP, and make recommendations for policy, legislative and institutional measures to improve Financial Services for Rural Households, Farmers, and other entrepreneurs.

12 Yesterday - Background Strauss Commission Recommendations Maintain existing clients while providing support to new clients, especially previously disadvantaged Improve outreach Change financial mechanisms to create access Focus on core mandate

13 Yesterday - Background Government Mandate Continue to provide support to commercial Farming Deliver appropriate services or products to new mandate clients Achieve efficiency and cost effectiveness of service delivery Benchmark with other similar institutions Therefore Fulfill a wider development mandate to stability, job creation and best practice

14 Yesterday - Background Ministerial Relationships Ministry of Land And Agriculture Land redistribution Restitution Tenure reform Land Development Support Agricultural Financial Services Facilitate Agricultural Marketing Departmental Statutory Bodies Department of Agriculture Policy Facilitate Promote Department Of Land Affairs Land Bank National Agricultural Marketing Council Agricultural Research Council Provide research services to Agriculture

15 Yesterday - Background Legal Framework Governed By the Land Bank Act of 1944 Act has become outdated, restrictive, and out of step with current and future realities Adhoc Amendments Permit women in customary marriages to borrow in own right Lend to all legal persons, including –Companies –Common property associations –Co-operatives

16 Yesterday - Background Legal Framework - Continued Permit wider range of lending –Agriculture –Agri-related business Alignment of the act with the other related legislation –Constitution –Governance act –Human Resources legislation

17 Yesterday - Background Inheritance in 1997 Bloated Bureaucracy Exclusively white male management None or little services to previously disadvantaged Inefficient and outdated banking management systems Over staffed by about 35% Low levels of productivity Rigid product range

18 Yesterday - Background Inheritance in 1997 - continued New and Transformed board of directors New governance structures New management A need to service new mandate clients Administration factory Non-aligned pricing

19 Today

20 Today Achievements - Outline Transformation Product Portfolio Branch Redesign and outreach Systems Modernization Alignment Financial Performance Update the act

21 Today – Achievements Product Portfolio Step Up Bronze Silver Gold Gold Platinum Platinum Poorly Resourced Securely Resourced Promote & Demote

22 Today – Achievements Branch Redesign Decentralization to improve turn around Unbundling to achieve –Sustainability –Access to clients Human resources development to improve skills Consultative forums –Provincial Advisory Forums Outreach –Appointment of agencies

23 Today - Achievements Systems Modernization Information Technology –Peoplesoft Integrated software to replace old system –Real-time processing to improve customer service –Automation of manual processes Human Resources –Attract scarce skills from commercial market –Preferred employer status –Address salary anomalies –Align Compensation with the market –Staff Development

24 Today - Achievements Alignment Focus on value adding core business activities Customer service orientation Team processes Compensation alignment to market rates Interest rates to market rate and fluctuations Right sizing of head office –From 300 in 1997 –To 130 in 1999 Credit policies

25 Today - Achievements Financial performance Retail Expense Ration –From 1997 105% to 1998 at 54% Retail performance –Containment of costs –Branch Positive Contribution to surplus –1997 3 out of 25 –1998 13 out 0f 25 Growth Capital Adequacy

26 Today - Achievements Financial performance Growth Loan Book

27 Today - Achievements Financial performance Growth NET Surplus

28 Today - Achievements Financial performance Growth Capital Adequacy Ratio

29 Today Challenges Sustainability The right Price Reaching Mazondo Visibility Impact Delivery Representative Employee Profile Market Confidence Promoting Subsistence Farmers to Commercial Status Efficient Service Delivery Relevance of Land Bank Act

30 Future National Strategic Strategic Direction Strategic Principles Strategic Initiatives

31 Future National Strategic –Vision –Goals Strategic Direction – Vision – Mission – Values – Services or Products – Goals of Land Bank Strategic Principles –Pricing –Sustainability –Intermediary Strategy

32 National Strategic Intent Vision

33 National Strategic Intent Goals Good Governance Through Stakeholder Consultation Accountability Ethical Behaviour Transparency Accelerated Service delivery that results in job creation Deliver social Impact in the following aspects Groups - PDI, Gender, Youth, etc. Areas - Informal sector, Rural, etc. Transformation through Equity in the workplace Affirmative Procurement Batho Pele Human Resource Development

34 Land Bank Strategic Intent Vision A provider of world-class, quality finance for sustainable agriculture and agribusiness through creative flair and compassion for agricultural entrepreneurial development by wealth-creation for social upliftment in South Africa

35 Land Bank Strategic Intent Mission To provide world-class, quality finance services for sustainable agriculture and agribusiness for all South Africans. This will be achieved by Being transparent Act with integrity Being visible Recognizing performance Meeting Client Expectations Stakeholder involvement This will be implemented with flair for entrepreneurial development by wealth-creation for social upliftment through competent people, intermediaries or partnerships using appropriate tools.

36 Land Bank Strategic Intent Values Transparency Integrity Visibility Recognize Performance Meet Client Expectations

37 Land Bank Strategic Intent Services or Products Agricultural and Agri-business Loans through –Retail Network –Wholesale –Equity finance for BEE or Development projects –Agri-business Insurance –Short Term Through third Parties –Long Term Through SAVVEM - a LB Subsidiary Capacity Building Through Third Parties Information

38 Land Bank Strategic Intent Goals To be a financially sustainability agricultural development bank To deliver services that result in social impact To achieve results through competent People To deliver services in an efficient manner To meet our client expectations To meet Stakeholder expectations

39 Future – Strategic Principles Pricing Sources of Funding –Land Bank raises money on Money & Capital Markets which influence its Interest Rates –Land Bank receives no government funding –Own reserves Pricing –Land Bank prime interest rates are consistently lower than that of The Commercial Banks. –Land Bank category of Prime Gold clients is much broader than that of the Commercial Banks. –Land Bank does not load clients with transaction charges –Leverage pricing to support social impact

40 Future – Strategic Principles Sustainability and Leverage Step Up Bronze Silver Gold Gold Premium Platinum Growth in Loan Book Value and Selective Clients Sustainable Profitable Business Objective Resource Generation Profitable and Sustainable Loan Book Growth & Tax/ Dividend Benefit Surplus Operational expenses and financing of growth and efficiency initiatives Resource Battery Product/ Client Portfolio Partial Agricultural Market Segments Commercial Agricultural Segments Resource Generation Flow Black Economic Empowerment Fund Social Accountability Fund Training & Capacity Building Fund Organisational Capacity Fund Facilitate a positive credit rating to leverage borrowing of funds with lower cost of capital, e.g. tax/ dividend pool Gold

41 Wholesaler Financial Intermediary Beneficiary Supply Intermediary BENCHMARK PERFORMANCE Sector focused Capacity Building through Intermediari es Producer of Products DIRECT INDIRECT Product 1 Product 2 Future – Strategic Principles Intermediary

42 Land Bank Strategic Intent Goals To be a financially sustainability agricultural development bank To deliver services that result in social impact To achieve results through competent People To deliver services in an efficient manner To meet our client expectations To meet Stakeholder expectations

43 Future Strategic Initiatives Implement Social accountability strategy and measurement Development of new products Review of The Land Bank Act Accelerate the implementation of Intermediary Strategy Implementation of Human Resource Legislation Leverage Technology to achieve efficiency & effectiveness Continue with Transformation Accelerate service delivery to new mandate clients & create jobs Human resources development Accelerate the implementation of development programmes Black Economic Empowerment Improve Stakeholder relations

44 Discussion & Way Forward

45 Conclusion Yesterday TomorrowToday Development Commitment

46 Conclusion National Strategic Strategic Direction Strategic Principles Strategic Initiatives


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