Financing the Market-Based Redistribution of Land to Disadvantaged Farmers and Farm Workers in South Africa: Recent Performance of the Land Reform Credit Facility

Abstract

This paper compares the results of public and private land redistribution in the province of KwaZulu-Natal, South Africa. It identifies problems that constrain access to the land market, and describes recent efforts to address the liquidity problem associated with mortgage finance. The Land Reform Credit Facility (LRCF) was launched by government in May 1999 to help alleviate cash flow problems on farms purchased by disadvantaged buyers and financed with mortgage loans from commercial banks. The LRCF does not offer subsidies. Rather it offers loans with deferred or graduated repayment schedules to reputable banks and venture capital investors who finance, on similar terms, equity-share projects and land purchased by aspiring farmers. The paper outlines the LRCF experience and considers reasons for its promising start. The loan target of R15 million (US$2.15 million) set for the first year was reached after only eight months.

Keywords

Land Reform Credit Facility Politics South Africa

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