Standard Chartered Bank and the Land and Agricultural Development Bank of South Africa (Land Bank) has signed a $300m Term loan facility, backed by a guarantee from the Multilateral Investment Guarantee Agency (MIGA), the political risk insurance and credit enhancement arm of the World Bank Group.
The deal secures long-term USD funding for Land Bank at very competitive terms achieving reduced overall cost of borrowing and diversification of financing sources. The facility has a door-to-door tenure of 10 years and will help increase long-term liquidity for the benefit of the agricultural sector in South Africa. The loan is denominated in USD, however, the financing structure will enable Land Bank to obtain liquidity in South African Rand (ZAR) for its lending operations
This transaction is a clear testimony of Standard Chartered’s commitment to boost South Africa’s agricultural sector, which is one of the main drivers of the South African economy. The facility will support Land Bank in its core business of promoting agricultural productivity, growth and job creation as well as promote food security in the country.
Saif Malik, head of global banking, Africa for Standard Chartered commented: “In line with our commitment to be Here for Africa, Standard Chartered Bank is delighted to facilitate the funding of a key sector like agriculture. We are delighted with our partnership with Land Bank and MIGA in a deal that will go a long way to support agriculture production and modernisation in South Africa. This is our second MIGA supported financing in South Africa and third globally - which is a demonstration of our commitment to South Africa and the African continent.”
Securing sustainable financing vitally important
TP Nchocho, CEO of Land Bank commented that the deal represents a vote of confidence in the work being undertaken at Land Bank to grow the agricultural sector: “Securing sustainable financing is vitally important for us to give effect to our mandate of creating greater access to the agricultural sector and ultimately bringing more land under production to ensure food security.
This year alone, we have worked with the World Bank Group to secure a R1.3b line of credit to help emerging farmers and we are now proud to be working with Standard Chartered and MIGA to further our efforts to grow the sector. Land Bank believes that these kinds of partnerships go a long way in ensuring the availability of sustainable finance solutions to deepen our development impact.”
“Several regions of the country are facing severe drought conditions, and agribusiness is especially vulnerable,” said Sarvesh Suri, director, MIGA Operations Group. “With our support, Landbank is shoring up the sector at a critical time.”
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The amount does seem workable to help improve the agricultural situation in South Africa. It should be adequate to go around with the facilities that the industry would require like storage of crops, shipping of produce and other necessities which are deemed as essentials to continue thriving in the industry.