Agriculture department writes off loans worth R28m

Rural development and agrarian reform MEC Nomakhosazana Meth. File picture
Rural development and agrarian reform MEC Nomakhosazana Meth. File picture
Image: MICHAEL PINYANA

Loans worth a combined R28m have been written off by the Eastern Cape department of rural development and agrarian reform.

This is according to rural development and agrarian reform MEC Nomakhosazana Meth, who was replying to questions from DA MPL Retief  Odendaal in the Bhisho legislature.

Odendaal said some of the loans could be considered reckless lending and place the department at risk.

“It is for this reason I have written to the chair of the standing committee of public accounts, Veliswa Mvenya, to request a full investigation into the lending practices of the department,” he said.

“Given the state of public finances, reckless lending practices by state entities is criminal and have to be stopped at all costs.”

The loans are for individuals who require seasonal input capital for primary production, or the purchase of assets or farming infrastructure.

Non-agricultural loans are short-terms loans that provide tender entrepreneurs and hawkers with financial assistance.

In response to the questions, Meth said the amount included loans from as far back as 2009.

As at the end of the 2018/2019 financial year, the department was owed R185m.

“This is a staggering amount of money considering the monetary value of the average loan awarded to applicants,” Odendaal said.

Over the past three financial years, the department has issued 599 loans — worth  R68m —  making the average loan about R115,000.

“While the loans offered by the department play a vital role in supporting small-scale and emerging farmers, the approval of some of these loan facilities by the department could, in certain instances, be tantamount to reckless lending by the entity,” Odendaal said.

“In awarding loan funding to individuals that have no reasonable prospect to repay them, the ECRDA does not only compromise the recipients, but also exposes the provincial entity to adverse and unnecessary financial risk.

“Reckless lending steals opportunity from the people who need it the most.”

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