Land Reform Facility - RFI/BFS/SF
The Land Reform Empowerment Facility (LREF) is a Broad Based Black Economic Empowerment Fund capitalised by the Department of Rural Development and Land Reform and supported by the European Union. LREF is a wholesale financing facility through which sefa lends money to commercial banks and other reputable agricultural lenders for on-lending to land reform beneficiaries. The aim of LREF is therefore to broaden the control, management and ownership by black South African citizens in land-based high-value income generating assets in the agricultural sector. To increase the commercial success of LREF-funded projects, sefa assists these projects with training and skills development interventions by means of a training grant.
Financing facilities under LREF
- Mortgage Loan Facility - This is a financing facility which enables the target market to buy and own land for agricultural production purposes, under the following criteria:
- Maximum loan value of R15 million per project
- Maximum loan of R1 million per Black person participating in the project
- Loan repayment period must not exceed 12 years.
- Equity Share Scheme - An equity share scheme is a business arrangement in which both land reform beneficiaries and private sector partners buy equity in the form of shares in a land-based agricultural enterprise.
- Maximum loan of R1m per person participating in the venture; and loan repayment period must not exceed 12 years.
- Production loans – for the purchase of agricultural inputs such as fertiliser, seeds for land reform projects
- To be available for both crop and livestock enterprises;
- To be repayable within 12 to 18 months (depending on length of production cycle);
- Loan amount ≤ R500,000 per enterprise production cycle;
- Own contribution of ≤ 10 % (of total funding required) may be required;
- Agricultural asset finance – for the purchase of agricultural machinery and equipment:
- Lending threshold ≤ R800 000 per farmer;
- Repayment period : within the useful lifespan of financed asset to a max of 5 years;
- Security: notarial bond over financed asset.