Land Reform Facility (RFI/BFS/SF)
Overview
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.
The 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 R1-million per person participating in the venture
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)
Maximum loan amount of R500 000 per enterprise production cycle
Own contribution of 10% (of total funding) may be required
- Agricultural asset finance – for the purchase of agricultural machinery and equipment:
Lending threshold is R800 000 per farmer
Repayment period is within the useful lifespan of the financed asset to a max of 5 years
Security is a notarial bond over financed asset