Financing the market-based redistribution of land to disadvantaged farmersand farm workers in South Africa: Recent performance of the land reform credit facility

This paper compares the results of public and private land redistribution i n the province of KwaZulu-Natal, South Africa. It identifies problems that constrain access to the land market, and describes recent efforts to addres s the liquidity problem associated with mortgage finance. The Land Reform C redit Facility (LRCF) was launched by government in May 1999 to help allevi ate cash flow problems on farms purchased by disadvantaged buyers and finan ced with mortgage loans from commercial banks. The LRCF does not offer subs idies. Rather it offers loans with deferred or graduated repayment schedule s to reputable banks and venture capital investors who finance, on similar terms, equity-share projects and land purchased by aspiring farmers. The pa per outlines the LRCF experience and considers reasons for its promising st art. The loan target of R15 million (US$2.15 million) set for the first yea r was reached after only eight months.