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;