Land Claims Fund

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Thoughts on possible way to facilitate economic activities on redistributed land in South Africa

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Land Claims Fund

  1. 1. Facilitating Land Reform <ul><li>Biggest challenge to the success of land redistribution is access to capital post redistribution. </li></ul><ul><ul><li>Access to capital facilitates productive utilization of land… </li></ul></ul><ul><ul><li>Individual communities too small, poor, uneducated or ‘risky’ to raise funds on a project by project basis… </li></ul></ul><ul><ul><li>Not all land viable for ongoing cash generative activities… </li></ul></ul>
  2. 2. Facilitating Land Reform <ul><li>Possible solution to raising capital for land utilization by individual communities… </li></ul><ul><ul><li>Creation of a Special Purpose Vehicle (SPV) in which investors can pool their risk to individual community exposure. </li></ul></ul><ul><ul><li>Communities provide access to viable land (or a portion of redistributed land) on a sale and lease back type arrangement. </li></ul></ul><ul><ul><li>SPV designed to facilitate both Debt and Equity investments † . </li></ul></ul><ul><li>† The SPV could take on the form of a basic fund or a not for profit (section 28) company depending on legal requirements </li></ul>
  3. 3. Facilitating Land Reform <ul><li>Responsibility of SPV is three fold… </li></ul><ul><ul><li>1) Assess community needs, land viability and project feasibility (bring land owners and project developers together). </li></ul></ul><ul><ul><li>2) Raise and access finance from institutional/private and public investors. </li></ul></ul><ul><ul><li>3) Ensure returns on projects are generated and distributed to investors (via dividends or interest repayments), and communities (preferably through capital creating projects such as building of schools, healthcare facilities etc) </li></ul></ul>
  4. 4. Land/Capital Intensive Projects Community Trust 1 Community Trust 2 Community Trust 3… Community Trust …n Private Game Farm Dairy Farm Cash Crops Biodiesel Production Wind/Solar Farm Debt Investors Equity Investors Labour/Skills Wages/Salaries Redistributed Land Dividend & Interest Flows Debt Funding Equity Funding Dividend Flows Dividend/Interest Flows Education Health Housing Sanitation Electricity Sustainable Services Dividend/Lease Flows Upfront Payment SPV

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