Development finance institutions (DFIs) are key instruments in the country to ensure that new entrant farmers are able to head towards commercialisation with a key focus being on creating jobs and having access to sustainable markets.
In a roundtable discussion during Food For Mzansi’s annual Young Farmers Indaba in Johannesburg, heavyweights in financing spoke about their offerings and highlighted the importance of working together.
What is on the table?
Kagiso Trust chief executive Mankodi Moitse said it was critical for all the DFIs to complement each other and not compete against one another.
She said it was part of the ecosystem that all the funding institutions should have the same understanding of how to better develop farmers.
“We, as Kagiso Trust, realised that there are many industries that are least transformed and two of them that we picked up were real estate and agriculture. And these are industries that are very complex and difficult to enter.
“We also realised that there were not enough blacks participating in the sector. So, we came with a model called aggregator and that is what we have been testing, and it has helped us so far to de-risk some of the farmers,” she said.
Moitse said their model works on bettering the chances of farmers who are seen as super high risk by the mainstream banks in getting funding.
Supporting young people
Meanwhile, Land Bank chief executive Themba Rikhotso said the bank was concerned with developing the agricultural sector.
“In terms of new-era farmers, we have got quite a lot of products that are earmarked to support young people in the sector. We are working with all the stakeholders; we do not compete with these people.
“We want to pull all the funds together and make it available for people who are sitting here, mostly young people,” he said.
Rikhotso said products for new-era farmers included blended finance which has a portion of grants and loans in it. He said the aim of the product was merely to bridge the gaps that were there for farmers.
Financing and market access
Diale Tilo, executive director for Kgodiso Development Fund, said the aim when it comes to agriculture was emerging farmers.
“We have specific initiatives that the fund has established to empower emerging farmers because we are committed to the sector.
“What we do is to provide financing and market access. The fund was established by PepsiCo which itself is a food and beverage business so we are working around our scope,” he said.
Tilo said as part of empowering farmers they procure a lot of maize, potatoes, wheat, and oats from the farmers as part of their products.
Closing the gaps
“We do a gap analysis on entrepreneurs. Where there are gaps in their businesses, we help to close them and we help them to fulfil all requirements while growing their business.
“However, we do not focus on startups. We need a one to two-year track record in running the business which will indicate to us that they have produced. We then offer them a market, with a price that will enable them to be profitable,” he said.
Head of agro-processing and agriculture at Industrial Development Cooperation Kgampi Bapela said the institution has a R1 billion scheme that is aimed at empowering young people irrespective of colour.
“Just like what Land Bank is doing, with regard to the blended finance scheme, we also have 40% of the funding being a grant.
“To qualify we need the entity to be 60% owned. We have a strong relationship with commodity groupings as there are specific commodities that qualify,” he said.
Solution driven
Meanwhile, Nazeem Hendricks, team leader at the National Treasury Jobs Fund, said their focus was on innovation and ideas that will bring lasting solutions, especially in the agricultural sector.
“We are not a mass job creation initiative; we are not here to compete with the work that is being done by the department of agriculture. All we are saying is it is time we put our heads together to come up with solutions to the systematic challenges we face.
“Ours is to test innovative models around job creation, building partnerships with public and private sectors to test solutions to our problems in the context of unemployment in South Africa,” he added.
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