As South Africa grapples with the challenge of supporting new-era farmers and advancing agricultural transformation, Land Bank’s blended finance scheme is being hailed as a crucial tool for bridging historic financial divides. This innovative approach, which combines grant and loan funding for qualifying farmers, is gaining traction, but not without hurdles.
During the Food For Mzansi and Land Bank lunchtime conversation today at Nampo, Bothaville in the Free State, leaders from Land Bank and the farming community unpacked the progress, limitations, and future prospects of the scheme.
In the panel discussion, Christopher Chake, provincial head for Gauteng at Land Bank, highlighted difficulties new farmers face when applying for finance.
Bridging the financial divide
Chake acknowledged that new farmers often struggle to provide the documentation required for credit assessments, but noted encouraging progress when farmers with a proven track record returned.
“We’ve got farmers that are coming through to Land Bank for the third time in a row. They’ve really embraced it. They are very much benefiting from this initiative,” he said, adding that successful seasons and improved compliance are becoming more common. He also praised grain farmers, in particular, for embracing the scheme.
Related stories
- RSVP now for Land Bank conversations at Nampo
- Land Bank launches Agro-Energy Fund to power SA farmers
- Debt relief sets stage for Land Bank to transform agriculture
Land Bank’s chief banking officer, Jabu Mphambo, echoed Chake’s sentiments, pointing to limited access to finance as one of the major challenges for new-era farmers.
“A lot of our new-era farmers don’t have strong financial muscles, so the blended finance scheme in the form of the grant that it provides bridges that gap,” he said.
However, Mphambo raised concerns about the availability of grant funding. “We would expect to get at least about a billion rands in grants to be able to blend and support farmers; it’s a big, big limitation,” he said.
Mphambo called for innovative ways to raise more grant funding from additional institutions to support the growing appetite for the scheme.
Tackling energy needs through partnerships
Beyond financing, the scheme also addresses energy-related challenges, particularly for irrigation and essential farm infrastructure. Silas Phoshoko, strategic partnership lead at Nedbank, underlined the bank’s role in supporting sustainable energy solutions.
“We share a longstanding relationship with Land Bank through substantial sector support as well as environmentally conscious practices,” he said.
Phoshoko explained that Nedbank serves as a technical partner, helping tailor solutions for each farmer’s energy requirements.
“Different farmers will require different solutions. Our role is being a technical partner to Land Bank, ensuring that we tailor-make solutions required by the respective farmers across the country.”
Farmers share real-world impact
The tangible impact of Land Bank’s support was brought to life by farmers who shared their personal journeys. Tshilidzi Matshidzula, a commercial dairy farmer from the Eastern Cape, credited the institution for supporting him when commercial banks would not.
“Land Bank guided us through that journey, helped us formulate a bankable business model. They worked with us for seven years without the participation of any commercial banking institution,” Matshidzula said.
Now scaling his operation with the help of the blended finance programme, he shed light on the high costs of dairy farming. “To milk one cow, you need an average investment of about R100 000. You need to milk probably around 400 cows minimum to have a sustainable business.”
Another Eastern Cape farmer, Vumile Mzinzi, shared his long journey of hardship before receiving support from the Land Bank.
“We had a drought. We were struggling even with mechanisation. We got a big tractor from Land Bank, which made things easier for us. Without Land Bank, especially with the drought last year, we wouldn’t have come back.”
Mzinzi also shared how purchasing a potato washer and shed helped lower transport costs and boost profitability.
Nandipa Gaqa, lead for partnership development and ecosystem coordination at Land Bank, positioned the scheme within broader government transformation efforts.
“The department has a desire to re-engineer agricultural finance in the country. One of the key objectives is to ensure that it develops and that black producers are able to participate in this economy.”
Gaqa confirmed the department’s continued commitment to the programme, which will run beyond March 2025.
Join the next lunchtime conversation on Wednesday, 14 May, from 13:00. Click here to RSVP.
READ NEXT: Drop in oil prices sparks hopes of cheaper fertiliser
Sign up for Mzansi Today: Your daily take on the news and happenings from the agriculture value chain.
