Developing sugarcane farmers celebrated a landmark deal this week that will see R19 million made available to distressed cane growers in KwaZulu-Natal and Mpumalanga.
This, as the Ithala Development Finance Corporation (IDFC) and the South African Development Association (Safda) signed a memorandum of understanding that marks the IDFC’s commitment to “radical socio-economic emancipation to emerging farmers in KwaZulu-Natal”, according to a statement released earlier this week.
The IDFC, who has also partnered with the Agribusiness Development Agency (ADA) in a blended finance initiative, says that this agreement will ease the red-tape challenges that developing black farmers face when searching for financing.
The memorandum of understanding also covers non-financial support to upcoming black farmers and is hoped to ultimately alleviate the weight of tough economic conditions, flood and arson aftermath, high input costs and lacking market access on farmers.
Increasing loan affordability
The IDFC’s agricultural portfolio constitutes 39%, or R275 million, of its overall loan book. Through its strategic partnership with the ADA, it now seeks to further address loan affordability for developing farmers through its blended package consisting of a loan and a grant facility.
As the deal also includes non-financial support, the executives behind the deal hope to increase the entrepreneurs’ technical skills to bring their business to a viable, sustainable, and profitable business, and to decrease IDFC agriculture clients’ loan deficits.
Gaining access to the benefits of the new partnership will entail the following steps:
- Contact Safda, who will be responsible for gathering information from farmers requiring financial assistance, as well as for developing their business plans and for submitting these plans to the IDFC for processing.
- Once the business plan and all required supporting documents are provided, the IDFC will issue the client with a pre-approval letter confirming loan approval.
- This will be followed by an application – by the IDFC on behalf of the client – to SASA for grant funding of 10% of the loan amount.
- The IDFC will initiate payment upon confirmation of the grant facility.
To qualify for this grant facility applicants must have the following:
- A viable business plan.
- A production plan.
- Cash flow projections.
- Company registration documents.
- Tax compliance with SARS.
- ID copies for all members or directors.
- Proof of residential address for all members or directors.
- Proof of business address.
- Breakdown of amounts required.
- Quotes for goods to be financed.
- Grower’s code.
- Signed financial statements for existing business.
- In operation for at least the past two years.
This grant facility is only available to sugarcane farmers as the facility is managed by the South African Sugar Association.
ALSO READ: KZN floods: Can sugarcane farmers get back up?
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