The agricultural development bank said the funding came at the right time as the industry was battling challenges such as the worst drought in more than a century in the Western Cape.
It said the facility had a 12-year repayment period with favourable terms, adding that the funding would be channelled to climate action projects that had a lifespan of two years or longer.
The bank said the funding would be specifically targeted at improving natural resource management, strengthening business continuity, contributing to a reduction in energy and water usage in food processing, improving existing carbon pools and capital formation specifically intended for climate adaptation and mitigation.
Last week the bank signed a R900m long-term loan facility, secured through German Development Bank KfW.
Land Bank chief executive Petrus Nchocho said an important part of their mandate was to work with all of their stakeholders to build an adaptive and competitive agricultural sector that contributed to food security.
“With this facility in place, we are better positioned to support farmers and agribusiness to deal with the challenges of climate change and ensure limited disruption of agricultural production,” Nchocho said.
The bank said this climate action facility from the EIB was the fourth in a series of major funding initiatives secured to increase its long-term liquidity for the benefit of the agricultural sector.
Tom Andersen, head of the EIB’s Pretoria office, said: “This project comes at a very important time and underlines the importance of planning ahead to ensure sustainability of our scarce resources.”
EIB is the long-term lending institution of the EU, owned by its member states. It makes long-term finance available for sound investment in order to contribute towards EU policy goals both inside and outside the EU.
The EIB said it had supported transformational investment across Africa for more than 50 years and had operated in South Africa since 1994 and made available over 3.1billion in financing to support various sectors of the South African economy, including energy, transport, agriculture and small and medium enterprises (SMEs).
Andersen said EIB was able to support various types of projects carried out by SMEs in the agricultural sector through partnerships. “In addition to having a positive impact on the climate, the facilities will also underpin job creation,” he said.
- BUSINESS REPORT