SOUTH Africa’s land reform programme has been adversely affected by the outbreak of the Covid-19 pandemic coupled with the challenging economic environment, which has resulted in budgetary cuts and re-allocation of resources to other priority areas, says the Vumelana Advisory Fund, a non-profit organisation that supports land reform.
Vumelana chief executive Peter Setou said that lack of funding remained one of the biggest challenges affecting beneficiaries of land reform.
However, the beneficiary communities, whose land had been restituted as part of the land reform programme, could now access funding from the Industrial Development Corporation (IDC) to develop their land productively and scale up their farms into successful commercial enterprises.
This development follows the launch of the Agri-Industrial Fund by the state-owned funder and the Department of Agriculture, Land Reform and Rural Development (Dallrd) earlier this year.
IDC head of corporate affairs, Tshepo Ramodibe, said the objective of the Agri-Industrial Fund was to support the development and expansion of the agricultural sector by assisting qualifying black producers and investees to develop, expand, acquire and integrate operations in prioritised value chains.
“The Fund is a blended instrument based on a R1 billion grant from Dalrrd. The scheme provides a grant portion and an IDC loan to black producers or majority black-owned agricultural enterprises. Dalrrd has allocated to the IDC over a period of five years, which equates to R200 million a year. The objective behind the Fund is to develop and implement high impact, large-scale commercial agricultural transactions and projects that have a minimum of 60 percent black ownership, including broad-based community trust structures,” Ramodibe said.
The IDC manages the receipt, processing of applications and the disbursement of funds to approved applicants. Both the IDC and the Dalrrd select the successful applicants.
Ramodibe explains that the partnership with the Dalrrd is in line with the financier’s agro-processing and agriculture strategy that sought to increase the competitiveness of the key sub-value chains of the agricultural sector that have a strong development impact.
“This Fund is intended to achieve multiple objectives, namely, to stimulate economic growth and expansion of the agricultural sector, accelerate land redistribution, and wealth creation by commercialising projects on such land, foster job creation and the transformation of the sector, ramp up exports and contribute meaningfully to a successful, effective land reform and rural development programme.”
To that end, the IDC would consider applications from poultry farmers that seek to increase production capacity to a minimum of 200 000 birds per cycle or piggeries that intended to increase to a sow unit of between 300 and 350 sows.
Ramodibe agreed with Setou that post-settlement support was necessary to achieve a successful land reform programme.
Ramodibe said while there have been programmes by the government to support land restitution beneficiaries and black commercial farmers, these initiatives have often been too fragmented and were not given enough impetus to gain momentum.
However, he said the Agri-Industrial Fund had a hybrid financing model, which addressed the challenge of access to funding by emerging black commercial farmers.
“Equally important, specialist support to help farmers with access to markets, especially for high-value products, will ensure that ventures receive maximum support and can flourish.”
Setou said these funds had come at the right time because these communities had seen their reclaimed land lie fallow due to lack of post-settlement support and lack of access to funding for working capital and purchase of farming equipment.
However, despite the IDC and Dalrrd intervention, Setou remained concerned that eligible projects and communities might still not be able to access funding support.
“In most instances, communities are not aware of facilities available to assist them and do not have the requisite capacity to apply for these funds. There is a need to create awareness of the existence of such facilities, make it easier for communities to access these funds and link them up with credible and experienced implementing partners.”
While the IDC and Dalrrd partnership was a step in the right direction, Setou said more needed to be done to come up with innovative and suitable financing models to fund land reform projects, especially given the current and emerging government budgetary constraints.
“We also need to actively promote partnerships between beneficiaries of land reform and private investors as this is the most expedient way of ensuring productive use of farms.”
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