For small farmers and other small entrepreneurs, access to finance is a crucial part of being in the game. Farmers all over the world borrow money for seed, fertiliser and other technologies or inputs. These are investments into the business so that it is able to generate products to sell. Finance is also necessary to market the produce. All of this requires money – before the farmer has earned a cent!
You need money to create money.
This page is a sketch, by no means conclusive, of the financial assistance to small, medium and micro-sized enterprises (SMMEs) in the country, with an emphasis on those touching on the agricultural value
Instead of talking about creating five million jobs … [government] should be saying we are going to create one million new enterprises by then – in other words one million new entrepreneurs with the freedom to do their own thing within an open, inclusive economy. If each of them hires on average four people, you have five million new jobs.
Meanwhile, very few captains of industry are helping to expand the space and provide support for entrepreneurs. Educational institutions have not woken up to the fact that the game of work has changed and, as such, they are still educating their students for the job market that existed 50 years ago.
Source: Clem Sunter
Emerging businesses often find that these institutions offer services that are not available to them by commercial banks.
The Development Bank of Southern Africa (DBSA) provides finances to projects related to the development of infrastructure. If your proposed venture focuses on the development of infrastructure you are entitled to apply for funds from this bank. See www.dbsa.org.
If you are exporting, the Export Credit Insurance Corporation of South Africa (ECIC) might be able to help. The ECIC evaluates export credit and foreign investment risks and provides export credit and foreign investment insurance cover on behalf of government. Visit www.ecic.co.za.
All government departments are tasked with growing their sphere of the economy and have (access to) various grants and funding mechanisms. Find a list of these departments at www.gov.za. The Department of Small Business Development (DSBD) is a first stop. See www.dsbd.gov.za. Enquire about its Township and Rural Enterprises Programme (TREP). Other programmes include Business Viability Programme and the Co-Operative Development Support Programme (CDSP). The Department of Trade, Industry and Competition (the dtic) has a number of financial incentives for businesses (take the “Financial assistance” option at www.thedtic.gov.za). The Department of Agriculture, Land Reform and Rural Development (DALRRD) runs the Blended Finance Scheme, AgriBEE Equity Fund programme, Land Redistribution for Agricultural Development (LRAD), and Micro-agricultural Financial Institution of South Africa (MAFISA), for example. Visit www.dalrrd.gov.za.
Various financial incentives offered by government can help the entrepreneur in agriculture. Take a look at https://industrialfinancing.co.za.
The Independent Development Trust operates largely within the realm of the second economy, supporting government to implement developmental projects. Visit www.idt.org.za. Provincial offices contact details are available on the website.
The Industrial Development Corporation (IDC) finances initiatives in different sectors including agriculture and agro-processing. Clients must show assets and/or a certain amount of savings. Visit www.idc.co.za.
The Jobs Fund offers backing to established companies which want to expand existing operations which will employ people. See www.jobsfund.org.za.
The Land Bank provides finance to all sectors of the agricultural economy and agri-business. If you are involved in these activities you can apply for finance. The Blended Finance Scheme (BFS) looks “to commercialise development farmers”. For more information on services visit the Land Bank website www.landbank.co.za. Contact Bethlehem 058 307 5200 Bloemfontein 051 404 1400 Cape Town 021 974 2200 Centurion 012 686 0500 Cradock 048 801 8900 Douglas 053 298 1126
Local Economic Development (LED) agencies is one measure available to district municipalities to support SMEs and to encourage investment. Enterprise Ilembe, situated between Durban and Richard’s Bay in KwaZulu-Natal, is one such organisation. Read about it at www.enterpriseilembe.co.za or www.ilembe.gov.za.
National Development Agency (NDA) has the mandate to “eradicate poverty by granting funds to civil society organisations that implement developmental projects in all provinces”. Find contact details for provincial and district offices on the website, www.nda.org.za.
The National Empowerment Fund (NEF) seeks “to support black enterprise development in South Africa’s industrial value chain, as well as act as a catalyst for accelerating job creation in line with government’s New Growth Path”. See www.nefcorp.co.za.
The National Youth Development Agency (NYDA) can be contacted at 087 158 6345 / 5738. Find contact details of provincial and district offices on the website www.nyda.gov.za.
Provincial government departments also run programmes. Visit the websites of provincial departments tasked with economic development for an idea of what is on offer. What happens in your province?
Provincial development agencies – e.g. the Limpopo Economic Development Agency, North West Development Corporation, Gauteng Growth and Development Agency (GGDA) etc – give financial assistance to co-operatives and small businesses. Find details of provincial bodies on the “Providers of financial services” page.
Small Enterprise Development Agency (SEDA) is an agency of the Department of Trade and Industry. SEDA has offices throughout the country to help the SMME with business plans, company registration, proposals for funding and more. We provide phone numbers for the provincial head office below. The website gives contact people, email and physical addresses. Visit www.seda.org.za.
The IDC’s small business development agency is the Small Enterprise Finance Agency (SEFA). See www.sefa.org.za for information on the different offerings. Regional office contacts: Eastern Cape East London 043 721 1510, Gqeberha 041 391 6200/6201 Free State Bloemfontein 051 436 0150 Gauteng Parktown 011 067 6400, Riversands (Diepsloot) 011 067 6450 KwaZulu-Natal Durban 031 811 1950 Limpopo Polokwane 015 817 2370 Mpumalanga Nelspruit 013 755 3923 North West Rustenburg 014 813 0620 Northern Cape Kimberley 053 832 2275 Western Cape Cape Town 021 418 0126
Thusong Service Centres provide small business advice and development. See www.thusong.gov.za.
EASTERN CAPE Bisho 040 609 6009 East London 043 722 2602/9
FREE STATE Witsieshoek 051 403 3286, 051 405 3891 Bloemfontein 051 448 4504
GAUTENG Marshalltown 011 355 6034 Johannesburg 011 834 3560
On the website find contact details for: Ga-Rankuwa Thusong Service Centre, Hammanskraal Thusong Services Centre, Kagiso Thusong Service Centre, Khutsong Thusong Service Centre, Mafatsane Thusong Service Centre, Mamelodi Thusong Service Centre, Maponya Urban Mall Thusong Service Centre, Muldersdrift Thusong Service Centre, Orange Farm Thusong Service Centre, Ratanda Thusong Service Centre, Sebokeng Thusong Service Centre, Soshanguve Thusong Service Centre, Tarlton Thusong Service Centre
KWAZULU-NATAL Pietermaritzburg 033 355 6188, 033 355 6568 Durban 031 301 6787
LIMPOPO Polokwane 015 294 7751, 015 291 4689
MPUMALANGA Mbombela 013 766 6993, 013 753 2397
NORTH-WEST Mmabatho 018 387 3456, Mafikeng 018 381 7071/7068
NORTHERN CAPE Kimberley 053 838 2718
WESTERN CAPE Cape Town 021 483 3839
Youth Employment Service (YES) Community Hubs are part of a national strategy to “absorb unemployed youth, ignite local economies and promote domestic markets”. The first of a planned 100 such hubs was opened in Tembisa in 2018. See the news report. Visit the YES website at www.yes4youth.co.za.
When it comes to financial assistance, the aim should be to help beneficiaries become self-sufficient. Farming is a business just like any other, and if you want to farm you have to start thinking like a businessperson. I think loans, rather than grants, would do more to reduce poverty and generate value-added wealth. If farmers should get anything for free, it’s training [i.e. it is training which will lead to success, not being given money].
Source: Peter Mashala
Further reference:
Find details of various regulatory bodies on the “Providers of financial services” page.
The Agricultural Colleges provide short course training in financial skills. Find contact details on the Agricultural education and training page.
The B-BBEE scorecard allows rewards companies whose financial contributions favour Black people. Read more on the “AgriBEE” page, or contact one of the role players listed there.
Various bodies representing business might be able to assist. Some have an agriculture/food desk. Usually though they will point you to organised agricultural bodies like AFASA and AgriSA (see the “Organised agriculture“ page). Nevertheless, the reader is welcome to give organisations like the Foundation for African Business & Consumer Services (FABCOS) and the Black Business Council a try.
The commercial banks have specialist SME divisions, providing finance for qualified entrepreneurs. Contact the banks or visit their websites to find out about their products and services, and their criteria to obtain finance. Most banks also participate in credit guarantees. The Banking Association South Africa represents this group. See www.banking.org.za.
Co-operative banks are a possibility. Refer to the page on co-operatives.
Development finance institutions (DFIs) are listed under the previous heading. These are institutions like the IDC, Land Bank etc.
Foundations working with industry associations (or on their own) can be a source of agricultural finance. Examples are Coca-Cola Beverages South Africa’s (CCBSA) Mintirho Foundation, which has partnered with the South African Farmers Development Association (SAFDA) on several occasions; and the SAB Foundation.
Industry associations might have knowledge of funds for role players in their sectors. These associations are listed in the various crop and livestock chapters. Some of these associations might be actively involved in sourcing funds. The National Emergent Red Meat Producer’s Organisation (NERPO), for example, runs farmer support programmes called “NERPO-Livestock Credit Scheme”(NLCS) and Farm Machinery and Infrastructure Credit Fund. CANEGROWERS (see sugarcane page) or Akwandze Agricultural Finance – 013 791 1000 – would be able to tell you about the Khula-Akwandze Fund (KAF) for small-scale sugar farmers. Also available is funding from Umthombo Agricultural Finance (Umthombo) – speak to the South African Sugar Association (SASA). Hortfin is a R600 billion, special purpose development financing vehicle established by the deciduous, table grape and wine industries. The custodian of Hortfin is the deciduous fruit industry, supported by the Jobs fund and Land Bank. It targets mostly agri entrepreneurs from previously disadvantaged groups. Read more at www.hortgro.co.za/inclusive-growth/hortfin/
National Stokvel Association of South Africa (NASASA) http://nasasa.co.za Research by African Response shows some R44 billion is saved and accessed through stokvels (Rotating savings and credit associations). See also the Siyanda Sishuba article “Stokvel concept offers hope to young farmers” for Farmer’s Weekly.
Some pension funds like the Government Employees Pension Fund (GEPF) invest in the agricultural value chain. The GEPF has previously invested R2.3 billion in the agricultural sector.
Retail Finance Intermediaries (RFIs) are institutions that obtain loans from the state in order to loan the money to clients in their communities. Different RFIs have different target markets depending on their operations. RFIs also use the Credit Guarantee Scheme to access additional funds from participating banks. RFIs charge different interest rates depending on the risk involved in the application.
Included in the seventeen manuals on developing a co-operative at www.dalrrd.gov.za are ones like Developing a business plan (7), Financing your agricultural business (11) and Financial management (12). Find the full list on the “Co-operatives” page.
Watch the Nation in Conversation video (2023, May 17) “Financing models are changing rapidly: Is agricultural finance in need of a mindset change?” at www.nationinconversation.co.za.
South Africa’s Enterprise and Supplier Development Landscape www.esdsa.com
Some media houses run magazines and newsletters for SMMEs. To see what is on offer from Entrepreneur Media SA, by way of example, visit www.entrepreneurmag.co.za.
Read The SA SMME COVID-19 Impact Report (2020, November) at www.finfind.co.za/funding-research-insights-and-reports. The Finfind South African SMME Access to Finance Report (2018) can be found at https://accesstofinancereport.co.za.
Serame M. 2019. Factors Influencing SMEs’ Access to Finance in South Africa. Master’s dissertation. Available at https://open.uct.ac.za/bitstream/handle/11427/30479/thesis_com_2019_serame_molobeng.pdf
Groenewald, J.A., & Jordaan, A.J. 2012. Unlocking credit markets. In Unlocking markets to smallholders. Edited by van Schalkwyk, H.D et al. Wageningen: Wageningen Academic Publishers.
Find the guideline for funding agencies for aquaculture on DALRRD‘s Directorate Aquaculture and Economic Development pages at www.dalrrd.gov.za. Many of the listed providers have funding programmes beyond aquaculture.
Patronage Politics Divides Us: A study of poverty, patronage and inequality in South Africa – research finds that a lack of start-up capital and official indifference to be common complaints among aspirant business people. Contact MISTRA (see previous heading).
Read about the Addis Ababa Action Agenda on sustainable financing at https://sustainabledevelopment.un.org/frameworks/addisababaactionagenda.
Various agricultural and other projects looking for backing from investors can be found at www.investmentnetwork.co.za.
The first online platform for peer-to-peer lending (P2P) in South Africa is RainFin. Small businesses can access funding and investors typically get better returns than those offered by banks. See www.rainfin.com.
Oji, C.K. 2015. Promoting Financial Inclusion for Inclusive Growth in Africa. Pretoria: South African Institute of International Affairs. Find the document at www.saiia.org.za.
It is not only individuals who struggle for shortage of capital. The World Bank’s “Global Financial Development Report 2015/2016: Long-Term Finance” looked at how shortage of capital has left underdeveloped countries struggling to grow their economies. Find the report at www.worldbank.org.
Small Business Connect www.smallbusinessconnect.co.za
SME South Africa www.smesouthafrica.co.za
