A blended finance scheme aimed at Eastern Cape-based agricultural businesses is driving the growth, competitiveness and productivity of 30 agri-entrepreneurs which have received R50,5 million in funding since its inception in 2023.
A statement released by the Eastern Cape Development Corporation (ECDC), revealed this partnership between the ECDC and the Eastern Cape Rural Development Agency (ECRDA), has disbursed the R50.5 million to qualifying agricultural businesses as a part loan and part incentive.
The statement noted that the ECRDA contributed R33.3 million to fund the incentive portion of the blended finance scheme, while the ECDC ringfenced R25 million for loan funding to qualifying businesses.
The statement read: “Of the R50,5 million disbursed by 31 December 2024, R28,3 million went to the incentive portion, while R22,2 million is loan funding. The 30 funded farmers are from the Amathole, Chris Hani, Sarah Baartman, OR Tambo and Alfred Nzo district municipalities. They also include farmers from the Nelson Mandela Bay Metro and the Buffalo City Metro.”
The statement explained that main products produced by the funded farmers include beef, dairy, chickens, sorghum, cannabis, yellow and white maize, macadamia nuts, as well as seasonal crops such as spinach and cabbage.
ECDC executive manager for enterprise finance and business support Zinzile Nkonki, said the response to the scheme was overwhelming, to the extent that we were not able to fund all farmers that had applied for consideration due to limited resources.
“The blended finance scheme mainly funds input costs, production and processing equipment of qualifying applicants as set out in their respective business plans. These include fertilisers, seeds, irrigation, mechanisation, livestock feed and other agricultural operations activities against which a clear income stream will be derived. It also provides asset based finance for tractors, vehicles, agricultural machinery, and other movable assets required in agricultural operations of the applicant enterprises.
“The ECDC in partnership with the ECRDA, launched the pilot phase of the Agri-Blended Finance Scheme to promote access to finance for agri-businesses operating in the agriculture value chain, by providing de-risked loans given the high risk nature of the agriculture sector which often results in funding institutions being reluctant to issue funding.
“This is a useful instrument in an environment where agriculture funding is mainly directed at established commercial agricultural enterprises,” Nkonki explained.
Nkonki stated the Agri Blended Finance scheme aims to leverage public and private sector resources to increase the scope of available support (financial, technical, and non-financial), to unlock and enhance agricultural value chains with a clear commercial intent.
“The idea is to use blended finance instruments such as this one derisk credit and financial risks that tend to render agri-businesses unfundable,” Nkonki added.
Nkonki further commented on the scheme, stating, “The farmers are repaying the loan portion of the scheme, with pineapple farmers enabled by off-take agreements.
“Farmers have different revenue intervals informing the repayment plans agreed upon with the ECDC. For example, most maize farmers will repay their loan portions after the June to August harvest. Similarly, beef cattle farmers generate revenues on the sale of weaners hence repayment terms for a number of farmers have been structured accordingly.
“This means if production stock was funded, the scheme takes into account the gestation period as well as the time it takes for a calf to be ready for the market as a weaner. Crop farmers are generally granted a moratorium to allow them sufficient time to grow their seasonal crops so that they are ready for the market.”
