In 2018, a Blended Funding Model was announced with pomp and fanfare after calls to address the lack of black farmers accessing loans.
Blended finance is the use of catalytic capital from public or philanthropic sources to increase private sector investment in developing countries and sustainable development.
Furthermore, it is described as a structuring approach that allows organisations with different objectives to invest alongside each other while achieving their own objectives.
Earlier in September, DG for agriculture Mike Mlengana appeared before the Portfolio Committee of Agriculture, Land Reform and Rural Development, and pointedly admitted that there was still no strategy and policy in place to implement this much awaited model.
“The Blended Finance Model had not seen the light of the day. It had been suspended for a while until a policy and a strategy around it can be developed,” he said.
This Funding Model was seen as a solution to improve access and affordability of finance to black producers in order to reduce reliance on grants.
The department has thus far transferred R322m to Land Bank out of the R820m promised.
However, there were concerns over Land Bank’s fitness to implement the model. At the recent AFASA Transformation Conference Minister of Agriculture, Land Reform and Rural Development Thoko Didiza was at pains to explain its progress.
“Limited review of the program indicates that it is an added product that can assist, however certain weaknesses were also identified and currently we are finalising the policy which will be canvassed with other departments,” she added.
The ‘weaknesses’ identified include the qualifying criteria which was not clearly defined making it difficult for Land Bank to approve applications.
Some departmental officials who owned farms were allegedly also applying for the blended finance and it was the one of the reasons the policy was temporarily withdrawn and put onto wider consultation.
Initially, the blended finance model as to target 450 black producers over a 5-year period for commercialisation purposes. According to Mlengana this was still to be done.
The Blended Funding Model was there to provide black producers with the equity they do not have to enter the agricultural value chain. Under this programme, black producers would simultaneously access loan funding and grow to such an extent that grant funding would no longer be required over time.
However, the Portfolio Committee was not confident of this new policy when it was discussed at their last sitting.
“At some stage, it was indicated the CASP, ILIMA, and MAFISA funds would be put in one bag for the development of the Blended Finance Model but nothing has been brought to life,” said the Chairperson of the Committee Chief Mandla Mandela.
According to Mandela, he hoped this policy will not be another white elephant like the Comprehensive Rural Development Programme (CRDP).
He then asked what happened to the “One Hectare One Household Project”.
However, over the weekend, the minister started the implementation of the One Hector One Household project in Bloemfontein. The department said they were targeting 100 co-operatives.