Gauteng MEC for agriculture & rural development Vuyiswa Ramokgopa says there is a need for additional channels of low-cost capital for small-scale farmers as Land Bank’s financial challenges constrain its ability to provide adequate agricultural financing.
The state-owned lender used to account for almost 30% of agricultural financing in SA before its default. In September it announced that it reached an agreement with lenders that would cure the bank’s default on R40bn of its debt. Its default on certain payment obligations triggered a cross-default on most of its debt.
“I think Land Bank does what it can and they’ve recently been recapitalised and so they’re kind of open for business again ... [There is] some need for grant funding here and there to plug the gaps and to derisk some of these entrepreneurs and some of these businesses. But it’s not enough. No, it can’t all come from the fiscals,” Ramokgopa said.
Ramokgopa, who is also the national chair of Rise Mzansi — which is party of the minority coalition in Gauteng — was appointed into the provincial cabinet in July.
Gauteng is SA’s richest province, contributing nearly 40% to national GDP. However, it is dogged by poor service delivery, high unemployment, mismanagement of funds, and fraud and corruption.
The administration of the government of provincial unity excludes the DA, the second-largest political party in the provincial legislature.
The MEC said that despite Gauteng being only 3% rural, agriculture contributes 14% to the economy. Priorities in the role include ending hunger, commercialising small-scale farmers and promoting agro-processing for job creation.
This includes addressing food insecurity, particularly in urban areas where it is more prevalent, by capacitating subsistence farming and providing production inputs and training.
“The second priority is commercialisation of farmers. So in terms of just headcount, small-scale farmers are about 70% ... But those 70% account for less than 10% of the value and the profit that is available in the industry.
“So it speaks to an industry that remains highly concentrated, and where value really resides in a handful of larger players and large-scale players. So our mission is to drive commercialisation, to ensure that those who are ready to scale up, or who are able to operate at a commercial level, are then enabled to do so,” she said.
“And again, that requires us to go out and seek partnerships, because us as a department alone, we have had conversations, and we have memorandum of understandings in agreements with Land Bank. We are talking to a number of international funding agencies as well as companies in the private sector, to say, how do we partner together, capacitate and enable small scale farmers?”
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