EASTERN CAPE DEVELOPMENT CORPORATION MEDIA RELEASER: 50 MILLION AGRI-BLENDED FINANCE SCHEME DRIVING THE GROWTH OF 30 EASTERN CAPE AGRI-BUSINESSES
- ECDC - Eastern Cape Development Corporation
- Apr 1
- 4 min read
01 April 2025: 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.
An initiative of the Eastern Cape Development Corporation (ECDC) and the Eastern Cape Rural Development Agency (ECRDA), the scheme disbursed the R50.5 million to qualifying agricultural businesses as a part loan and part incentive. 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. 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 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.
“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,” says ECDC executive manager for enterprise finance and business support Zinzile Nkonki.
Nkonki says 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.
One of these agri-businesses is LM Holdings whose 15 Idutywa-based co-operatives farm sorghum, white maize, soya beans and other grains. The scheme disbursed R3,9 million to the business with R1,9 million being an incentive and R1,9 million a loan. Their business model involves partnering with communal landowners and smallholder farmers in commercialising the use of their land.
“The funding helped LM Holdings to acquire production inputs, a planter, boom spray and harvester. The business also has United National Breweries in Durban as their market.
This season, LM Holdings has cultivated 600 hectares in the Ngxakaxa cooperative, 300 hectares in the Chachazela cooperative, 150 hectares in the Qhorha cooperative, 210 hectares in the Ndakeni cooperative, 150 hectares in the Nqandu cooperative, 90 hectares in the Mangwevini Cooperative, and 200 hectares in the Fort Malan cooperative. The crops planted in these cooperatives include sorghum, soybean, sunflower, white and yellow maize,” Nkonki says.
Founded by two rural youths, Mzimasi Jalisa, 29, and Siphe Joyi, 31, Jay Jay Farming is based in rural Mputhi in Mthatha. Jay Jay Farming received R2,2 million from the Agri-Blended Finance Scheme. Of this amount, R1,084 million was an incentive and R1,1 million a loan. The funds went to the procurement of maize crop production inputs, the development of infrastructure such as the construction of a storage shed, and toward working capital. A total of 202 hectares have been planted with white maize, while 130 hectares have been cultivated with soya beans. The business has employed 15 permanent workers and employs a further 15 seasonal workers. Their produce is being sold to Mthatha, Ngcobo and Kokstad retailers, animal feed companies and to local communities.
Also based in Mthatha, EC Poultry received R1,026 million from the scheme with R706,400 being an incentive and R320 367 a loan. The enterprise specialises in the rearing of chickens (layers) and the cultivation of vegetables.
The funding facilitated the purchase of feed, medication and vaccines, as well as infrastructure development for the installation of a solar-powered borehole, storeroom and fencing. Additionally, a storeroom is being constructed. Fencing has been completed for an area of over 3.5 hectares. The business has access to markets for eggs, while cabbages are sold to local hawkers and residents. Furthermore, the project maintains a positive relationship with the Department of Defence, which is advocating for the farm to supply its branches.
“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,” Nkonki ends.
ENDS
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Lunga Mtshizana
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