Funding boost for emerging farmers
3 November 2008
The Department of Agriculture has entered into a partnership with Khula Enterprise Finance to extend financial services to South Africa's emerging farmers and agri-businesses.
The follows the signing of an agreement in Pretoria this week by Department of Agriculture director-general Njabulo Nduli and Kuhla Enterprise Finance MD Xola Sithole, which will see the establishment of the Khula-Mafisa Fund.
The fund will provide portfolio indemnity to financial institutions that provide production loans to emerging black farmers within the Khula-Mafisa target market.
Nduli said the arrangement would enable the leveraging of additional financial resources from commercial financial institutions, explaining that the maximum loan ceiling was also higher under the agreement, and that the banks would provide packaged support to their clients.
"It is expected that this partnership will be successful and pave the way for other partnerships with Khula and other institutions," she said.
The arrangement improves access to credit by mainly black and emerging farmers, who have insufficient collateral, but are bankable, thus giving them an opportunity to build up a credit record.
This, she said, would improve their productivity, thereby increasing the sector's contribution to job creation and the country's economy, and further ensuring food production and food security.
For their part, Sithole also lauded the partnership, stating that Khula could help in the achievement of common national developmental goals.