1 department of agriculture, forestry and fisheries micro agricultural financial institutions of...

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DEPARTMENT OF AGRICULTURE, FORESTRY AND FISHERIES

MICRO AGRICULTURAL FINANCIAL INSTITUTIONS OF SOUTH AFRICA MAFISA

THE PORTFOLIO COMMITTEE ON AGRICULTURE, FORESTRY AND

FISHERIES

07 AUGUST 2012

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Annexure

Annexure 1 Mafisa credit policy Annexure 2 Khula proposal Annexure 3 Accreditation criteria Annexure 4 Standard agreement Annexure 5 Reporting template

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STRUCTURE OF THE PRESENTATION (1)

Background Expected Mafisa outcomes Institutional arrangements Products and services Participating intermediaries Monitoring and evaluation Activities Intermediaries Impact of Mafisa

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STRUCTURE OF THE PRESENTATION (2)

Challenges Way forward Conclusion Enterprise break down

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BACKGROUND

Mafisa Government supported financial scheme; Provision of financial services to small holder farmers; growers and

fishers; Only for small holder farmers, growers and fishers in agriculture,

forestry and fisheries; First implemented as a pilot project in three provinces.

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EXPECTED MAFISA OUTCOMES

Efficient and effective developmental micro agricultural finance system;

More accessible, relevant and responsive financial services; Increased productivity in farming and agribusiness operations; Equitable access to markets; Sustainable financial institutions with a greater outreach capacity; Sustainable food production; Greater ownership over local financing programmes.

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INSTITUTIONAL ARRANGEMENT (1)

Mafisa is accessed through a network of intermediaries; Intermediaries include public and private institutions; Each intermediary has been allocated funds; Amount allocated to an intermediary depends on capacity of that

intermediary; Approval of government owned entities’ funding capped at R100

million and at R50 million for privately owned entities; No allocation per sub segments; Intermediaries must be registered with national credit regulator to

participate;

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INSTITUTIONAL ARRANGEMENTS (2)

Applications for loans are considered by the accredited intermediaries;

Intermediaries operate according to Mafisa credit policy framework (Annexure 1);

Intermediaries charge 8% per annum for interest; Intermediaries keeps 7% as payment for their services.

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PRODUCTS AND SERVICES Production loans; Saving mobilization - encourage self help groups and co-operatives to

save collectively; Capacity building for member owned financial institutions; Portfolio indemnity scheme – established but did not take off

(annexure2). Discussions have been held with commercial banks and one of them is interested in partnering with the department;

Enterprise insurance – work in progress.

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PARTICIPATING INTERMEDIARIES (1)

NERPO – National Emergent Red Meat Producers Organization; MEGA (ex MADC) – Mpumalanga Economic Growth Agency; GEP – Gauteng Enterprise Propeller; ECRFC – Eastern Cape Rural Finance Corporation; MGK – Magalies Graan Koperasie; SASA – South African Sugar Association; Kaap-Agri; HFF – Hlanganani Farming Finance; PLN – Peulwana Agricultural Financial Services.

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PARTICIPATING INTERMEDIARIES (2)

Institution Approved amount

Transferred Area covered Focus

NERPO R 50 m R 50 m All provinces Livestock

MEGA R 100 m R 50 m Mpumalanga Various enterprises

GEP R 30 m R 10 m Gauteng Various enterprises

ECRFC R 130 m R 80 m Eastern Cape Various enterprises

MGK R 50 m R 50 m North West Grain crops

SASA R 50 m R 20 m KwaZulu-Natal & Mpumalanga

Sugar cane

KAAP-AGRI R 50 m R 20 m Western Cape Various enterprise

HFF R 20 m R 20 m Limpopo Poultry & vegetables

PLN R 20 m R 20 m Gauteng, North West, KwaZulu-Natal

Sugar cane, vegetables & poultry

Total R 500 m R 320 m

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MONITORING AND EVALUATION

Intermediaries submit monthly reports; DAFF pays inspection visits to intermediaries and funded projects; Annual review workshops.

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DEPARTMENTAL ACTIVITIES

Working towards inclusion of forestry and fisheries; Developed a new data collection template (Annexure 3); Reviewing MAFISA credit policy (Annexure 1); Developing a development finance policy – discussion at

departmental level; Developing a computerized reporting system; Working on Terms of Reference for impact study; Working on financial literacy training for clients; Farm together training provided.

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EASTERN CAPE RURAL FINANCE CORPORATION (1)

Started participating during the pilot phase; So far received R 80 million of the approved R 130 m; Funded mainly crop production, poultry and ostrich projects; Repayments for 2009/10 exceed disbursement because of collections of

past years loans; Currently affected by the merger.

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EASTERN CAPE RURAL FINANCE CORPORATION (2)

Year Disbursed Repaid Beneficiaries Jobs

2009/10 R 7 236 829 R 24 435 746 388 1 214

2010/11 R 24 536 367 R 1 735 018 400 4 117

2011/12 R 14 334 075 R 13 923 593 498 1 565

Total R 46 107271 R 40 094 357 1 286 6 896

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GAUTENG ENTERPRISE PROPELLER (1)

Operates in Gauteng; Received R10 m of the approved R30 m; Initially had capacity challenges; Disbursed just over R 2 million; No repayments because loans are fairly new.

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GAUTENG ENTERPRISE PROPELLER (2)

Year Disbursed Repaid Beneficiaries Jobs

2009/10 R 70 000 0 2 5

2010/11 R 487 000 0 4 10

2011/12 R 2 674 163 0 41 34

Total R 3 231 163 0 47 49

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HLANGANANI FARMING FINANCE (1)

Operated in Limpopo; Funded vegetable and poultry projects; Received all approved R20 million; Struggling to recover funds disbursed (repayments); Farmers not paying; Handed the responsibility to recover funds to lawyers; Jobs created mostly on vegetable projects; 2011/12 no job creation because no new loans; Disbursed more than allocated because it also disbursed from

repayments; Submitted a letter to withdraw its participation. Discussions will be held with intermediary and the

Provincial department to find a way of resolving this problem.

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HLANGANANI FARMING FINANCE (2)

Year Disbursed Repaid Beneficiaries Jobs

2009/10 R10 186 943 R133 755 100 577

2010/11 R 9 765 061 R1 069 828 397 1 615

2011/12 R118 171 R239 210 44 0

Total R 20070175 R1 442 793 541 2 192

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KAAP-AGRI (1)

Operates in the Western Cape and Northern Cape; Funded mainly livestock in the Northern Cape and Grapes in the

Western Cape; Lower repayments because livestock requires longer time; Contract expired 1 Jan 2012; Negotiations are ongoing to renew the contract; Bank balance as at 7 March 2012 = R 17 m.

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KAAP-AGRI (2)

Year Disbursed Repaid Beneficiaries Jobs

2009/10 R1 599 025 R339 968 30 101

2010/11 R2 614 811 R1 841 560 19 802

2011/12 R4 722 774 R717 545 88 1 324

Total R8 936 610 R2 899 073 137 2 227

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MAGALIES GRAAN KOPERASIE (1)

Operates mainly in North West; Funds grain production; Provides comprehensive support package; Contract expired 30 November 2011; Negotiations are ongoing to renew the contract; Bank balance as on 30 November 2011 R 37.7 m; Jobs created mainly for weeding, harvesting.

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MAGALIES GRAAN KOPERASIE (2)

Year Disbursed Repaid Beneficiaries Jobs

2009/10 R11 642 966 R46 765 647 691

2010/11 R21 008 817 R11 879 175 549 616

2011/12 R 25 483 240 R19 211 414 3 266 616

Total R58 135 023 R31 137 354 4 462 1 823

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MPUMALANGA ECONOMIC GROWTH AGENCY (1)

Operates in Mpumalanga; Received R50 m of the R100 m approved; Funds various agricultural enterprises – livestock, flowers, vegetables,

grains; Activities affected by the merger taking longer than expected; Have funded a fish project in Delmas; Repayments lower because most projects are livestock projects.

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MPUMALANGA ECONOMIC GROWTH AGENCY (2)

Year Disbursed Repaid Beneficiaries Jobs

2009/10 R242 178 0 4 57

2010/11 R4 106 899 R284 700 116 119

2011/12 R 10 068 380 R487 434 38 260

Total R14 417 457 R772 134 158 436

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NATIONAL EMERGENT RED MEAT PRODUCERS ORGANIZATION (1)

Operates in all provinces; Grant loans to livestock related enterprises; Repayments lower in the first two years because livestock terms are

longer; Maximum loan term is 5 years; Disbursed more than received because of recycling of loan repayments.

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NATIONAL EMERGENT RED MEAT PRODUCERS ORGANIZATION (2)

Year Disbursed Repaid Beneficiaries Jobs

2009/10 R17 565 829 R234 807 182 67

2010/11 R21 668 973 R4 899 028 549 75

2011/12 R11 620 690 R8 000 000 521 55

Total R50 855 492 13 133 835 1 252 197

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SOUTH AFRICAN SUGAR ASSOCIATION (1)

The last intermediary to be accredited (2010) ; Operates in KZN and Mpumalanga; e.g. Akwanze Loan repayments only starting with first harvest period in March/April

2012; Jobs created are mainly for weeding and harvesting.

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SOUTH AFRICAN SUGAR ASSOCIATION (2)

Year Disbursed Repaid Beneficiaries Jobs

2010/11 R2 382 367 0 2 000 400

2011/12 R 4 929 451 R713 603 750 929

Total R7 311 818 R713 603 2 750 1 329

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PEULWANA AGRICULTURAL FINANCIAL SERVICES (1)

Operates in Gauteng, KZN, and North West; Funds mainly cane growers, poultry and vegetables; Disbursed more than allocated due to recycling of loan repayments; Repayments slow for now as most loans are for sugar cane which

requires around 18 -24 months to mature.

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PEULWANA AGRICULTURAL FINANCIAL SERVICES (2)

Year Disbursed Repaid Beneficiaries Jobs

2009/10 R8 100 711 R1 237 493 202 2 010

2010/11 R9 842 580 R1 237 872 330 2 304

2011/12 R7 060 784 R6 513 665 472 390

Total R25 004 075 R8 989 030 1 004 4 704

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SUCCESS OF PROJECTS

For projects to be regarded as successful the following are considered

Turnover; Increase in business size; Increased in productivity; Consistent sales to markets; Consistent production; Loan repayments; Employment creation.

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SUCCESSFUL PROJECTS(1)

SASA; Peulwana; MGK; Kaap-Agri; Hlanganani; GEP; NERPO; MEGA; ECRFC.

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SASA

Mill – Gledhow; Mansomini sugar cane project; Located in Stanger KZN; Area in hectares – 165 ha; Loan amount – R3. 5 m; Total beneficiaries – 186; Enterprise type – sugar cane; Employment created – 257; Permanent positions – 57.

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PEULWANA

Zivuseni co-operative – PEULWANA

Location = Gauteng, Sedibeng – Lesedi; Area size – 186 ha; Loan amount R316 283 Total beneficiaries – 6; Type of business – Maize and Dairy; Employment created = 16 with 6 of this permanent; Repaid their loans on time for two successive seasons; Increased in business size - cows from 18 – 40; Increased cultivated land from 18ha – 100ha; Bought tractor and some equipments.

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MGK

M J Mahuma, CJ Ramatlhape and Masongwa;

Operate on 103ha, 49ha and 212 ha; Operate in Bethaine and Maumong areas around Brits/ Rustenburg; They are individual beneficiaries; Sunflower production; Ramatlhape acquired machinery and equipments.

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KAAP-AGRI

SiyaZama;

Located in Winelands – Western Cape; Operate 24 ha; Loan of R4 m in two cycles; Has 7 beneficiaries; Produce table grapes; Created 80 jobs; Operated on leased land.

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HLANGANANI (1)

Thivhonali Margaret Mukwevho

Located in Limpopo Nwanedi – Musina municipality; Operate 15ha; Loan amount R505,939.3 1 beneficiary; Vegetable production; 15 jobs created; Increased business size.

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HLANGANANI (1)

Sasekisani coop

Located in Limpopo Thulamela district – mahonisi; Operate on 5ha; Loan amount R444, 784.7 9 beneficiaries; Egg production; 30 jobs created; Increased business and market.

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GEP (1)

Mamochecheri farming coop

Located Gauteng Metsweding; Operate on a 24ha farm; Loan amount R 563 000; Have 5 beneficiaries; Egg production; Created 5 jobs.

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GEP (2)

Korema cc

Located Gauteng Tshwane; Operate on 10ha; Loan amount R 242 000; 2 beneficiaries; Vegetable production; Created 4 jobs.

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NERPO (1)

Bravosat cc project

Located in Mpumalanga; 6 beneficiaries; Cattle farming; 4 jobs created.

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NERPO (2)

Barui farming cc

Located in North West; 7 beneficiaries; Cattle farming; 4 jobs created.

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MEGA (1)

Crystal water Fish

Located in Sundra –Delmas –Mpumalanga; Land size 2ha; Loan amount R 405 153; 1 beneficiary – female; Tilapia fish production; Jobs created - 4 permanent and 6 seasonal; Owner won best small holder female entrepreneur award; Sells about 4500 fish per month to local supermarkets.

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MEGA (2)

BJS Roses

Located in Moloto – Mpumalanga; Operate on 15ha; Loan amount R 150 000; 2 beneficiaries; Produces roses and indigenous plants; Jobs created 8 permanent and 12 seasonal; Sells average of 4000 plants per month; Has market in Gauteng and Mpumalanga; Cannot meet demand.

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ECRFC

Paballong maize

Located in Matatatiele – Paballong township; Maize production; 20 beneficiaries; 20 Jobs created; Operate on 10 ha; Project was also support by the massive food programme; Repaying the loan; Good working relation with provincial department of agriculture; Municipality promised to assist with fencing.

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UNSUCCESSFUL PROJECTS(1)

Peulwana; MGK; Kaap-Agri; Hlanganani; GEP; NERPO; MEGA; ECRFC.

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PEULWANA Mr. Vilakazi farm

Farm in Gauteng Sedibeng district; Planted 150 ha of the 900ha; Loan amount R 241 840; 4 beneficiaries; Produced maize on leased land; Employment created 6 with 2 of these permanent; Failure due to drought, low maize price and lack of equipments.

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MGK

Molusi, Mogoshane and Maluleke

Operate in Maumong, Robega and Bethaine; Operate on 70ha, 32ha and 16ha; They are individual operators; Sunflower production; Failure due to drought, wild life and poor management.

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KAAP-AGRI

Kingdom products R1.27 m, Pieterse R 500 000 and Wynman cc R100 000

Located in Helderberg, Langeberg and Swartland; First two are vegetable projects and last pig and cattle project; Operate 11ha, 10.8ha and 3.5 ha; Beneficiaries are 32, 2 and 2; Jobs created are 52, 10 and 2; Permanent are 32, 2 and 2; Reasons for failure – lack of experience, market price low, pests.

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HLANGANANI (1)

Xihahele trading

Located in Limpopo- Thulamela district – Xigalo; Operate 10ha; Loan amount R209, 986.9 1 beneficiary; Vegetable production; 10 jobs created; Reason for failure – lack of knowledge.

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HLANGANANI (2)

Tshitaka farm

Limpopo – Nwanedi – Musina; Operate 15ha; Loan amount R225,125.5 2 beneficiaries; Vegetables; 10 jobs; Reason for failure –not taking advices.

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GEP

Ntwanatsatsi

Located in Gauteng Ekurhuleni; Operate on 17.5ha; Loan amount R 487 000; 1 beneficiary; Vegetable production; Created 5 jobs; Not showing commitment to pay; Client avoiding GEP officials; Handed to over to legal.

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NERPO

Bulemi Bakopane co-operative Located in Gauteng; 3 beneficiaries; Piggery; Pigs died due to sickness and therefore no breeding stock to proceed.

Tshabalala P Located in the Free State; 2 beneficiaries; Sheep farming; Sheep died of diseases.

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Unsuccessful – MEGA

Bongani Thabethe – Salayedwa project

Located in Khumbula – Mpumalanga; Egg Production project; 2 beneficiaries; Created 1 job opportunity; Loan amount R141 610; 2000 chicks; Project failed due to under feeding and therefore less production; Birds mortality also contributed to project failure.

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ECRFC

Makhoba and Mzongwana project

Located Makhoba location; Maize production; 1005 community members as beneficiaries; Operate on 1596 ha; Failed as 40% of income was taken by mentor.

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IMPACT OF MAFISA (1)

A total of 19853 jobs have been sustained or created in the past three years;

A total of 8886 beneficiaries have been recorded; Idle land brought to be under production; Skills level of farmers improving; Some farmers acquiring assets- tractors and equipments; Contribution to food security; Sugar cane growers have increased their output from 50 tons per

hectare to 90 tons per hectare; Most small holder farmers have increased incomes.

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CHALLENGES Limited product range – lack of insurance, asset finance etc; Compliance with legislations means excluding some potential clients; Fragmented support to clients; Inadequate communication between players; Limited / restrictive use of Mafisa funds – may not be used for

machinery; Staff turn over in intermediaries affects capacity and performance of

intermediaries; External factors - mergers of some intermediaries affected

performance.

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WAY FORWARD

Monitoring of intermediaries will be improved; Mafisa credit policy is currently under review; Implement mechanisms to integrate grant and loans funding; Increase Mafisa outreach by partnering with commercial banks,

commodity organizations and other institutions; Draft a communication strategy to inform stakeholders about Mafisa

activities; Wholesale facility with Land Bank.

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CONCLUSION

The Mafisa scheme has taken off although it has challenges; It is meeting the needs of small holder farmers; Funds repaid are used for on lending to other deserving small holder

farmers; Monitoring of intermediaries needs to be improved; Mafisa credit policy is under review Grant funding and loan funding should be integrated; Relationships with provinces need to be improved.

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Enterprise break down ( 2011/2012)

Commodity Amount Percentage of total

Grain 26 319 521 32.5%

Grapes 2 655 813 3.3%

Leather fern 4 037104 5%

Livestock 14 515 743 18%

Poultry 3 377 113 4.2%

Undefined 16 023 938 19.8%

Sugar cane 11 562 663 14.3%

Tobacco 1 333 302 1.65%

Vegetables 1 186 532 1.5%

Total 81 011 732

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6262

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