L e t ’ s g e t d o w n t o b u s i n e s s. Yours. BBS: AgriBusiness AgriBEE Indaba Banking Association Andrew Makenete 6 December 2005

L e t ’ s g e t d o w n t o b u s i n e s s. Yours. BBS: AgriBusiness AgriBEE Framework þ Must recognise role of agriculture industry in SA Economy and the multi linkages þFuture market positioning & opportunities to be exploited þImportant that it is well received by stakeholders, farmers, industry, consumers, labour, public, media, financial service providers etc. international bodies þMust be a shift from “Business as Usual” to “Usual business” i.e. BEE in Agriculture becomes the norms þHigh Expectations converted to real expectations þExploit the true potential for Growth in agribusiness

L e t ’ s g e t d o w n t o b u s i n e s s. Yours. BBS: AgriBusiness View: Banking Association Draft charter þConsultative process has been very important þInformed by the Strategic Plan for Agriculture – Well accepted document þInformed by the Code’s of good practice Key Challenge Areas þLand Reform will be key : Reaching the 30% target by 2014 is non-negotiable; Acceleration of settlement of land claims, resettlement, redistribution; Coordinated/Integrated Ministerial Support

L e t ’ s g e t d o w n t o b u s i n e s s. Yours. BBS: AgriBusiness View: Banking Association (Cont) Key Challenge Areas” þRecognition of role of property in global wealth creation – in this respect land as an asset is a key value source for creating sustainable value - therefore the principles of “ Willing buyer – Willing seller” are important in locking in value. Does not preclude fact that massive state intervention required in the market, nor underscore failure of “pricing forming mechanisms in certain markets”. þCost of doing business (agriculture): Extreme pressure on profit margins in the sector throughout the value chain reduces the ability to the sector to draw in new participants; Significant investments required in the sector particularly in infrastructure, support services, research and extension. This will lower threshold of doing business and reduce risk

L e t ’ s g e t d o w n t o b u s i n e s s. Yours. BBS: AgriBusiness þNew and targeted incentives to grow agriculture þSyndication of Risk in an manner that will draw in further investment – to some extent government needs to share in the risk enterprise. þPublic Private Partnership [PPP] Financial Institutions to administer government programmes [MAFISA, LRAD, CASP, etc} Banks can enhance Governments ability to deliver Banks can assist with financial Assessment & monitoring of LRAD beneficiaries View: Banking Association (Cont)

L e t ’ s g e t d o w n t o b u s i n e s s. Yours. BBS: AgriBusiness Responsibility of the Banking Industry Banks drew up own charter much earlier than the publishing of Codes of Good Practice and the framework for the AgriBEE charter – committed R1,5 bn over next 5 years (2004 – 2008). þWe accept that financing is key to fast-tracking empowerment and transformation þR1,5 bn of the total financing package is low, but this was a minimum threshold in the absence of clear Agri-sector targets (we envisage and accept that they should be further negotiations and collaboration)

L e t ’ s g e t d o w n t o b u s i n e s s. Yours. BBS: AgriBusiness þSupport to institutions, building up the institutional arrangements and leveraging these e.g. DoLA (LRAD), DoA (CASP, MAFISA) þDirect support, facilitation, shared information, and resource allocation to Agri-industry, farmer and agri enterprises, and agro-industrial bodies þPromoting champions and industry leaders Responsibility of the Banking Industry

L e t ’ s g e t d o w n t o b u s i n e s s. Yours. BBS: AgriBusiness Gaps To be Addressed Acquisition of land and assets þMassive upscale required in funding beyond LRAD grants þLegislative and regulatory framework to allow for land rental markets (security of tenure, terms etc to encourage investment) Equity Gap þ Establishment of a Agriculture specific fund for emerging farmers, enterprises and entrepreneurs þBroadening MAFISA's mandate / funding to lower cost of funding across value chain

L e t ’ s g e t d o w n t o b u s i n e s s. Yours. BBS: AgriBusiness Risk reduction þFinalize land claims process þDevelop new collateralized / securitized vehicles and or institutional /enterprise arrangements (off take arrangements, contracting, purchase agreements) þEndorse property rights and market promoting mechanisms “Willing buyer – willing seller” Gaps To be Addressed (cont)

L e t ’ s g e t d o w n t o b u s i n e s s. Yours. BBS: AgriBusiness þGovernment define its role with respect in promoting access to new participants in the various markets and overall in promoting “brand SA Inc” in the international trade environment Skills Gap þAgribusiness and Gov [Extension Services] needs to develop a “Skills/Expertise Transfer Strategy” Mentorship Programmes Commercial Farmer to BEE Farmer support Empower Extension Officer - Up-skill, well resourced, and reward & Performance culture Gaps To be Addressed (Cont)

L e t ’ s g e t d o w n t o b u s i n e s s. Yours. BBS: AgriBusiness Skills Gap (cont) þDefined period of Skill development þRecognition for Service Providers [Sector & Individuals] þFormalize link between Agri-Seta and all Skills Dev related initiatives. Gaps To be Addressed (Cont)

L e t ’ s g e t d o w n t o b u s i n e s s. Yours. BBS: AgriBusiness THANK YOU