1. 1 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

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

3. 3 STRUCTURE OF THE PRESENTATION (1)  Background  Expected Mafisa outcomes  Institutional arrangements  Products and services  Participating intermediaries  Monitoring and evaluation  Activities  Intermediaries  Impact of Mafisa

4. 4 STRUCTURE OF THE PRESENTATION (2)  Challenges  Way forward  Conclusion  Enterprise break down

5. 5 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.

6. 6 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.

7. 7 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;

8. 8 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.

9. 9 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.

10. 10 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.

11. 11 PARTICIPATING INTERMEDIARIES (2) InstitutionApproved amount TransferredArea coveredFocus NERPOR 50 m All provincesLivestock MEGAR 100 mR 50 mMpumalangaVarious enterprises GEPR 30 mR 10 mGautengVarious enterprises ECRFCR 130 mR 80 mEastern CapeVarious enterprises MGKR 50 m North WestGrain crops SASAR 50 mR 20 mKwaZulu-Natal & Mpumalanga Sugar cane KAAP-AGRIR 50 mR 20 mWestern CapeVarious enterprise HFFR 20 m LimpopoPoultry & vegetables PLNR 20 m Gauteng, North West, KwaZulu- Natal Sugar cane, vegetables & poultry TotalR 500 mR 320 m

12. 12 MONITORING AND EVALUATION  Intermediaries submit monthly reports;  DAFF pays inspection visits to intermediaries and funded projects;  Annual review workshops.

13. 13 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.

14. 14 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.

15. 15 EASTERN CAPE RURAL FINANCE CORPORATION (2) YearDisbursedRepaidBeneficiariesJobs 2009/10R 7 236 829R 24 435 7463881 214 2010/11R 24 536 367R 1 735 0184004 117 2011/12R 14 334 075R 13 923 5934981 565 TotalR 46 107271R 40 094 3571 2866 896

16. 16 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.

17. 17 GAUTENG ENTERPRISE PROPELLER (2) YearDisbursedRepaidBeneficiariesJobs 2009/10R 70 000025 2010/11R 487 0000410 2011/12R 2 674 16304134 TotalR 3 231 16304749

18. 18 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.

19. 19 HLANGANANI FARMING FINANCE (2) YearDisbursedRepaidBeneficiariesJobs 2009/10R10 186 943R133 755100577 2010/11R 9 765 061R1 069 8283971 615 2011/12R118 171R239 210440 TotalR 20070175R1 442 7935412 192

20. 20 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.

21. 21 KAAP-AGRI (2) YearDisbursedRepaidBeneficiariesJobs 2009/10R1 599 025R339 96830101 2010/11R2 614 811R1 841 56019802 2011/12R4 722 774R717 545881 324 TotalR8 936 610R2 899 0731372 227

22. 22 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.

23. 23 MAGALIES GRAAN KOPERASIE (2) YearDisbursedRepaidBeneficiariesJobs 2009/10R11 642 966R46 765647691 2010/11R21 008 817R11 879 175549616 2011/12R 25 483 240R19 211 4143 266616 TotalR58 135 023R31 137 3544 4621 823

24. 24 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.

25. 25 MPUMALANGA ECONOMIC GROWTH AGENCY (2) YearDisbursedRepaidBeneficiariesJobs 2009/10R242 1780457 2010/11R4 106 899R284 700116119 2011/12R 10 068 380R487 43438260 TotalR14 417 457R772 134158436

26. 26 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.

27. 27 NATIONAL EMERGENT RED MEAT PRODUCERS ORGANIZATION (2) YearDisbursedRepaidBeneficiariesJobs 2009/10R17 565 829R234 80718267 2010/11R21 668 973R4 899 02854975 2011/12R11 620 690R8 000 00052155 TotalR50 855 49213 133 8351 252197

28. 28 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.

29. 29 SOUTH AFRICAN SUGAR ASSOCIATION (2) YearDisbursedRepaidBeneficiariesJobs 2010/11R2 382 36702 000400 2011/12R 4 929 451R713 603750929 TotalR7 311 818R713 6032 7501 329

30. 30 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.

31. 31 PEULWANA AGRICULTURAL FINANCIAL SERVICES (2) YearDisbursedRepaidBeneficiariesJobs 2009/10R8 100 711R1 237 4932022 010 2010/11R9 842 580R1 237 8723302 304 2011/12R7 060 784R6 513 665472390 TotalR25 004 075R8 989 0301 0044 704

32. 32 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.

33. 33 SUCCESSFUL PROJECTS(1)  SASA;  Peulwana;  MGK;  Kaap-Agri;  Hlanganani;  GEP;  NERPO;  MEGA;  ECRFC.

34. 34 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.

35. 35 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.

36. 36 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.

37. 37 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.

38. 38 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.

39. 39 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.

40. 40 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.

41. 41 GEP (2)  Korema cc  Located Gauteng Tshwane;  Operate on 10ha;  Loan amount R 242 000;  2 beneficiaries;  Vegetable production;  Created 4 jobs.

42. 42 NERPO (1)  Bravosat cc project  Located in Mpumalanga;  6 beneficiaries;  Cattle farming;  4 jobs created.

43. 43 NERPO (2)  Barui farming cc  Located in North West;  7 beneficiaries;  Cattle farming;  4 jobs created.

44. 44 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.

45. 45 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.

46. 46 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.

47. 47 UNSUCCESSFUL PROJECTS(1)  Peulwana;  MGK;  Kaap-Agri;  Hlanganani;  GEP;  NERPO;  MEGA;  ECRFC.

48. 48 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.

49. 49 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.

50. 50 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.

51. 51 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.

52. 52 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.

53. 53 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.

54. 54 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.

55. 55 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.

56. 56 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.

57. 57 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.

58. 58 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.

59. 59 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.

60. 60 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.

61. 61 Enterprise break down ( 2011/2012) CommodityAmountPercentage of total Grain26 319 52132.5% Grapes2 655 8133.3% Leather fern4 0371045% Livestock14 515 74318% Poultry3 377 1134.2% Undefined16 023 93819.8% Sugar cane11 562 66314.3% Tobacco1 333 3021.65% Vegetables1 186 5321.5% Total81 011 732

62. 62 THANK YOU