Scaling up success

Creating the conditions for agri-entrepreneurs to thrive


With the topic of land reform and agricultural transformation looming large in the public eye, another topic has slowly but surely begun to assume a position of vital importance. This is the role that small-scale farmers will play in the agricultural sector of tomorrow. It has become increasingly obvious that emerging agricultural entrepreneurs have tremendous potential to grow the economy and achieve food security, but only if they receive the funding, mentorship and partnerships that they need. We spoke to Wandisile Makwabe, Investment Head: Agribusiness at the Masisizane Fund, to find out more.

What is the background to the Masisizane Fund?

The Masisizane Fund is an Old Mutual initiative that was established in 2007 following the closure of the Unclaimed Shares Trust in consultation with the National Treasury of South Africa.

Masisizane was set up as a non-profit funding company to provide loan financing and support to Small, Micro and Medium Enterprises (SMMEs) in South Africa. The purpose is to develop and support entrepreneurship in South Africa, particularly in three high-impact sectors contributing to socioeconomic transformation in rural, peri-urban and township areas throughout South Africa.

The three sectors are: Franchise, Supply Chain/Manufacturing and Agribusiness.

We strive to contribute measurably to job creation that in turn contributes to poverty eradication in South Africa. This is achieved through enterprise financing, encouraging entrepreneurship and capacity development, thereby contributing to the sustainability of SMMEs.

Five years after its first pilot, how is the Masisizane Fund’s Agricultural Flagship Project progressing in the agri-sector of the Eastern Cape’s Alfred Nzo District Municipality, and Harry Gwala District Municipality in KwaZulu-Natal (KZN)? How has the fund been contributing to job creation and empowerment in these targeted areas?

It is a stated fact that economies of scale are critical in today’s farming environment as is evident from the increase in scale and size of farming units in South Africa and around the world.

Farmers need to have access to land to farm on to ensure the viability of the enterprise in terms of output, infrastructure (particularly irrigation) to ensure that farmers achieve sustainable yield, sustainable local markets, and affordable financing that does not expose them to over-indebtedness·

To this end, Masisizane Fund established an Agri-cluster approach that entails clustering small scale farmers together to gain economies of scale and provide emerging farmers with a range of opportunities and benefits.

Farmers are clustered in order to meet the demands of the market and secure inputs at negotiated prices, through bulk buying.

When you are buying in bulk, you have bargaining power and the cost of is reduced in the process.

The specific objectives of the Flagship project are to:

  • Stimulate economic activity in rural economies
  • Forge meaningful partnerships
  • Enhance an Agri-value chain
  • Achieve and demonstrate positive socioeconomic impact.

Five years on the project has achieved the following:

  • R100 million invested in the area towards agricultural enterprise development
  • R60 million secured from meaningful partnerships
  • A 100% black-farmer-owned mechanisation company
  • Funding secured for farmer owned grain (silo) facility and a grain processing facility (mill) which demonstrates achievements in terms of the value chain.
  • Close to 1 000 jobs created across the two districts
  • About 3 500 household members benefit from the project through capacity building and food security.

How has the Masisizane Fund’s investment changed the prospects of the rural farming community in the Alfred Nzo and Harry Gwala district municipalities?

The profile of rural economies is one of minimal infrastructure. There is a low base level of skills. Poverty is very high. Tools and equipment are barely existent to initiate any economic activity and there is no industry to support the rural economy.

The Masisizane Fund Flagship Project introduced financing to clients with no asset base, low skill levels and clients who ordinarily would not be funded by commercial entities.

The financing was used to secure machinery that would ensure a scale up in terms of production which would feed into a sustainable and established market.

The Masisizane Fund introduced capacity to assist their clients by way of setting up the local based Flagship office where clients and partners are provided with access to the office resourced with agricultural specialists and agronomists who are there to help provide capacity and support to clients.

Because of these interventions, infrastructure development was prioritised and impactful upgrades were developed—such as fencing, which was introduced and upgraded, road networks (farms to markets) to enable industry development and growth.

Who are some of the public sector stakeholders, Flagship Project clients and partner organisations?

At the cornerstone of the Masisizane Fund’s ethos and values is the tagline that the Fund stands for “Partnerships for a Brighter Tomorrow”. This guides proactive stakeholder engagement approach. Our stakeholder engagement strategy is executed by informing partners, securing buy-in from partners and being directly involved in projects.

This kind of proactive approach allows the Masisizane Fund to be involved in our partners’ strategic plans and activities from the onset and enables us to help ensure that there is continuous programme and policy alignment.

In living up to the ethos, the Flagship partners include government departments, parastatals, rural farming communities, community and traditional leaders and various private sector institutions.

All partners share the common values and vision of developmental financing with the aim of reducing inequality in South Africa.

What are the criteria for success the success of this Flagship Project? What legacy do you aim to create?

The success of our Flagship project will be measured when we see fully fledged entrepreneurs operating in the mainstream economy and learning from each other. This will in turn enable entrepreneurs to create jobs, close the inequality gap, and have a sustainable future.

We want to upskill and empower entrepreneurs to the point where they have the ability to introduce technology solutions and skills into their operating environment, and raise the bar in terms of their production and future success. We would also deem success to have been achieved in our Project when the youth and communities play a key role in these new business developments.

What does the Flagship Project’s success mean for the regional economy?

By supporting and encouraging entrepreneurs to be successful, which is the aim of the Flagship Project, we are contributing not only to the regional economy but also the national economy. By creating jobs and bringing more people into the mainstream economy we play a role in driving a far better and brighter future for South Africa and its people.

The success of our Flagship Project means that rural economies will be transformed, enabling them to be economies in which industry can thrive.

Our aim is to enable sustainable outputs that feed into a sustainable market, linked to a prominent value chain. This in turn, would accelerate efforts to create job creation amongst youth, as well close the disparity between rural and well developed economies in urban areas. In so doing, we would also facilitate/encourage more investment into the rural areas.

Recent migration patterns of communities moving from rural areas to cities in the hope of finding wealth and success has placed enormous pressure on already over-populated cities with ailing infrastructures.

If we can improve the rural environment for productive SMMEs and entrepreneurs, we can open meaningful opportunities in local rural areas, which currently provide little/to no opportunities, and alleviate the pressure on our urban areas.

Is it possible to drive both business value and social value at the same time?

Yes, it is possible. Entrepreneurship should inherently empower both the entrepreneur and the community within which the business is located. The community benefits directly from the services, products and job opportunities provided by the entrepreneurial ventures.

Old Mutual’s brand promise is to “Do great things”. The Fund believes that through effective long term and sustainable partnerships with our clients as well as the provision of the right advice and products, we can help them–and their communities–achieve success.

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Issue 45


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