Land Bank's Blended Finance Scheme (BFS)

The blended finance scheme (BFS) in South Africa, implemented by Land Bank and the Department of Agriculture, Land Reform and Rural Development (DALRRD), aims to address the financing needs of the agricultural sector by commercialising farmers and promoting the participation of black farmers and black-owned enterprises into the main value chain.  Blended finance combines public and private funds to leverage resources and attract investments for projects that have a positive social or environmental impact.

Under this scheme, Land Bank and the Department collaborate to provide financial support and technical assistance to agricultural projects in South Africa. The Department plays a key role in identifying priority areas and projects aligned with national agricultural development goals, while Land Bank acts as a financial intermediary and facilitator.

The Minister of Agriculture Thoko Didiza launched a 3.2 billion Blended Finance Scheme with Land Bank to assist farmers. The department and Land Bank have each invested R325 million per annum which will effectively result in the creation of a R650 million fund a year and it will grow to R1.95 billion by the end of Year 3. “Strategic partnerships like these are critical to ensure growth, food security, development of farmers and transformation of the agricultural sector, and contribute towards job creation,” said Minister Didiza. 

ABOUT THE PROGRAMME

Targeted Producers at Land Bank

This partnership aims to support the development of small and medium scale producers in primary agriculture and agro-processing subsectors within the Land Bank’s mandate. The BFS fund seeks to support producers engaged in value chain and aggregation activities. The objective is to assist projects to achieve sustainability and growth with priority given to projects with high development impact.

BFS Targeted commodities

These commodities are in-line with the Agriculture and Agro-processing Master Plan and Aquaculture:

• Grains and Oilseeds.
• Fruits and Nuts: Citrus, deciduous, sub-tropical fruits and nuts.
• Livestock: Poultry, piggeries and red meat.
• Other Food Sectors / Agro-processing: Dairy, sugarcane, aquaculture and vegetables.
• Non-food Sectors: Wool and mohair.
• Industrial Crops: Cotton

Ineligible to apply for BFS

• Politicians in public office (12 months cooling period).
• Employees of government and State-Owned Enterprises (24 months cooling period).
• Employees of all organisations serving as administrators of the scheme within credit providers.
• Special advisors for agricultural programmes (local, provincial and national).
• Foreign nationals, dual citizenship and illegal immigrants.
• Part time producers (regardless of having a full-time farm manager or will appoint a farm manager).
• Politically Exposed Persons posing a reputational risk as identified through the credit provider’s lending policies, including  but not limited to Anti-Money laundering risk management and compliance policies
• Distressed producers where the grant is required to settle the debt of distressed producers (at application stage).
• Joint Ventures with farm workers where farm workers are not involved in the management of the operation.
• Joint ventures where targeted producers exercise less than 60% ownership and voting rights.
• Producers who have mismanaged previous government support.
• Applicants with no provision for farm worker profit sharing.

BFS Eligible Criteria

• South African citizens with a valid ID and/or registered business entity.
• Black-owned and managed farming enterprises that are commercially viable in commodities prioritised in the Agriculture and Agro-processing Master Plan (listed above) and Aquaculture.
• In the case of joint ventures, the non-black partner should have 40% but not less than 26% ownership in the enterprise.
• Enterprises with 10% farm worker profit sharing

Funding scope

• Acquisitions of primary agricultural land parcels and/or commercially viable agricultural sector value chain operating entities (agri-businesses).
• Support to existing operations for expansion in production on privately owned or land reform farms (Brownfield and Greenfield operations).
• The purchasing of capital equipment and infrastructure (“CAPEX”).
• Working capital and/or production loan (“Production Facility”).
• Insurance pool provision for subsidisation of insurance cover for the applicable farmers (capped at a maximum of 6% (six percent) of the total grant facility).

Key programme terms

• Applicant must meet the minimum criteria as stipulated by the economic benefits criteria scorecard from DALRRD for the conditional grant and also qualify and be approved for loan funding.
• Applicant must also meet the Land Bank credit criteria regarding the debt portion.
• Conditional grant funding will be capped according to the maximum grant gliding scale limits as approved by DALRRD which shall be determined at application stages based on the funding needs of the business.
• The conditional grant cannot be approved on a standalone basis, grant funding to be in conjunction with Land Bank loan funding. Loans will be priced at market related rates.
• Assessment and approval processes for the BFS scheme will follow approved Land Bank lending policies and processes.

About the economic benefits criteria scorecard

A scorecard that allocates points to the Applicant for ownership and transformation, inclusivity, own contribution through financial or non-financial means, employment creation, contribution to food security, sustainable development, localisation, and markets. Applicants will need to obtain a minimum of 20 points out of a total of 50 points to qualify for the conditional grant.

To apply, visit Land Bank to contact your nearest branch.