Cuts to blended finance for emerging farmers opposed – Noko Masipa

DA MP says dept has now pulled out of R3.9bn commitment

DA opposes cuts to R3.9 billion blended finance for emerging farmers

8 March 2020

In August 2019, the Democratic Alliance (DA) asked Minister Thoko Didiza about the status of the R3.9 billion blended finance for emerging farmers. Blended finance is a mixture of government grant and commercial funding that was aimed at supporting emerging farmers who would not necessarily be able to raise a deposit for both installment sale and mortgages.

To date, we have not yet received any answers from the Minister apart from the contradicting public statements from the President and Finance Minister.

Following the advice from the Department of Agriculture, Land Reform and Rural Development, the President, during the 2019 SONA debate, announced a R3.9 billion medium-term budget for blended finance towards supporting emerging farmers. However, Finance Minister Tito Mboweni, during the 2020 budget debate, only announced a mere R1.2 billion medium-term budget for blended finance for emerging farmers. 

The Department has now pulled out of the R3.9 billion commitment and the remainder of the money is going to be used as a grant towards failed, unproductive farms and non-feasible projects of the now-defunct Land Reform Department.

The unwillingness to give the entire budget towards blended finance is a concern. Providing only grant finance to the restituted farms has led to many failures and corruption. There has been little transparency between the farmers and department on money allocated and money received by the farmers hence the large scale of corruption.

The DA strongly believes that concessional funding in the form of the blended finance is able to mitigate perceived risks that often comes with attracting commercial funding for emerging farmers. We maintain that the full R3.9 billion be used for blended finance in order to bridge the gaps and address market barriers that prevent private sector participation in the underutilized farmlands across the country which has strategic commodities and higher economic growth impact instead of being given as a grant to the farmers.

We call on Minister Didiza to bring on board inputs from finance experts on how to finance and support emerging farmers. The department clearly does not have a grasp of the possible missed opportunity in regards to blended finance. The department must scrap the many grant funds to give way to seamless agricultural funding support using the Land Bank as a vehicle of assessment, all payouts, and the post lending evaluation to all farmers to prevent corruption with the support of extension officers.

Issued by Noko Masipa, DA Member on the Portfolio Committee on Agriculture, Land Reform & Rural Development, 8 March 2020