The Blended Finance Scheme (BFS) is a blended finance program that aims to commercialize development farmers in partnership with the Department of Agriculture, Land Reform and Rural Development (DALRRD). The primary objective of the BFS is to facilitate the meaningful participation of black producers and majority black-owned enterprises in owning and controlling agricultural value chains. Here are 20 important things you should know about the BFS:
- Targeted Producers at Land Bank: The BFS focuses on small and medium-scale producers in primary agriculture and agro-processing subsectors within the Land Bank’s mandate.
- Value Chain and Aggregation Activities: The fund seeks to support producers engaged in value chain and aggregation activities to achieve sustainability and growth.
- Sector Focus: The BFS targets commodities in line with the Agriculture and Agro-processing Master Plan and Aquaculture, including grains and oilseeds, fruits and nuts, livestock, other food sectors/agro-processing, non-food sectors, and industrial crops.
- Exclusions: The BFS excludes politicians in public office (with a 12-month cooling period), government and State-Owned Enterprises employees (with a 24-month cooling period), administrators of the scheme within credit providers, foreign nationals, dual citizenship holders, illegal immigrants, and more (as outlined in the content).
- Qualifying Criteria: To qualify for the BFS, applicants must be South African citizens with a valid ID and/or registered business entity. They must also be black-owned and managed farming enterprises that are commercially viable in prioritized commodities.
- Joint Ventures: In the case of joint ventures, the non-black partner should have at least 40% ownership in the enterprise.
- Farm Worker Profit Sharing: Enterprises must have at least 10% farm worker profit sharing.
- Funding Scope: The BFS provides funding for acquisitions of primary agricultural land parcels, support to existing operations for expansion, capital equipment and infrastructure, working capital, production loans, and insurance pool provision.
- Economic Benefits Criteria Scorecard: Applicants must meet the minimum criteria stipulated by the economic benefits criteria scorecard from DALRRD for the conditional grant and also qualify and be approved for loan funding.
- Land Bank Credit Criteria: Applicants must meet the Land Bank credit criteria regarding the debt portion.
- Conditional Grant Funding: Conditional grant funding will be capped according to the maximum grant gliding scale limits as approved by DALRRD, based on the funding needs of the business.
- Grant and Loan Funding: The conditional grant cannot be approved on a standalone basis; grant funding must be in conjunction with Land Bank loan funding, which will be priced at market-related rates.
- Assessment and Approval Processes: The BFS follows approved Land Bank lending policies and processes for assessment and approval.
- Facilitating Transformation: The BFS plays a crucial role in promoting transformation in the agricultural sector by empowering black producers and enterprises.
- Development Impact: Priority is given to projects with high development impact, supporting sustainable growth and development in the agricultural industry.
- Collaboration with Government: The BFS is established in partnership with the Department of Agriculture, Land Reform and Rural Development to align with government objectives and initiatives.
- Market Alignment: The BFS focuses on commodities aligned with the Agriculture and Agro-processing Master Plan, ensuring market relevance and demand.
- Commercial Viability: The BFS supports commercially viable farming enterprises, promoting long-term sustainability and profitability.
- Expansion Opportunities: Existing operations can benefit from BFS support for expansion in production on privately owned or land reform farms.
- Compliance and Governance: The BFS adheres to legal and regulatory requirements, ensuring transparency, accountability, and responsible financial management.
