Enabling successful ESD through collaboration and ecosystems
“In the same way that it takes a village to raise a child, it takes a village to raise a business.”
Mishack Mthethwa
Group Manager: Strategic Sourcing and Enterprise and Supplier Development, AECI
“This is why we go beyond B-BBEE compliance, box-ticking and point-scoring to create a dynamic ecosystem that includes external partners and internal specialists committed to growing Small, Medium and Micro Enterprises (SMMEs) with the potential to grow our business and South Africa’s economy in the future. Since research clearly shows that SMMEs require finance, market access, marketing and new business development, our ESD programmes are powered by sector-specific enabling ecosystems through the R30 million AECI ‘Good Chemistry’ Fund. A case in point is the work we are doing in the agricultural sector where we have a long, proud history.”
AECI Agri Health generated 25% of the Group’s total revenue in 2020. It is a key strategic growth pillar and it has played a pivotal role in a three-year pilot project. This project provided the catalyst and framework to embark on an Emerging Farmers Support and Development Programme. The enabling ecosystem includes:
AECI Agri Health
Agricultural skills development and
advisory services
AECI ‘Good Chemistry’ Fund
Finance
IDF Capital
Fund managers
Khula! App
Market access
LEAP
Sustainable business development and growth enablement
Since the inception of the pilot project and programme, some of the lessons learnt are the need for financial reporting, fortnightly monitoring of the expected harvest output, technical assistance and technology.
AECI and IDF Capital work closely together to:
Assess the commercial viability of projects
Design transaction structures
Evaluate funding instruments and their pricing
Facilitate due diligence investigations
Negotiate terms on behalf of farmers with funders and off-takers
Prepare and review legal agreements
At the same time, AECI partners with LEAP, an organisation with extensive experience and know-how in growing SMMEs, and the Khula! app in which AECI recently acquired an equity investment.
On the Khula! Fresh Produce Marketplace App, emerging farmers sell their produce in bulk; and on the Khula! Inputs App, emerging farmers buy products and services.
Today, three emerging farmers are on the programme, namely Farmers Hope, HempVest and Ithuba. Together, they employ at least 21 permanent employees and 110 seasonal workers across 3 042 hectares (Ha) in Gauteng, Mpumalanga and North West.
Agriculture is critically important to growing the economy.
The Africa Institute for Policy Analysis (AIPA) says that the agricultural sector is an engine for development and growth because of the downstream and upstream linkages between agriculture and the secondary and tertiary sectors. Agriculture supplies these sectors with raw materials and, in turn, provides a market for goods and services. AIPA estimates that a 1% contribution by agriculture to GDP produces a 2% increase in the country’s growth, and an investment of R1 million in agriculture generates twice as many jobs as an equivalent investment in the manufacturing sector.
According to Statistics South Africa, agriculture was the only positive contributor to the economy in Q2 2020, growing by 15,1%. In Q3 2020, it grew by 18,5% representing a value of R79,4 billion.
The South African government believes that the key to food security lies in investing in emerging farmers and has committed R1,2 billion to support 150 000 smallholder and subsistence farmers.
“In AECI’s 2020 Sustainability Report, we detailed the alignment of our strategy to carefully selected United Nations Sustainable Development Goals (SDGs), most notably in the ESD context “Decent work and economic growth” and “Partnerships for the goals”. Our Emerging Farmers Programme emboldens our commitment to “Zero hunger” and “Responsible consumption and production”,” explains Mishack.
“It is clear that there will be a growing market for AECI in the future. But, the ultimate success of the Emerging Farmers Programme will lie in the contributions and strengths of the entrepreneurs and partners, and the effectiveness of their collaboration.”
Meet the farmers
Farmers Hope
Founded by Tebogo Nyathela in 2016, the 20Ha farm in North West specialises in crops (cabbages, garlic, peppers and spinach) and poultry (chickens and eggs). There are five permanent employees and seven seasonal workers. Three more seasonal workers are employed in peak seasons.
With a background in corporate affairs and marketing, Tebogo learnt farming literally from the ground up, completing a number of learning programmes at the Agricultural Research Council in Roodeplaat, Tshwane. She registered and started the business with her own money, taking over the “Permission to Occupy” agreement with the local authority before clearing the area of bush, fencing 5Ha and installing a borehole, an irrigation system and electricity.
In April 2021, the AECI ‘Good Chemistry’ Fund approved a loan facility of R880 000 including a technical assistance grant of
R80 000 for drilling a second borehole. LEAP provides ongoing business support and mentorship.
HempVest
Founded by Zunaid Mayet and Zaid Mohidin in 2019, the 22Ha farm in Gauteng specialises in crops (broccoli, cucumbers, lettuce, peppers and tomatoes) and low/no THC cannabis. (THC is tetrahydrocannabinol, the main psychoactive compound in cannabis.) There are 10 permanent employees and 50 seasonal workers. Thirty more seasonal workers are employed at peak times.
Cannabis farming is fairly new to South Africa and legislation is changing. The expectation, though, is that the industry will grow to R107 billion by 2025. HempVest’s vision is to become a leading, vertically integrated cannabis business, distributing a range of CBD products in South Africa, the rest of the continent and beyond. (CBD is cannabidiol, the second most prevalent active ingredient in cannabis.)
Operating under a lease-to-buy agreement, HempVest set up the necessary greenhouse, nursery and security infrastructure as well as the required operating processes and procedures.
In June 2021, the AECI ‘Good Chemistry’ Fund approved a convertible loan facility of R2,65 million for a processing facility, farming equipment, land preparation and working capital. Also included is a technical assistance grant of R265 000 for Global G.A.P. certification, software licences and training (Global G.A.P. is the most widely accepted private sector food safety certification).
Ithuba
This cooperative comprises six members who have worked together for more than 10 years. The 3 000Ha farm is in Mpumalanga. Twenty seasonal workers are employed in peak seasons.
Ithuba rotates two crops (maize and soya beans) for sale to local grain silos. There is also livestock (cows and sheep) for sale to three feedlots.
The AECI ‘Good Chemistry’ Fund recently approved a short-term facility of R600 000 for working capital. Further support could be forthcoming depending on the success of the season.
The requirements to qualify for AECI’s Emerging Farmers Support and Development Programme are:
51% (minimum) Black ownership
51% (minimum) Black employees
Land access/tenure
Agricultural experience
Openness to mentorship and other support, such as soil testing
Commitment to meeting performance targets