South Africa Sets up 1 Billion Rand Fund to Assist Black Farmers

South Africa created a 1 billion-rand ($68 million) fund to help small-scale Black farmers enter commercial agricultural production.

The Department of Agriculture will finance the project that will be run by the Industrial Development Corp., a state-owned bank that plans to provide loans to farmers. The fund will have an initial duration of 10 years.

“The broader agricultural sector is central to the recovery of the local economy,” IDC Chief Executive Officer Tshokolo Nchocho said in a statement Thursday.

In addition to addressing the racial inequality that is a legacy of apartheid, the fund will help fill a void left by the Land & Agricultural Development Bank of South Africa, a state lender that’s defaulted on its debt and is struggling to provide new loans to farmers.

The creation of the fund may encourage lending to the sector by commercial banks and other state development institutions, Agriculture Minister Thoko Didiza told reporters at a briefing. With opportunities of scale, the support of private sector lenders could fill the gap, said Nchocho.

South Africa’s ruling party is considering pushing to have the government amend the constitution to allow for the redistribution of land without compensation, especially inactive land, to boost Black participation in the economy. The fund aims to focus on horticulture, fruit for export, livestock and poultry.

The IDC already has a pipeline of 950 million rand worth of agricultural transactions, some of which would qualify for the current funding round, said Nchocho. It has also plowed 4 billion rand in agriculture and plans to double that amount over the next four years, Nchocho said.

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