A year on Kagiso Trust’s Tyala Impact Fund harvests rewards

The Kagiso Trust Tyla Impact Fund, a vehicle to provide new era farmers with a holistic funding solution, recently celebrated an encouraging and successful year of operations in helping emerging black farmers overcome the hurdles in accessing finance, skills development and market access.

Despite the challenges of the pandemic over the last year, the agriculture sector was resilient and showed growth in its contribution to the gross domestic product of South Africa. Agriculture made a significant contribution in the economy in 2020, according to the Department of Agriculture, Land Reform and Rural Development.  In the first quarter, it grew by 28.6%, in the second by 15%. Good weather conditions meant bumper crops, particularly in grain and oilseed, with the maize crop up by 38%.

It was a good time to be involved with agriculture, but for many emerging black farmers, there are barriers that prohibit from entering the sector and building a sustainable business. Central to these challenges are issues of traditionally high-priced funding structures geared towards semi/commercial farmers which are also less favourable to small holder farmers, lack of  required security and farming production skills for high tier crops.

Kagiso Trust’s developmental funding approach is intentional in creating enablers for emerging farmers. “We have entered into joint agreements with stakeholders that provide for seamless, centralised, critical resources centres to address infrastructure development, skills development, technical assistance and ring-fenced access to markets,”  says Genius Mokgoadi, Business and Fund Manager of Socio-Economic Development at Kagiso Trust.

“Our approach of blended funding is a hybrid solution that allows for a low cost of finance, de-risked co-funding structures and guaranteed offtakes. It encourages stakeholders to participate in farming businesses they might ordinarily avoid.” Kagiso Trust Tyala Impact Fund is in the business of building sustainable farming businesses in a forever moving part of the business environment. “The transactions we are involved with are at different stages but have already proved successful. Kagiso Trust believes emerging new era farmers require a holistic solution: appropriate funding, access to markets and technical support to ensure sustainable success.”

Kagiso Trust collaborated with financial partners and investors, approving the co-funding of several transactions with a total blended funding investment of R204.2-million in North West, Limpopo, KwaZulu-Natal and the Eastern Cape.

Of this, Kagiso Trust invested R57.3-million of its developmental funding, unlocking a further amount of R147.2-million from partners, creating approximately 2,436 jobs with skills transfer and training a priority to tackle long-term skills shortages.

“It’s been a pleasing and satisfying process, particularly with the challenges the pandemic brought so soon after we started operations,” says Mokgoadi.  “We have built a profile, seen growth in our traction in the agriculture sector and learnt industry insights through our interaction and collaboration with financial institutions and sector stakeholders.”

The next focus of Kagiso Trust Tyala Impact Fund is on resuscitating available unproductive communal and government owned/leased land. It is collaborating with stakeholders who understand the challenges in this type of an environment and the business and social urgency required to structurally develop and turn the soil of this land.

“New investment proposals include partnerships with some of South Africa’s largest producers and household brands to open up market access, transform the value chain, further develop current black emerging business partners, and implement skills development and capacity building across the South African food system,” said Mokgoadi. “It’s been fruitful and heartening for Kagiso Trust during a time when South Africa and the world were hit with a once-in-a-generation crisis. Through partnerships, crafted blended financing and careful management and due diligence we have made a difference in creating workable sustainable development solutions to help eradicate poverty.”

For over 35 years the Kagiso Trust, a self-funded development agency, has dedicated itself to providing resources and sustainable programmes to overcome poverty, inequality and to create real and lasting economic empowerment of those South Africans who need it the most – the poor. The Trust was founded in 1985 when South Africa was still under the oppression of apartheid and helped in the struggle by supporting other development institutions and organisations. Our patrons include the late Dr Beyers Naude, Archbishop Emeritus Desmond Tutu, Father Smangaliso Mkhatswa, Dr Nkomo and former first lady Zanele Mbeki. It has invested over R2 billion in development and implemented over 1,831 programmes, developing and implementing scalable, replicable, sustainable development programme models in the areas of education development, institutional capacity building, socio-economic development and financial sustainability.