Announcing the rural development agency’s 2013/14 performance results, ECRDA chief executive officer Thozamile Gwanya says the results, coupled with a second consecutive unqualified audit opinion, are a result of ECRDAs determined resolve to practice financial prudence and build a reputation as a trusted steward of public funds.
In its second year of operation, ECRDA received a total funding allocation of R173 million. Government grants, excluding funding for the cropping project for the Department of Rural Development and Agrarian Reform, amounted to R138 million. ECRDA also provides grant funding from its own allocation to its subsidiaries which amounted to R12 million. In 2013/14, the unplanned transfer of R12 million to Magwa Enterprise Tea resulted in a R1,1 million deficit.
“Of the R14,7 million approved for disbursement, R2.6 million were Micro Agricultural Financial Institutions of South Africa (MAFISA) loans disbursed to 178 beneficiaries. These loans mainly catered for livestock farming in the Chris Hani District Municipality (CHDM) and for crop farmers who were participating in the cropping programme of the Department of Rural Development and Agrarian Reform.
“Over R2.4 million of agricultural loans were disbursed to 34 beneficiaries while R818 000 of non-agricultural loans were disbursed to 19 beneficiaries. The majority of the loans, 89%, went to entrepreneurs involved in agricultural activities while the balance, 11% went to non-agricultural activities,” Gwanya says.
ECRDA’s loan book of R154 million pre-impairments, and excluding livestock loans, grew by 2% year-on-year, whilst the impairment rate remained fairly constant at 62%. A new credit policy was approved in 2013 which aims to improve the quality of the loan book whilst remaining true to the developmental mandate of the agency which serves the unbankable, entrepreneurial start-up market.
Gwanya, who joined the agency in June 2013, says ECRDA aims to improve the performance of its loans by providing clients with an aftercare service for the entire duration of the loan term, broadening the loan focus to include non-agricultural loans, and the stringent application of its collection procedures.
About 31% of the loans went to the OR Tambo district, 26% to Amathole, 20% to Chris Hani, 19% to Alfred Nzo and 4% to the Cacadu district.
He says the majority of the loans, 89%, went to entrepreneurs involved in agricultural activities while the balance, 11% went to non-agricultural activities. The bulk of the loans went to self-help groups who usually require small agricultural loans of about R30 000 because of their relatively small size of arable land. This segment constitutes about 60% of the total loan portfolio. They are usually tailored for the food security needs of communities.
In addition, ECRDA began the implementation of the DBSA Jobs Fund Agro-processing Initiative. DBSA has committed R91 million over the next three years to ECRDA and the Eastern Cape Development Corporation for the implementation of this initiative. The DBSA Jobs Fund will contribute 80% of the funds while the remaining 20% is split equally between ECRDA and ECDC. The Jobs Fund initiative served as a platform for the establishment of the Rural Enterprise Development (RED) hubs at Ncora and Mqanduli.
ECRDA received R16.5 million for the implementation of the programme in 2013/14. A total of 1 866 ha were planted in two sites by the end of the financial year – 955 ha in Ncora and 911 ha in Mqanduli.
During the period under review, ECRDA implemented the Department of Rural Development and Agrarian Reforms Letsima grain production programme. The department made available R38 million for production. 6 559 hectares were planted across five districts with yellow maize; benefitting 325 projects. These projects are constituted by 8 741 beneficiary landowners while 432 temporary jobs were created during production.
In the livestock development programme, focus was on Fort Malan in Mbhashe and Ntseshe in Mnquma. In Ntseshe, ECRDA provided farmers with six Nguni bulls while those in Fort Malan received three Braman bulls. In both villages a total of 1 300 cattle were vaccinated. In addition, three training workshops on basic animal husbandry were held in each village.
These interventions are geared to improve production volumes and reduce mortality rates.
ECRDA also secured a three-year DBSA Jobs Fund grant of R113 million for the organisation’s forestry development programme. R30 million will be matched equally between ECRDA and ECDC. The objective of this programme is to ensure that by the end of the three-year period, 6 000 ha would have been planted with the creation of 565 permanent jobs in eight projects, which cover a total area of 15 600 ha.
During the year, nearly R5.5 million was committed to five projects – Izinini and Sinawo (near Bizana), Mkambathi (near Flagstaff), Sixhotyeni (near Maclear) and Gqukunqa (near Qumbu). Notwithstanding the late start, 340 ha were planted and 320 people were employed.
ECRDA has also formed a high-value partnership with the Sakhisizwe Bio-fuels project in the Coega Industrial Development Zone which aims to generate 100 million litres of biodiesel per annum. ECRDA will provide feedstock to the plant from ECRDA supported farmers. As such, these farmers are expected to embark on a cropping programme of no less than 40 000 ha of land in 2014/15 to plant oil seeds, soya beans and sunflower seeds as rotational crops.
“Moving forward, the organisation will continue to focus on vigorous pursuit of inspired implementation of its identified high impact priority programmes underpinned by robust operational efficiencies. Furthermore, more focus will be placed on sharpening ECRDA’s loan finance tools to improve their performance and ability to effect meaningful economic change in the rural communities the organisation serves. The ultimate objective is building vibrant rural economies, reducing poverty, ensuring food security and the empowerment of communities,” explains Gwanya.