Post on 12-Jan-2016
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
JOINT BUDGET COMMITTEE HEARING ON MTBPS
Theme 3: Rural Development and Urban Renewal
Masiphula M. Mbongwa DDG: DEPARTMENT OF AGRICULTURE
Committee Room E249Parliament
02 November, 2004,
2
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Sustainable Rural Livelihoods Framework
VULNERABILITY CONTEXT
•Trends
•Shocks
•Culture
CAPITAL ASSETS
•Natural
•Social
•Physical
•Human
•Financial
Laws Policies Incentives
Institutions
PROCESSES
TRANSFORMING STRUCTURES & PROCESSES
STRUCTURESGovernmentPrivate Sector
ISRDP
STRATEGIES
• LRAD
• CASP
• IFSNP
• ARM
• AgriBEE
• MAFISA
• Land Care
• Non-NR-based
OUTCOMES
•more income
•more jobs
•better well-being
•reduced vulnerability
• improved food security
•better sustainable use of NR-base
3
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Presidential Announcement Re-establish the agricultural credit scheme in the
Department of Agriculture Provide capital to increase support to agricultural
activities in the communal land areas as well as other small–scale agriculture.
Leave the Land Bank to deal with the commercial sector
Make R1 billion immediately available to start the scheme
Work with the financial institutions to implement the provisions in the financial services charter relevant to the development of small-and medium-farming enterprises
4
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Why the Reversal ?
Enterprises Farmers Enterprises Farmers Farmers
Land BankCommercial Banks
Agricultural Coops
Agricultural Coops
Agricultural Coops
Agricultural Credit Board
5
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Why the Reversal ?
Enterprises Farmers EnterprisesFarmersFarmers
Land BankCommercial Banks
Agricultural Companies
Farmers Farmers Farmers Farmers Farmers Farmers
Rural Micro-Finance Institutions
Rural Micro-Finance Institutions
6
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Why the Reversal ?
Enterprises Farmers EnterprisesFarmersFarmers
Land BankCommercial Banks
MAFISA: Micro-Agricultural Financial Scheme for South Africa
Farmers Farmers Farmers Farmers Farmers Farmers
7
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Mission
MAFISA is the state-owned entity that provides micro-agricultural financial services on a widest, accessible, cost-effective and sustainable basis in the rural areas.
8
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Strategy
Productive Assets and Technology
Improving equitable access to productive natural resources and technology
Productive Assets and Technology
Improving equitable access to productive natural resources and technology
Empowering the rural working poor and
enterpreneurs in their efforts to improve their
livelihoods
Financial Assets and Markets
Increasing access to financial services and markets
Financial Assets and Markets
Increasing access to financial services and markets
Human and Social Assets
Strengthening the capacity of the rural poor and their organisations
Human and Social Assets
Strengthening the capacity of the rural poor and their organisations
9
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Principles
Rural livelihoods strategies guide service delivery; Collaborate, share and reinforce for service delivery; Use or improve existing resources and efforts; Offer and gain something of value to service delivery; Specialise in something of value to service delivery; Strive for service delivery within the 20km target; Go for 10 million customers for scale, leverage and
impact; Optimise tax Rand value return to reduce poverty and
hunger; and Use rural financial services industry benchmark to
improve service delivery.
10
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Farms and Agribusiness StructureFarms and Agribusiness Structure
IV
III
II
I
Large commercial farms & agribusinesses
Small commercial farms & agribusinesses
Emerging farms and Emerging farms and agribusinessesagribusinesses
Subsistence farms Subsistence farms andand agribusinessesagribusinesses
1st E
cono
my
2nd
Eco
nom
y
11
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Socio-Economic Analysis An estimate of 15 million rural poor people Women-headed households Women, youth and people with disabilities Some form of access to land Have some form of self-employment Earn between R600 – R1 000 per month Farming share less than 10% to total HH income Move in and out of the 1st and 2nd economies in pursuit
of household livelihood strategies Are not severely malnourished, hungry or destitute Use credit for high potential areas and high return
activities
12
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Socio-Economic Analysis Use savings for subsistence farming and low return
productive activities Rely on remittances, wages, disability, pension and
child support grants for production and HH needs Live in remote and dispersed areas with poor
infrastructure Participate in but do not benefit from the 1st economy May be creditworthy below and above the poverty
datum line May engage into profitable self-employment
investments Use extended families and social networks to manage
production, price and market risks and disasters
13
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Business Case More savers than borrowers in a financial system Households save more than they borrow Enterprises borrow more than they save If 10 out of 15 million rural people are savers, then 5
million rural people should be borrowers If 10 million people save at least R200 per year, then
there should be R2 billion in the rural financial market available for the 5 million rural borrowers.
14
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Customers
Farm workers; Small landholders; Landless; Food Emergency Beneficiaries; Farm and labour tenants; Land reform and agrarian beneficiaries; Small farmers; Household producers; and Rural micro-entrepreneurs.
15
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Products and Services
Income Level Commercial Financial Services
Poverty Alleviation
Programmes
Low
Standard Bank Services
Micro-Savings
Micro- Loans
Micro- Insurance
Trans-actions
Working Poor
Extremely Poor
Food & water, medicine and nutrition, employment generation, skills training & relocation
Poverty Datum Line
16
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Functional Structure
Head officeHead office
District BranchesDistrict Branches
Local BranchesLocal Branches Local BranchesLocal Branches
41
500
17
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
18
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Service Delivery Consortia
Land BankLand Bank
Post OfficePost Office
MAFISAMAFISA
APEX FundAPEX Fund
DonorsDonors
BanksBanks
User-OwnedUser-Owned
SAVVEMSAVVEM
KHULAKHULA
Provincial DoAsProvincial DoAs
Provincial DFIsProvincial DFIs
Agri CosAgri Cos
Agri-CoopsAgri-Coops
IDCIDC
Rural MFIsRural MFIs
Local MunicipalitiesLocal Municipalities
Rural
Financial
System
Rural
Financial
System
19
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Sources of Funding
MAFISAMAFISA
Interest Income
Investments Grants
Parliamentary Appropriation
20
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Phased Implementation Plan Phased over 10 years Launch quick win products in selected areas; Increasing institutional sustainability; Conducive policy and institutional environment; Gradual expansion of the branch network; Conduct staff training and deployment; Building strong partnerships and alliances; Developing new innovative products and services; Monitoring and evaluating implementation; and Assessing the impact on the lives of the rural working
poor and entrepreneurs.
21
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Expected OutcomeExpected Outcome A more efficient and effective agricultural rural finance
system; Financial services which are more accessible, relevant
and responsive to farmers and agribusinesses; Greater productivity in farming and agribusiness
operations; More effective and participation by beneficiaries in
input and output markets; Sustainable institutions with a greater outreach
capacity; Greater and more reliable production of food Greater asset ownership; and Increased wealth, growth and development.
22
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
THANK YOUTHANK YOU
23
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Sustainable Livelihoods Framework
VULNERABILITY CONTEXT
•Trends
•Shocks
•Culture
CAPITAL ASSETS
•Natural
•Social
•Physical
•Human
•Financial
Laws Policies Incentives
Institutions
PROCESSES
TRANSFORMING STRUCTURES & PROCESSES
STRUCTURESGovernmentPrivate Sector
ISRDP
STRATEGIES
• LRAD
• CASP
• IFSNP
• ARM
• AgriBEE
• MAFISA
• Land Care
• Non-NR-based
OUTCOMES
•more income
•more jobs
•better well-being
•reduced vulnerability
• improved food security
•better sustainable use of NR-base
24
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Sustainable Rural Financial System
Financial
Services
Stakeholder
participation
Rural Financial
InfrastructureOutreach
Conducive
Policies
Non-Financial
Services
Regulation &
Supervision
Improved
sustainable
livelihoods
25
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Financial and Enterprise Viability Cycle
Viable Financial Institutions
Viable Rural Enterprises
Vibrant rural and agricultural economy
Growth
Growth
26
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Savings and Credit Household Cycle
Credit: High potential areas and high return ventures
Savings: Subsistence production and low return ventures
Rural and Agricultural
EconomyGrowth
Growth
27
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
Short hand for socio-economic dualism:
First Economy at the cutting edge, globally integrated and with a capacity to export manufactured goods, services and primary commodities
Second Economy exists at the edges, consists of large numbers of the unemployed and the ‘unemployable’, and does not benefit from progress in the First Economy
The Second Economy denotes the condition lived by millions of people on the margins of the modern, industrial economy:
People without a steady income based on their own economic activity
Households or individuals with no steady employment, and without an income-generating asset that can practically be ‘realised’ as capital or collateral
Defining the Two EconomiesDefining the Two Economies
CASP model
The Hungry &
Vulnerable
Household food
security &
Subsistence
Farm & Business
level activity
Agricultural macro-
system within
consumer economic
environment
Agriculture supportAgriculture support
Info
rmat
ion
&
Kn
ow
led
ge
Man
ag
emen
t
Info
rmat
ion
&
Kn
ow
led
ge
Man
ag
emen
t
Tec
hn
ical
&
advi
sory
ass
ista
nce
Tec
hn
ical
&
advi
sory
ass
ista
nce
Fin
a nc i
al
ass
i sta
nc e
Fin
a nc i
al
ass
i sta
nc e
Tra
inin
g &
Cap
aci
ty
bu
ild
ing
Tra
inin
g &
Cap
aci
ty
bu
ild
ing
Mar
keti
ng
&
Bu
sin
ess
Dev
elo
pm
ent
Mar
keti
ng
&
Bu
sin
ess
Dev
elo
pm
ent
On
& o
ff f
arm
infr
astr
uct
ure
On
& o
ff f
arm
infr
astr
uct
ure
6 pillars6 pillars