The agricultural sector stands at a crossroads where innovation meets necessity. At a recent panel discussion at the African Farming AgriFund Connect Summit facilitated by Dr Lerato Tsalaemang Matsaunyane, Researcher at the Agricultural Research Council (ARC), industry experts gathered to explore innovative financing models that could transform the landscape for agripreneurs across South Africa.

By Maile Matsimela, Digital Editor at African Farming

The panel brought together financial institutions, development funds and agricultural specialists to address a critical question: How can we create sustainable funding pathways that truly serve the needs of emerging farmers while ensuring financial viability?

The Challenge Landscape

The discussion opened with a sobering reality check. As Keneilwe Mabona from Standard Bank explained, traditional barriers continue to plague the sector: “From our side, we investigated the pain points that are happening with the small and medium enterprise,” Mabona explained to the panel. When Standard Bank dug deeper into agricultural financing challenges, three critical barriers emerged consistently: “There’s a lack of security, which we call collateral, and there’s also a lack of technical skills and recordkeeping.”

Mabona acknowledged the constraints that Standard Bank faces as a commercial bank. “Obviously, we are a financial commercial bank, right? We have shareholders, so we must be innovative and that’s where partnerships come in.” Rather than viewing unprepared businesses as lost causes, Standard Bank recognised an opportunity to create sustainable partnerships. “We realised that we cannot come with the funding because funding has to be repaid, so we try to mix funding with other partners,” Mabona noted.

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The solution emerged through accelerator programmes developed with strategic partners. “We do have accelerator programmes that we run with partners,” she explained, describing comprehensive initiatives that go beyond traditional lending. “There’s going to be some financial literacy. We’re going to show you how to [improve] your recordkeeping [and] help you with technical skills.”

Tshegofatso Selepe from the Kgodiso Development Fund highlighted the compliance challenge: “Compliance is a problem – financials are not done on time, recordkeeping is subpar and quality standards are often not met… Business support becomes the decider.”

Innovative Solutions Emerge

Desry Lesele from Nedbank introduced a compelling metaphor for modern agricultural financing: “Innovation in funding needs to be dynamic, like an octopus model that adapts to the unique challenges of each farmer.”

Nedbank’s approach extends beyond traditional lending through its agri-renewal programme, which combines classroom training with practical on-the-ground support, connecting farmers directly with major retailers such as Pick n Pay. “We back the jockey, not just the horse,” Lesele emphasised, highlighting the importance of investing in the farmer as much as the farming operation.

Blended Finance: A New Paradigm

The panel explored blended finance models that combine grants, loans and insurance solutions. This approach addresses the risk concerns of financial institutions while reducing the burden on farmers, particularly during the critical establishment phase.

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Partnership-driven Growth

Shertina Maremane, Provincial Head of Land Bank in Limpopo, stressed the power of partnerships: “Through our partnerships, we are talking testimonies and numbers now. Aggregation models plug in small farmers growing from five hectares … enabling them to access formal markets.” This aggregation approach allows smallholder farmers to achieve economies of scale, accessing markets and financing opportunities previously beyond their reach.

Sustainability as Currency

The discussion revealed a growing recognition that environmental sustainability is becoming a new form of currency in agricultural financing. “Soil is the new gold,” Lesele noted, emphasising how sustainable farming practices are increasingly attracting green financing options.

Dr Langelihle Simela from Absa added that financial institutions are now evaluating applications based not just on traditional metrics but also on environmental and social impact potential.

Learning from Experience

Success Mdluli, Project Manager of the Zamukele project at the Schoeman Group, shared a hard-learnt lesson that cost his organisation dearly but provided invaluable insights for the industry.

“We paid school fees – R8 million we couldn’t recover because we called it funding, not financing,” Mdluli revealed to the panel, using the South African expression “paying school fees” to describe learning an expensive lesson.

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What Mdluli was describing was a critical communication failure that had major financial consequences. When his organisation provided R8 million to agricultural entrepreneurs, they used the term “funding” in their communications and agreements. To many recipients, this terminology suggested grants or financial assistance that didn’t require repayment.

The reality was different – this was meant to be financing that would be repaid according to agreed terms. However, because the language wasn’t clear about repayment obligations, many recipients treated it as grant money rather than loans.

Technology and Accessibility

Aron Kole from FarmSol emphasised how technology platforms are democratising access to information and resources. Digital solutions are helping bridge the gap between rural farmers and urban financial services, providing everything from weather data to market prices and financial literacy training.

Policy and Regulatory Evolution

The panel acknowledged that regulatory frameworks need to evolve alongside innovative financing models. High compliance costs for environmental impact assessments and water licensing were identified as significant barriers that policymakers must address to truly unlock agricultural potential.

The Road Ahead

As the discussion concluded, facilitator Dr Matsaunyane challenged both panellists and audience members to think beyond traditional boundaries. The consensus was clear: the future of agricultural financing lies not in any single institution or approach, but in collaborative ecosystems that combine financial resources with technical support, market access and policy advocacy.

Key Recommendations from the Panel:

Business Readiness First: Invest in farmer preparation and business support before financing;
Partnership-driven Models: Combine financial institutions with technical experts and market facilitators;
Customised Solutions: Develop flexible financing products that adapt to specific agricultural contexts;
Sustainability Integration: Align financing with environmental and social impact goals; and
Policy Alignment: Work with government to reduce regulatory barriers while maintaining necessary standards.

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