Fund growth with a healthy mix of solutions

When Nkosana Mtambo received a small farm from his grandfather on his 21st birthday, it was the perfect coming-of-age gift, says Lindiwe Sithole, host of African Farming Season 2. Mtambo has since changed from a city boy to a farm boy, proving that he is truly passionate about farming.

When Sithole visits Nkosana Mtambo on his Free State farm, it is clear that farming is his life. He lives and breathes to make his farm a success. “I am so grateful for all the lessons my grandfather thought me from a young age, and I believe the success of agriculture lies in the youth’s understanding of how agriculture works,” he says. 

Farmers who are passionate about their businesses want to see them grow, but the path to success is riddled with challenges. If a farmer grows their business too fast or go into too much debt to do so, expanding can be their downfall. 

Keneilwe Nailana, Manager: Agribusiness at Standard Bank Group, says it takes a lot of work and planning to grow a business successfully. Funding is one of the key aspects of taking your business into the next phase. Different businesses need funding at different stages in a business cycle. 

According to Nailana, the business cycle stage in which a business is will determine the type of funding necessary to move forward. “The business cycle stages are the start-up cycle, the growth stage, the maturity stage and the decline stage.” She says finding financial solutions for a business in each of these cycles entails finding a mix of financial solutions, like cash, debt and equity. 

“To fund start-ups is usually the most difficult – these are usually funded out of pocket, but when you reach the second cycle and the business has financial statements, market access and so forth, the chances of having a multiple stream of funding are more realistic.” 

She cautions that farmers should never rely on debt alone as a solution. “Debt has to be used with caution; it should also be productive debt. The best solution is to find a variety of ways to fund a project, and in the end make use of a healthy mix of funding solutions.” 

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