PRESENTATION ON THE AGRIBEE FUND TO SUBTROPIC TRANSFORMATION

PRESENTATION ON THE AGRIBEE FUND TO SUBTROPIC TRANSFORMATION SUMMIT TZANEEN 17 MAY 2016 DIRECTORATE: COOPERATIVES AND ENTERPRISE DEVELOPMENT

CONTENT 1. 2. 3. 4. BACKGROUND KEY OBJECTIVES OF THE AGRIBEE FUND PRODUCTS DIFFERENCE BETWEEN THE AGRIBEE FUND AND OTHER FUNDING PROGRAMMES OF DAFF 5. CRITERIA AND PRE-REQUISITES FOR FUNDING 6. CONDITIONS FOR FUNDING 7. EXCLUSIONS 8. PROCESS FLOW 9. CHECKLISTS 10. CONCLUSION 2

BACKGROUND • AGRI-BEE Fund is a support intervention emanating from the empowerment framework to enable participation of businesses owned by Black People, previously excluded from mainstream economic activities. • The Department of Agriculture, Forestry and Fisheries (DAFF) has appointed the Land Bank to manage the Fund. This includes economic and financial analysis and evaluation of recommended proposals. • The relationship between the two institutions is governed by a Memorandum of Agreement (Mo. A) and Addendum to the Mo. A signed in 2011 and 2012 respectively. • The Fund is supported through annual allocations from the National Revenue Fund. 3

KEY OBJECTIVES OF THE FUND • To support the economic empowerment and successful entry of black people into the Agriculture, Forestry and Fisheries Sectors: ü Ensure an increase in the number of black people who own, manage and control sustainable enterprises within the sector. ü Ensure improved participation by designated groups in the sector. • Promote entry and participation of black people in the entire Agriculture, Forestry and Fisheries value chain through provision of funding for: ü Equity acquisition ü Enterprise development » Agro-processing and Value addition 4

THE AGRIBEE FUND PRODUCTS Agri. BEE Fund Products Equity New Equity Deals Agro-processing /Value Adding Increasing Equity Ownership Start-up processing / value adding businesses Clusters Niche export products Existing processing / value adding businesses requiring expansionary capital Up-scaling operations 5

DIFFERENCE BETWEEN THE AGRIBEE FUND AND OTHER FUNDING AVAILABLE WITHIN DAFF Agro-processing and value adding Equity Agri. BEE Fund CASP On/off farm infrastructure and production inputs MAFISA Production inputs 6

CRITERIA AND PRE-REQUISITES FOR FUNDING • Applicants must : üBe black South Africans with valid identity documents üBe a legal entity (Certificate for registration/incorporation is required). üHave own contribution of 10% • Provide a financially and economically viable business proposal. • Complete and submit the Agri. BEE Fund application form to the relevant Provincial Department of Agriculture point of contact. • Preference shall be given to project applicants whose membership consist mostly of women, youth, people with disabilities, farm workers and whose proposal is linked to commodity strategy of a specific commodity group. 7

CRITERIA AND PRE-REQUISITES FOR FUNDING CONT… • The applicant must have a market partner or identified market, market plan in order and signed contract/ undertaking/off-taker agreement/s, preferably a long-term off-taker agreement from partners to qualify for funding. • The applicant must have skills on the intended business operation it plans to buy into (furnish proof thereof when required in a form acceptable to the Land Bank). • Preference shall be given to applicants who want to acquire equity in viable entities or invest in viable agroprocessing / value adding operations that operate within their line of commodity. • Viability studies will be conducted by the Land Bank as part of the Due Diligence process. In this regard, the report of such studies shall form part of the evaluation. • FICA verification documents may be required. • NCA documents may be required/completed where necessary. 8

CONDITIONS FOR FUNDING • The maximum fund per approved applicant is limited to R 5 million and a minimum own contribution of 10 percent is required. However, DAFF and the Land Bank may exercise their discretion and consider and approve applications of more than R 5 million, 20% own contribution would be required for such cases. • For new equity deals, applicants must hold at least up to 49% in the initial investment. • The applicant must source the portion required as own contribution from any funding source of their choice and furnish DAFF with supporting evidence (e. g. signed loan agreement). • The applicant must supply DAFF and Land Bank with reports, which include financial reports, status reports (progress in regard to production) where applicable, the Balance Sheet, and all other reports that may be required. • The applicant must have a clean credit record and be credit-worthy. 9

EXCLUSIONS Purchasing of farms and infrastructure at farm level Land under claim 100% interest acquisition Passive Investors (speculators) Government & Land Bank employees as well as Politicians 10

PRE-APPROVAL PROCESS FLOW & RESPONSIBILITIES PDA DAFF • Assist farmers in project formulation and the preparation of commercially viable business plans • Provide general agricultural information and capacity to contribute to the success and sustainability of the projects • Provide advisory services • Provide a letter of support • Submit those applications and/or proposals that fit the criteria to DAFF • Receive applications and/or proposals from PDA’s, screen them and forward to the Land Bank for consideration/due diligence • Receive from DAFF those applications that have gone through pre-screening • Screen applications and undertake due diligence assessments LAND BANK • Recommend to DAFF those applications that have met the Bank’s criteria 11

POST-APPROVAL PROCESS FLOW AND RESPONSIBILITIES PDA DAFF LAND BANK • Receive invoices/quotations from the Land Bank • Conduct the necessary verifications (the costs are market related, items procured are from reputable suppliers, any other issue that Land Bank need to be verified) • Submit the verification report to the Land Bank • Confirm that a verification as in above has been conducted • Confirm that the purpose of the previous payment has been met • Receive the invoices/quotation from the applicants • Forward such invoices/quotations to PDA for verification • Disburse funds upon receipt of verification report from PDA and confirmation from DAFF 12

CHECK LIST FOR EQUITY DEALS • Completed and signed application form • Business plan of the identified partner where investment is intended, with the clear indication of sustainability for a long term • CVs / profile of the applicants and identified partner(s) • Registration certificates for both applicants and identified partner(s) • Constitutional and / or founding documents must be provided. If it is a trust, trust structure is required • Identity Documents for both applicants and identified partner(s) • Three (3) year consecutive audited financial statements (Balance Sheet, Income and Cash Flow statements) for both applicants and identified partner(s) 13

CHECK LIST FOR EQUITY DEALS CONT. . . • Shareholder’s certificates • Tax Clearance certificates for both applicants and identified partner(s) • Letter of intent from the seller • Off take Agreements • Letter of support from the Provincial Department of Agriculture • Trust deed for employees organized into a Trust 14

CHECK LIST FOR AGRO-PROCESSING AND VALUE ADDITION • Completed and signed application form. • Business plan of the applicants with a clear indication of sustainability for a long term • Profile of the applicants • Registration certificates for applicants • CVs of the applicants • Identity Documents for applicants • Three (3) year consecutive audited financial statements (Balance Sheet, Income and Cash Flow statements) for applicants 15

CHECK LIST FOR AGRO-PROCESSING AND VALUE ADDITION CONT. . . • Tax Clearance certificates for applicants • Off take Agreements • Letter of support from the Provincial Department of Agriculture • Constitutional and / or founding documents must be provided • EIA report may be required. • Quotations 16

CONCLUSION • The Fund supports previously disadvantaged individuals to acquire equity from existing financially and economically viable enterprises and also to establish or upscale operations for agroprocessing and value adding projects. • The Fund compliments CASP and Mafisa but may not be used as a substitute for these funding programmes. • Only proposals that fit the criteria may be recommended for funding. • DAFF will not accept any applications directly from applicants. Applications should be submitted via the Provincial Departments of Agriculture. 17

THANK YOU 18