South Africa's emerging and commercial farmers will benefit from financial assistance after the African Development Bank (AfDB) approved a R1-billion line of credit to the Land and Agricultural Development Bank of South Africa on Wednesday.
The support will be also used to assist agricultural co-operatives and agri-related businesses; it will help mobilise financial resources, ultimately contributing to job creation and income generation.
"The line of credit from the AfDB will be dedicated to the agricultural sector which is generally labour-intensive," said the AfDB's private sector and micro-finance department director, Tim Turner, in a statement.
"Its benefits are expected to emphasise low-skilled workers, especially with the Land Bank's focus on emerging farmers."
Turner said that the projected 2 700 loans to be given to emerging farmers are expected to generate some 14 000 jobs, while the financing to the commercial farmers, cooperatives and agri-related businesses is expected to create at least 2 000 jobs.
"This will have multiple positive inclusive growth effects by targeting underserved populations such as rural communities, women and black emerging farmers," he added.
The credit also includes a technical assistance component for capacity building at Land Bank and will enable the government to support, promote and facilitate the development and transformation of the agricultural sector in South Africa.
As one of the most employment intensive sectors of the South African economy, agriculture's potential impact on empowerment and poverty relief is much larger than its actual weight in the economy suggests.
While the primary agricultural sector contributes about 3% to the country's gross domestic product (GDP), it represents about 7% of formal employment. If the entire value chain of agriculture is taken into account, its contribution to GDP actually reaches 12%.