Photo by: Duane Daws
Escalating electricity costs, shortage of electricity and a lack of backup power during load-shedding are eating into South African farming profit margins and even threatening the survival of some sectors of the agriculture industry, says Nedbank.
As such, the bank, known for funding sustainable ventures in renewable energy, infrastructure and agriculture, announced on Wednesday that it had introduced a funding model designed to help the country’s farmers implement renewable-energy and energy efficiency projects in their agriculture businesses.
Nedbank explained in a statement that its Commercial Renewable Energy Financing Offering was tailored to existing and new clients that wished to green their operations, reduce the impact of the 12% to 14% annual energy cost increases on their bottom line and achieve some independence from the national grid. The goal of the product was to, as far as possible, match repayment terms to savings in electricity costs over the medium-term.
“By forming strategic partnerships with key stakeholders in the agricultural sector, we have gained a deep understanding of the challenges farmers face in implementing more sustainable practices on their running farms,” advised Nedbank head of business banking strategic initiatives Mark Boshoff.
Besides offering creditworthy clients in the agricultural industry longer than usual payback periods, the loan product notably also offered a 7% rebate on the loan through Nedbank’s partnership with the French Development Agency, subject to availability.
Boshoff added that clients approaching the bank for the funding of energy efficient machinery and equipment that could demonstrate verifiable energy savings in excess of 15% were also eligible for a 7% rebate.
“Through leveraging the relationship with the National Business Initiative, we are also able to offer our clients free access to its newly launched Private Sector Energy Efficiency programme.”
As a result, small business clients could receive help-desk services, workshops and publications at no cost, medium-sized businesses could be eligible for fully-funded four-day energy surveys and follow-up service, while large agriculture businesses could obtain up to 60% subsidised energy-reduction consultancy over an eight-month period.
“So far, clients walking this exciting journey with us include agriculture businesses installing renewable-energy solutions to reduce their carbon footprint, as well as clients wanting to run their operations completely off-grid, and smaller businesses whose sustainability is at risk owing to rolling blackouts,” says Boshoff.
In comparison with other types of energy, solar power provided calculable, 25-year maintenance-free yields, Nedbank noted.