Agriculture and farmer development fund the Kgodiso Development Fund (KDF), which was established by food and beverage multinational PepsiCo in 2022 as a condition of its acquisition of Pioneer Foods, reports success in its mandate of funding the development of farmers and aims to grow its presence and impact in the coming years.

Since its establishment, the fund had approved R246-million for black entrepreneurs in the agricultural sector, including R233-million in loans to entrepreneurs and R12-million to small, medium-sized and microenterprises in the agricultural services and agroprocessing value chain, KDF executive director Diale Tilo said in a May 25 briefing, in Johannesburg.

The fund also leveraged R75-million in co-funding from other finance and development finance institutions, as well as R17-million of contributions made by owners who are sustainably producing crops.

Further, R98-million of the fund's investments over the four years that the fund has been active has been repaid by recipients.

This reflects the strategic approach of the KDF – relying on repayments on investments to fund its internal operational expenses, which enables the entirety of the R400-million investment made by PepsiCo in the fund to be reinvested in agricultural support initiatives.

This strategic approach of using repayments required that KDF judiciously manage its finances and loans to sustain its work, said KDF chairperson Setlakalane Molepo.

During the presentation of the fund's report for the financial year to February 28, 2025, Tilo highlighted that KDF undertook pre-investment assessments, as well as post-investment and credit monitoring, and aimed for disciplined management of its portfolio.

KDF conducts ongoing monitoring, mentoring and coaching for clients, and also provides restructuring of finances to mitigate distress.

“We partner with business development service providers to ensure our clients not only receive funding, but also mentorship, technology support and business guidance. Finances without support becomes debt, but, with mentorship, it becomes transformative,” he added.

During the fund's lifetime, it had supported the creation of 1 512 sustainable jobs in the eight provinces it operated, including 96 farmers that were supported in the 2025 financial year, Tilo said.

“During the financial year under review, the fund approved R92-million in loans, assessed a R144-million pipeline of investment opportunities and generated R22.7-million from operations, which demonstrates our strong recovery mechanisms. These good results are owing to our finance and post-investment teams,” he said.

Agriculture-based economies across the world eventually have to transition from producing primary commodities towards value addition and manufacturing using these commodities, and South Africa must do the same.

Specifically, South African farmers borrowed about R220-billion a year to produce crops valued at about R500-billion a year that then entered the food value chain, and South Africa consumed about R860-million worth of food each year, noted KDF board member Christo van der Rheede.

KDF's facilities represented only 0.04% of the yearly requirements of the agricultural sector – a drop in the ocean – but, even if it was a small amount invested, if managed properly and used to build an ecosystem around it, it could amplify its impact and support the transformation of the sector, he said.

In addition to supporting the development of farms, PepsiCo made a R200-million investment to develop agricultural skills in partnership with tertiary education institutions, said PepsiCo Southern Africa supply chain VP Tumisang Matsheke.

“What has been particularly encouraging is that we are seeing tangible benefits from the investments made by the Kgodiso Education Fund. Through these investments, we have fully funded university bursaries, apprenticeships, learnerships and graduate opportunities.

“We are witnessing the development of future agronomists, engineers, artisans and commercial leaders. We are seeing young people gain not only qualifications, but also confidence and exposure to the industry, and pathways to sustainable careers,” he said.

Further, KDF's partnerships with tertiary education institutions were not only about academic collaboration and skills development, but were investments in the development of knowledge systems and intellectual capital in the agricultural sector, said Molepo.

“Farming is not only about land and labour but, increasingly, it is about science, data, climate resilience, mechanisation, supply chain integration and research and development. Farmers and agricultural entrepreneurs not only need determination, but also technology and management competencies.

“This is why education is central to KDF's philosophy. It is an important intervention to cultivate scarce skills and leadership capabilities for the future of the economy,” he said.

Addressing PepsiCo representatives, Molepo said that, in the next phase, KDF wanted to grow its presence and impact and asked for further support from the company to achieve this.

TRANSFORMATION FUND

Meanwhile, Department of Trade, Industry and Competition transformation and competition chief director Takalani Tambani said the Transformation Fund the department was developing would serve as a platform to provide additional funding to black-owned and controlled entities.

The Transformation Fund is aimed at aggregating existing funding available for transformation and collaborating with existing funds, including the KDF, to achieve its goals, he said.

Collaboration with existing funds would broaden the finances available to support transformation and deliver a greater impact by funding more beneficiaries, he said.

“KDF was established as part of the public-interest conditions of the acquisition by PepsiCo, and has delivered real transformation. This highlights that competition policy is an effective instrument that can be leveraged to advance inclusive growth.

“KDF is evidence that merger conditions can create targeted developmental impacts,” noted Tambani.