Tongaat, Sefa partnership has benefitted 68 sugarcane growers

29th March 2021

By: Marleny Arnoldi

Deputy Editor Online

     

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A six-year service level agreement between sugar manufacturer Tongaat Hulett and the Small Enterprise Finance Agency (Sefa) has benefitted 68 growers and contractors, with 652 jobs created in KwaZulu-Natal.

The service level agreement, which was signed in 2014 between Tongaat and Sefa and which draws to a close this month, was based on a capital commitment of R50-million by Sefa in the form of concessionary loan finance to Tongaat’s black growers and contractors.

Tongaat sugar corporate affairs director Nkonzo Mhlongo says the company adopted a hands-on approach to implementing the agreement.

“We worked with loan applicants to help collate the necessary documentation to ensure they had the best chance of success when applications were submitted to the credit committee.”

Mhlongo adds that, apart from the assistance given to growers and the new jobs created, the long-term nature of the loans had resulted in a total of 998 jobs being maintained by the growers and contractors involved in the scheme.

“This is most heartening and we are delighted to have been able to contribute to the creation and maintenance of these jobs, as well as working with and supporting emerging growers and contractors,” she notes.

Over the term of the facility, R39.5-million was disbursed to black growers and contractors. This was largely owing to the fact that some of the repaid funds were lent to other applicants. 

The first year of the agreement saw the highest number of loans approved and paid out, R20-million, which is 53% of the total amount of loans disbursed. 

Loans slowed down in 2015/16 and 2016/17 owing to the two-year drought that affected KwaZulu-Natal.

The loans were used to accelerate the farm expansion programme by the growers, as well as to buy much-needed equipment including irrigation equipment.

Sefa is a development finance institution whose mandate is to foster the establishment, survival and growth of small, medium-sized and microenterprises and contribute towards poverty alleviation and job creation. 

The service level agreement between Tongaat and Sefa was subsequently replaced in 2015 by an unincorporated joint venue (UJV), which still aimed to finance small-scale growers and mechanisation contractors. 

At the signing of the UJV, it was agreed that the loans granted to growers and contractors would be limited to R5-million per grower or enterprise and that Tongaat would provide mentorship support, training and grower development services.

It was also agreed that all monies recovered from the growers and the contractors would be made available for re-lending to other eligible growers and contractors provided that the loans are repaid before the termination of the UJV this year.

 

 

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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