Agro-Processing and Agriculture

HOWWE FUND BUSINESSES IN THE
AGRO-PROCESSING AND AGRICULTURE SECTOR

Driving Industrial Development and Facilitating Job Creation

 

One of the objectives of the Agro-processing and Agriculture Strategic Business Unit (SBU) is to invest in the development of projects and businesses that either create new or expand local manufacturing capacity – which often results in the creation of new jobs as well as replacing imports, facilitating increased exports, and enhancing competitiveness. This is done by, amongst other things, reducing production costs by introducing new technologies, increasing efficiencies,  and promoting a value chain approach.

 

The aim is to develop a competitive industry in the food, beverage, forestry, and agro-derivative industries that utilise and develop local and regional resources to supply domestic demand and increase international trade participation.

 

This is achieved by expanding production capacity and promoting value-adding expansionary agro-processing activities in a manner that fosters economic inclusivity. The SBU also provides funding to agro-processors that want to increase their procurement levels from historically disadvantaged farmers or farming communities.

 

Through various funding and project development activities, we aim to have the following impact on the South African economy:

 

  • Promote, and expand industries, creating and preserving jobs and driving sustainable economic growth.
  • Enable local industries to ensure better utilisation of resources and infrastructure.
  • Improve operating margins and improve competitiveness.
  • Reduce imports and increase exports in the sector.
  • Achieve development goals of BEE and broad-based inclusivity, youth, and women ownership in businesses.

 

The Agro-Processing And Agriculture business unit supports a wide range of economically viable activities in agro-processing (food and non-food) sectors.

WHAT WE FUND

 

The IDC Agro-processing and Agriculture Strategic Business Unit (SBU) funds processing in the following sub-sectors of the agriculture value chain:

Horticulture including fruit, vegetables, nuts, tea and coffee

Field Crops Processing

Animal Protein, including red/white meat, aquaculture, poultry etc.

Forestry

The SBU can also consider backward integration into primary agriculture, where this forms part of the business and adds to the business’s competitiveness.

 

The SBU can also consider projects and transactions where land has been transferred back to communities and other broad-based groups to set up viable projects on such land.

WHO SHOULD APPLY FOR FUNDING?

We encourage new or existing companies within the agro-processing and agriculture sector that plan to create new or expand industrial capacity within the economy to apply. We can also consider the funding of expansionary BBBEE acquisitions in the sector where the majority of the acquisition funds remain within the target company for expansionary purposes (usually through an issue of shares).

HOW DO WE FUND BUSINESSES IN THE AGRO-PROCESSING AND AGRICULTURE INDUSTRY?

The funding application should preferably facilitate the creation of new industrial capacity, save and/or create new jobs.

Risk-sharing from operating private-sector investment partners is non-negotiable and the shareholders will often have to guarantee the funding of shortfalls

HOW DO WE STRUCTURE FUNDING?

Start-up businesses: IDC’s preferable maximum funding equates to 60% of the total funding requirement (for start-ups).
Expansion projects: IDC can fund a full expansion if the equity structure at peak is a minimum of 35%.

 

Preferred equity structure for start-up projects of at least 50% at peak.
Actual final funding structuring and splits are finalised during our due diligence.

 

BBBEE conditionality: We expect all business partners to have at least a level 4 accredited BBBEE rating or that they provide the IDC with an undertaking to achieve such rating within a specific time period. BEE empowered, women and youth-owned businesses are encouraged to apply. Value-chain based projects are preferable.

INVESTMENTS IN THE REST OF AFRICA

The project must be of direct benefit to South Africa in any of the following ways:

 

  • Must promote regional economic development with linkage to SA
  • Upstream / Downstream businesses within IDC value chains
  • Must develop and integrate regional value chains in line with IDC priority sectors
  • Must support the implementation efforts of the AFCFTA in order to entrench the development of regional VCs and a move away from a reliance on offshore supply chains
  • The minimum size of the total project funding requirement must be:
    • R5-million SACU-based investments
    • USD 3 million for SADC-based investments
    • USD10-million for investments in countries outside SADC
    • Rand, US Dollar and Euro-based funding are available.

HOW TO

APPLY FOR FUNDING

Application for funding should be in writing and should include an executive summary and a business plan.

STEP 1

BUSINESS PLAN

Draw up a well-researched business plan, stating a compelling case for funding

STEP 2

REGISTER ONLINE

*Applications can also be submitted at the IDC office

STEP 3

UPLOAD APPLICATION

Upload your application with the relevant documents, certificates and business plan

STEP 4

PROCESS APPLICATION

IDC will confirm that it has received your application. While processing we may ask you to supply extra information or documentation

STEP 5

APPROVAL STATUS

IDC will give you feedback on the outcome of your application, in writing. If your application is successful, due diligence will be conducted on your business.

STEP 6

LOAN CONTRACT

Once the IDC has satisfied itself of your bona fides, you will be asked to sign a loan contract

OTHER INDUSTRY SECTORS

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