PLANS were under way to establish a rural co-operatives bank partly owned by beneficiaries of the government’s land reform programme, says Rural Development and Land Reform Minister Gugile Nkwinti.
The proposed bank would facilitate the funding of initiatives in rural areas amid claims that established financial institutions have been reluctant to finance agribusiness initiatives by entrepreneurs lacking collateral.
Addressing farmers and agricultural groups at a development evaluation workshop in Boksburg at the weekend, Mr Nkwinti said the green paper on rural development and land reform was proposing the establishment of a rural development agency that would be anchored by a rural co-operatives bank partly owned by farming communities.
Mr Nkwinti said the department was considering depositing 70% of an agreed seed fund to establish a rural co-operatives financing facility, with farmers taking up shares to make up the remaining 30%. They would progressively buy 50% over a period of at least five years and hopefully take up 100% ownership of the bank in 10 years.
He said his department would then use the bank to reach farmers, assisting with the purchasing of equipment, seed and fertilisers in addition to supporting women and youth in the craft sector and other rural industry initiatives. Mr Nkwinti said it could even be made compulsory for those benefiting from the state recapitalisation programme to use the bank for borrowings and savings.
"The programme would usher in great possibilities for wealth creation and ownership by rural producers of goods and services, while creating a strategic basis for sustainable development of the rural economy," he said.
Lindie Stroebel, the Agricultural Business Chamber’s economic intelligence and finance manager, said the chamber would welcome initiatives to encourage and promote the culture of saving among land beneficiaries.
Such a facility should be linked to an experienced private or developmental financial institution to help raise funds easily from the market and impart technical and management skills, she said.