Funding opportunities for Agribusinesses in South Africa.

With the high unemployment stats continuing to get worse, young people in this country are put in a position to take matters into their own hands and start their own agribusinesses. For many youth in the agricultural industry, they are equipped with the know how in terms of qualifications which is an asset they depend on to successfully run their projects. But with all the knowledge and experience, it is difficult to grow an agribusiness in a declining economy with a lot of uncertainty. Funding has been one of the catalysts or accelerators of small business growth as it equips the small business with the core infrastructure or tools to allow growth to take place.

Many agribusiness funding are mostly targeted for youth in South Africa but not all of them so if you are above 35, there is still other funding opportunities you can utilise. It’s important to understand that there are different types of funds available with different conditions so as an entrepreneur you must be aware of what suits your business. Let’s look at the types of business funding’s available in South Africa.

Business grant

Grants are financing a business receives with no intention of repaying it back, it is what it say it is, a grant. These types of funding’s are normally provided by government with grant funding programs like NYDA. We will look into depth later on the article on this.

Loans

This is one of the most common practices of agribusinesses who are looking to grow their business to the next level. This is normally viable for existing growing businesses than start-ups. In South Africa it is very difficult to get a business loan to start a business. Private financial institutions like Banks are the common financial providers.

Crowd funding

With this option you raise the total amount of funding you need online from the general public. People can either lend you the money (peer-to-peer lending) or take a stake (shares/equity) in your business. It is most suitable for businesses with a great growth potential that will attract plenty of attention, and with time on their hands - it can take a while.

Pros

The larger the pool of people you can reach, the more chance of getting a good deal.

Cons

It can take a long time to hit your target, and you may have to invest a lot of effort in publicity.

Friends and family

It's common in the early stages of a business for parents, siblings or friends to financially support your business. This option is most suitable for businesses that need initial support to prove the concept can be successful, to the point where they can seek other funding.

Pros

It's a quicker funding process with flexible terms. Depending on how much interest you pay your friends and family, this could be a great investment for them

Cons

Mixing business with family and friends' finances can damage relationships if things go wrong. You'll need to carefully assess the possible impact of business failure before proceeding.

Business angels

Angel investors are wealthy individuals who provide funding in exchange for a share in your business. Some investors work in groups, whilst others work on their own. Business angel investment is not suitable for businesses who want to retain 100% control of their business.

Pros

Apart from the cash, angel investors will have experience and should be able to offer valuable business advice and guidance.

Cons

You're likely to have to give up control of your business to some extent

Incubators or accelerators

These are programmes designed to scale and grow ambitious start-ups. They provide mentoring and a small seed investment in return for equity in the start-up.

Pros

In addition to funding, these programmes offer structured training and valuable expertise to help develop your business.

Cons

The application and selection process can be gruelling.

Venture capitalist

These are investors who put in a considerable amount of money - generally a larger investment than an angel investor would provide - in exchange for equity in the business. Often their objective is to help the business to grow quickly, so that they can realise a good return on investment in a short time frame. If you're a start-up with high growth potential and don't mind giving up some equity, venture capital funding is a good route to both secure funding and mentoring.

Pros

In addition to the funding, venture capitalists offer expertise to help develop the business. They can also open doors to other contacts in their network.

Cons

You're likely to have to give up a large chunk of your business, because of the significant amount of funding provided.

That gives you an idea of the different types of funding one might seek out based on what suits their business. People need to get out of the mindset that business funding only means government business grant because we end up losing out on many funding opportunities as we are only looking at the government to fund us because it is non repayable. That can take years which might end up discouraging you in your business. But we understand the importance of knowledge and we know that there are many government supported business grants that can be of help to many entrepreneurs, not just in Agriculture.

Let’s look at the available business grants available in South Africa

Agro-Processing Support Scheme (APSS) – Department of Trade, Industry and Competition (DTIC)

The scheme targets businesses in food and beverage value addition and processing (including black winemakers), furniture manufacturing, fibre processing, feed production, and fertiliser production.

Black Industrialists Scheme (BIS) – DTIC

Grant programme of the Black Industrialists Policy that aims to unlock the industrial potential of predominantly black-owned and black-managed businesses within the South Africa economy.

Business and Arts South Africa Supporting Grant Programme

Incentivises business sponsorship of the arts, through the provision of additional funds to a sponsored arts organisation.

Co-operatives Incentive Scheme (CIS) – Department of Small Business Development (DSBD)

A 100% non-repayable business grant to improve the viability and competitiveness of co-operative enterprises. It helps to lower cooperatives’ cost of doing business through an incentive that supports Broad-Based Black Economic Empowerment.

Clothing and Textile Competitiveness Improvement Programme (CIP) – DTIC

Programmes makes available non-repayable business grants allocated for the formation of clusters of either similar manufacturing entities or a value chain cluster, comprising e.g. manufacturers, suppliers and retailers.

Infrastructure Investment Programme for South Africa (IIPSA) – Development Bank of South Africa (DBSA)

Provides innovative financing, involving the blending of EU grants together with loans from participating Development Finance Institutions.

Export Marketing and Investment Assistance (EMIA) – DTIC

The scheme develops export markets for South African products and services and to recruit new foreign direct investment into the country.

Pre-commercialisation Support Fund – Technology Innovation Agency (TIA)

Grant enables innovators to evaluate, demonstrate and advance the value proposition and commercial potential of their research outputs.

Tourism Transformation Fund – National Empowerment Fund (NEF)

Funding earmarked to transform the tourism sector. To qualify enterprises must provide services to tourists as its direct clients. The enterprise must be at least majority (51%) black-owned. The grant portion of the funding is capped at R5-million per successful applicant.

National Youth Development Agency – NYDA

Support for young entrepreneurs in the form of non-repayable business grants and non- financial business development support. The programme aims to enable youth entrepreneurs to establish or grow their businesses.

Youth Pipeline Development Programme – Industrial Development Corporation (IDC)

A part of the IDC Special Scheme business support and grant funding programme. This grant assists potential applicants to improve the readiness of their proposal.

Sector Funding – TIA

Programme works to increase the rate of commercialisation of viable intellectual property from South African technologies emanating from higher education institutions.

Support Programme for Industrial Innovation – DTIC

This incentive provides financial assistance for the development of commercially viable products and processes. Similarly, it facilitates commercialisation of such technologies.

Seed Fund – TIA

The purpose of the fund is to increase the rate of commercialisation of viable intellectual property from South African technologies emanating from higher education institutions.

Sector Specific Assistance Scheme – DTIC

This scheme compensates for costs in respect of the approved activities aimed at the development of South African emerging exporters through events. This incentive provides financial support for physical and digital events participation by qualifying emerging exporters.

Seda Technology Programme (STP)

This programme offers non-repayable small business grants. Additionally entrepreneurs can access support services, including incubation, quality and standards and technology transfer services.

and we are sure that there are still many other funding opportunities out there, it is upon you as business person to go out and research more. get in touch with us if you are looking for assistance in compiling the documentation for some of the funding opportunities.

Happy Wednesday!