North West Roadshow Unpacks Blended Finance Scheme and Agro-Energy Fund for Farmers

Karen Scheepers
Jul 16
10 min read

The North West Department of Agriculture and Rural Development (DARD), in collaboration with the national Department of Agriculture, hosted an information-sharing session at the Potchefstroom College of Agriculture on 14 July 2025. The session aimed to unpack the Blended Finance Scheme (BFS) and the Agro-Energy Fund (AEF), two government-backed funding programmes designed to empower farmers, by explaining eligibility criteria and improving farmers’ access to these financial support tools.

Image: North West Department of Agriculture and Rural Development

Dozens of emerging farmers and agricultural stakeholders from across the province attended, eager to learn how these initiatives can help grow their businesses. Officials emphasized the significance of these programs in transforming agriculture and aligning with the country’s Agricultural and Agro-processing Master Plan (AAMP) goals of inclusive growth and sustainability.

Blended Finance Scheme: Combining Grants and Loans for Farmers

A focal point of the workshop was the Blended Finance Scheme (BFS), an innovative funding model that mixes government grants with loans from financial institutions to support qualifying farmers. Developed by the Department of Agriculture as part of its commitment to the AAMP, the BFS is designed to increase access to affordable finance for black producers in the agriculture and agro-processing sector gov.za.

Under this scheme, the government provides a grant (essentially an equity contribution) which is then “blended” with a loan from a partner financial institution, thereby reducing risk and cost for the farmer. “DALRRD provides a grant (as equity contribution for producers/farmers) and leverages private funding in order to increase access to affordable finance for black producers,” the department explains old.dalrrd.gov.za. This blended approach lowers the barrier to credit for emerging farmers who often lack collateral or credit history, effectively bridging the financing gap that has historically limited the growth of black farmers foodformzansi.co.za.

Eligibility and Partners: The BFS primarily targets commercially viable farming enterprises that are black-owned and managed, focusing on projects aligned with priority commodities identified in the master plang. Applicants must be South African citizens with valid IDs, and joint ventures are allowed provided the black ownership is significant Since its re-launch in 2021, when the scheme was revamped in partnership with the Industrial Development Corporation (IDC) to address initial shortcomings, the BFS has operated through strategic partnerships with both development finance institutions and private banks greenagri.org.za.

The Industrial Development Corporation (IDC), the Land Bank, and ABSA Bank were among the first partners to sign on, with agreements being concluded with other major banks like FNB, Nedbank, and the Small Enterprise Finance Agency (SEFA) to broaden the reach. Each partner brings capital in the form of loans or credit, while the Department of Agriculture injects grant funding. For example, from March 2021 to March 2024, the scheme invested R3.1 billion in the sector to develop 183 black farmers, of which about R1.2 billion was grant funding from the state.

The IDC alone approved 29 projects worth R1.915 billion (with R587 million as grants), creating over 1,400 jobs in that period. Land Bank supported 154 projects (R1.192 billion, including R617 million in grants) creating nearly 2,000 jobs. The inclusion of commercial banks is recent, ABSA signed on in May 2024 and has been preparing its branches to roll out BFS loans alongside the grants. This public–private partnership model, officials note, is vital to scale up support. “Strategic partnerships like these are critical to ensure growth, food security, development of farmers and transformation of the agricultural sector,” Agriculture Minister Thoko Didiza has stated gov.za.

The goal of the BFS is not only to finance individual farms but to catalyze structural change in agriculture. By blending funds, the government and its partners aim to commercialize emerging farmers, enabling small-scale and under-resourced producers to expand into mid-size and commercial operations. This, in turn, is expected to drive job creation, increase agricultural output, and improve food security.

To date, hundreds of farmers have benefitted nationwide; the national Department of Agriculture reported that by 2025 the BFS had supported over 225 black producers and created nearly 4,000 jobs greenagri.org.za. However, demand still exceeds available grant funding, a point raised during discussions. A Land Bank executive at a recent forum noted that many new-era farmers lack “strong financial muscles,” so the grant portion “bridges that gap,” but he cautioned that “it’s a big limitation” if grant pools aren’t increased to meet the growing appetite for the scheme.

Agro-Energy Fund: Powering Sustainable and Energy-Efficient Farming

Alongside the BFS, the session shed light on the Agro-Energy Fund (AEF), a specialized funding instrument to promote sustainable, energy-efficient agriculture. The AEF is another blended finance initiative, established in partnership with Land Bank, that provides both grants and loans to farmers investing in alternative energy solutions for their operations gov.za.

Launched in August 2023 with a capital pool of R1.2 billion, the fund was created in response to South Africa’s energy crisis and climate commitments personal.nedbank.co.za. Its purpose is to help farmers acquire solar panels, battery systems, biogas digesters, efficient irrigation equipment and other green energy infrastructure that can power farms while reducing reliance on the national grid By doing so, the AEF aims to shield agricultural production from the disruptions of load-shedding and rising electricity costs, ensuring stability of food production even amid energy challenges.

How it Works:

The Agro-Energy Fund provides financing for on-farm capital projects that improve energy efficiency or generate renewable energy, for example, solar installations to run irrigation pumps, or solar-powered cold storage for horticulture. “The fund will focus on intensive agricultural activities, including irrigation, intensive production systems, and on-farm cold chain activities,” according to Land Bank, and is designed to make alternative energy more accessible for farms of all sizes personal.nedbank.co.za. All farmers and agro-processors are eligible to apply, regardless of race or scale, as long as they operate a viable agricultural business and propose an energy project that offsets grid electricity use.

Like the BFS, the AEF uses a blended model: applicants must qualify for the loan portion first, after which a grant is added to improve affordability. The grant-to-loan ratio works on a sliding scale, smaller-scale farmers may receive a higher proportion as a grant, while larger commercial applicants get more in loans. This ensures that emerging farmers receive a bigger boost, reflecting greater need. The typical uses of AEF funding include purchasing solar power systems, energy-efficient equipment, and infrastructure to reduce diesel generator reliance. In its first nine months, the AEF approved projects worth R24.4 million, with roughly one-third given as grants (about R8 million) and two-thirds as loans gov.za. Although still in early stages, this fund is seen as a “game-changing opportunity” for farmers to invest in renewable energy, cut operational costs, and contribute to environmental goals.

Speakers highlighted that the AEF complements the BFS by tackling a critical cost-driver in farming. Energy expenses and power interruptions have eaten into farm profitability in recent years; thus, sustainable energy investments can greatly enhance farm resilience and productivity. By making solar technology affordable, the AEF not only promotes greener farming but also helps safeguard the food supply chain from electricity instability. Nedbank has partnered with Land Bank as an implementation partner for AEF, assisting farmers with tailored solar energy plans and installation support through its Avo Solar platform. This kind of collaboration underscores a broader trend of banks supporting sustainability in agriculture.

Aligning with the Agriculture and Agro-Processing Master Plan

Both the BFS and AEF initiatives are grounded in the national Agriculture and Agro-Processing Master Plan (AAMP), a sector-wide strategy adopted in 2022 to drive inclusive growth and transformation in South African agriculture gov.za. The AAMP identified access to finance and infrastructure, especially for historically disadvantaged farmers, as key pillars for developing a more equitable and competitive agricultural sector. By providing blended finance, the government and its partners address one of the biggest constraints new farmers face, lack of capital, thus operationalizing AAMP’s commitment to open up the industry.

The Blended Finance Scheme was explicitly created as part of AAMP efforts to broaden finance for black producers, thereby accelerating their entry into value chains that remain largely white-dominated. It directs funding toward priority commodities and value chains outlined in the master plan, such as horticulture, grains, and livestock, to bolster production in those areas. Likewise, the Agro-Energy Fund supports AAMP’s focus on sustainability and climate resilience by helping farmers adopt clean energy, aligning with the plan’s emphasis on modernizing agriculture and safeguarding it against climate and infrastructure risks.

Critically, both programs serve the AAMP’s overarching goal of inclusive growth. The Master Plan calls for raising the participation of smallholders and black entrepreneurs in commercial agriculture, alongside large-scale farmers, so that the sector’s growth benefits a broader base. The BFS and AEF are tools to make this inclusion a reality. Through these schemes, emerging farmers gain not just funding but also capacity-building (such as technical support from partners like IDC and Nedbank) that improve their odds of success. Government officials at the roadshow noted that such blended finance models exemplify the public-private partnerships championed by AAMP: they leverage private capital and expertise together with public funds to maximize impact. This collaborative approach is seen as essential for meeting the Master Plan’s targets in job creation, export growth, and rural development.

Among the specific AAMP-aligned outcomes the BFS is meant to achieve are:

Economic growth in the agricultural sector and expanded production capacity.
Accelerated land redistribution and farmer empowerment, by funding black entrants to acquire or expand farms.
Job creation and improved livelihoods in rural areas as farms scale up.
Increased exports and import replacement, by boosting output in key value chains.
Sector transformation, ensuring more diverse ownership and a new generation of commercial farmers.

These goals, reiterated during the session, underline why the government is investing heavily in schemes like BFS (with over R3.2 billion committed over 10 years in partnership with Land Bank alone gov.za) and why new funds like the AEF have been launched. The roadshow reinforced how each farmer accessing these programs contributes to the larger vision of a thriving, inclusive agricultural economy.

Potchefstroom Roadshow Highlights and Farmer Engagement

At the Potchefstroom information session, one of several being rolled out to raise awareness, officials provided practical details on accessing the BFS and AEF, and fielded questions from the audience. Ms. Elder Mtshiza, Chief Director for the Comprehensive Agricultural Support Programme at the national Department of Agriculture, delivered the main presentation on the Blended Finance Scheme. She walked the attendees through how the scheme works and its evolution, noting that the BFS was first piloted in 2018 and re-launched in March 2021 with a stronger framework to ensure better outcomes.

“We had to eliminate previous financial and technical deficiencies,” Mtshiza explained, describing the new memorandum of agreement with banks which stipulates the government’s grant acts as equity while banks provide the credit portion greenagri.org.za. She highlighted success stories of farmers who have already benefited and outlined the application process, emphasizing the importance of a sound business plan, proof of land access, and compliance with the qualifying criteria. For instance, applicants need to fall within the targeted commodity sectors and, for BFS, must demonstrate majority black ownership in their farming enterprises gov.za.

A representative from the Land Bank followed with a presentation on the Agro-Energy Fund, explaining how farmers can apply for financing to install solar power or energy-efficient equipment. The presenter underlined that the AEF is “open to all farmers and agribusinesses” and that its aim is to reduce the impact of load-shedding on farming operations by funding alternative energy projects personal.nedbank.co.za. Technical details were provided on how the grant-loan blend is determined (with smaller farmers receiving up to half the cost as a grant, for example), and attendees were advised on preparing the necessary documents like energy audits, quotes for equipment, and financial statements to support their applications.

Both Ms. Mtshiza and the Land Bank officials reassured farmers that government and banks are ready to assist with the paperwork and mentorship to improve the success rate of applications, given that many emerging farmers are first-time entrants into formal finance.

During the interactive Q&A session, local farmers raised a range of questions and concerns. Eligibility criteria were a hot topic, for example, a young farmer asked if cooperatives or group-owned farms could apply, to which the officials responded that collective entities could qualify under the BFS as long as they meet the 60% black ownership threshold and are commercially viable. Another farmer inquired about interest rates and repayment terms on the loan portion.

The Land Bank representative explained that interest rates are competitive and projects are assessed on their merit; importantly, the grant component significantly reduces the debt burden, making the financing more affordable than a standard bank loan. There were also questions about timelines, how long it takes from application to approval. Officials noted that, once all documents are in order, approvals for viable projects can happen within a few months given the partnership structures already in place.

Farmers also shared their perspectives on challenges they face, such as high input costs and unreliable electricity. In response, the presenters stressed that these programs are designed precisely to tackle such hurdles: the BFS to inject much-needed capital for inputs and expansion, and the AEF to fund solutions like solar panels that cut energy costs.

While no formal testimonials were given at the event, the sentiment echoed what other beneficiaries have expressed elsewhere, that blended finance is a “crucial tool for bridging historic financial divides” in agriculture foodformzansi.co.za. The atmosphere was one of enthusiasm, with many participants grabbing application forms and pamphlets at the end of the program. According to DARD officials, over 100 people attended the roadshow, including farmers from all district municipalities in North West, agricultural extension officers, and representatives from agribusiness firms. The diverse turnout underscored a broad interest in these funding opportunities.

Empowering Emerging Farmers and Rural Economies

The Potchefstroom roadshow is part of the government’s broader strategy to commercialize emerging farmers and revitalize rural economies. By equipping previously marginalized farmers with capital and resources, initiatives like the BFS and AEF aim to unlock the productive potential of rural areas. This strategy was reinforced in closing remarks by a senior DARD official, who noted that supporting emerging farmers to become fully fledged commercial producers will not only increase food production but also create jobs in the countryside, from farmworkers to agro-processing, thus fighting rural poverty and unemployment. The government’s message is clear: access to finance and technology should not be barriers to growth. Through blended finance schemes, the state and private sector share risks and co-invest in farmers’ success, ensuring that those with viable projects have a fair chance to succeed.

As South Africa contends with dual challenges of transforming agriculture and ensuring sustainability, the Blended Finance Scheme and Agro-Energy Fund represent a proactive solution. The Potchefstroom session and similar engagements countrywide, serve to demystify these opportunities for farmers on the ground. If the robust turnout and positive response in North West are any indication, there is keen appetite among farmers to leverage these schemes.

Officials expect a surge of applications in the coming months from the province. The ultimate success of the BFS and AEF will be measured in new commercial farm enterprises established, megawatts of solar energy installed on farms, and increased output from previously under-funded producers. For now, the government and its partners are doubling down on support for emerging farmers, convinced that empowering this cohort is key to energizing rural economies and securing South Africa’s food future gov.za.