Day Month Year

Trialogue CSI Matters Conference“Enterprise Development:

In pursuit of independent and sustainable enterprise.” 24 May 2011

Corporate Background

• Development finance institution

• Plays a central role in the implementation of the New Economic Growth Path and Industrial Development Action Plan (IPAP2)

Mandate: • Develop balanced, competitive and sustainable economy• Develop industrial capacity• Industrialisation in Africa – focussing on integrating regional value chains

To meet the following objectives: • Job creation• Regional development, including rural development;• Fostering & Growing entrepreneurship;• Promoting broad based black economic empowerment;• Environmentally and socially responsible sustainable growth;• Increasing local production/ import substitution

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IDC ‘s CSI Programme

Very importantly .....Aligned to corporation’s core business strategy

Focus on three areas:

Economic development which encompasses enterprise developmentEducation (maths, science and technology at secondary school levelHealth (HIV & AIDS)

• National footprint with a bias towards rural and underdeveloped areas

And initiatives led by women youth and people with disabilities

• Implement initiatives in partnership with non-profit organisations, government, tertiary institutions and other corporations

 

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CSI Enterprise Development Objectives

Address unemployment, poverty and skills shortage

Enterprise Development not a standalone but is integral part of social investment strategy

Promotes sustainable development and empowers beneficiaries to create own wealth

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IDC Nguni Cattle Project

Nguni Project established first in 2004 in Eastern Cape.

Partners with local universities and the provincial government

Its objectives are:

1. Upgrade cattle in some rural areas to Nguni status ( pure breeds)

2. To encourage emerging commercial Nguni farmers

Extended to 5 other provinces – Limpopo, North West and Northern Cape (2006), Free State (2008), Mpumalanga (2009)

Based on concept of “passing on of the gift” in communities

Governance: Trusts established to manage the Project

To date 222 Nguni cattle farms have been established across SA

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Nguni Cattle Project – the Limpopo case study

BackgroundEstablished in 2006, To date 24 farms established with the total herd size of 2005 cattleFarmers are “Gifted” 23 heifers / cows and 1 bull (IDC provides 12 and provincial

government another 12)

Some farmers have managed to service their ‘ gift/loan’ obligation within 2½ years of a 5 year term

Farmers sell excess male calves and bulls to generate income for farmsCalves sell at between R3000 and R4500 and bulls at between R5000 and R6 Beneficiaries able to return the cattle within 2.5 years and ready for

commercialisation 000

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Nguni Cattle Project – Limpopo

Value chain development and commercialisation strategy

Project feasibility study - to enable emerging farmers to play meaningful role in the industry

Realisation that beef production industry needs critical mass to be commercial

Project success has attracted attention of several partners for expansion

Partners in the feasibility project include: Angus South Africa – supply of Angus bulls Pick n’ Pay - main distributor of beef Beefcor – feedlot and abattoir operator Agricultural Research Council – offers technical support

20 Beneficiaries to be identified based on willingness & entrepreneurial ability

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1. Establish appropriate Partnerships – To leverage resources for maximum impact. Define partnership upfront, enter into formal agreement with clear roles and

responsibilities and all partners are equal

Forming partnership is complex, challenging and lengthy process but results are impressive

The strength of the Nguni Cattle Project is the partnership between the three institutions - IDC, Universities and Provincial departments of agriculture, rural development and land reform.

Formalised through independent Trusts that are to oversee the implementation. Each institution appoints two representatives as Trustees. Each Trust appoints a project manager responsible for the daily operations of the

Project. This approach ensures that each organisation is accountable for commitments made.

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Critical Success Factors ( CSF) and Learnings

CSF.... 2

2. Understand Group Dynamics

Work with recognised community structures and formalise informal groups.

Let beneficiaries choose their own leaders and ensure that proper governance processes are put in place for accountability.

Choose a facilitator that is acceptable by all to facilitate the process.

In the early stages on the project in Eastern Cape, beneficiaries were selected from communal farms with no clear governance procedures.

No one willing to take responsibility.

CSF.....3

3. As sponsor be willing to take make a long-term-term commitment

Recognise that rural development is a process that may takes long to yield results.

From 2004 in one province to 222 farming enterprises in 6 provinces. The potential benefits motivated the IDC to extend the project.

Adequate resources need to be committed from all partners.

IDC approved a grant facility of R45 million in 2006 which was later increased to R60 million to cater for escalating costs in the purchasing of cattle and inflation.

CSFs ... 4& 5

4. Implement initiatives that addresses beneficiary needs

Get community / beneficiary buy-in

Consider and upgrade skills where necessary, partner local institutions

5. Treat beneficiaries as equal partners

Listen and learn – to opinions and concerns of beneficiariesPproject success and sustainability relies mutual respect

CSF .....6

6. Build on available resources or existing initiatives to maximise impact

Nguni beneficiaries are selected from those who are already involved in cattle farming or have basic farming skills These farmers are preferred as they qualify for special grants from government for infrastructure development

Aligns with other government programmes such as Land Redistribution for Agricultural Development (LRAD) to access land for agricultural purposes or make better use of the land already accessed.

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CSF ..... 7

7. Work with local structures to select beneficiaries

The final selection of beneficiaries is the responsibility of Trustees based on a recommendation from the project manager, who works in consultation with local structures.

Chiefs / Traditional authorities – in most rural areas these are the only respected structures in the area. The land may be communal and therefore their support and buy-in is crucial

Government structures – the Project relies on extension officers from the department of agriculture to identify would be beneficiaries. These officers are available in each ward across the country.

CSF .... 8

8. Monitor, measure , evaluate and refine

Key to success of any project to ensure learning from mistakes as project develops

Trustees regularly visits the farms for inspection.

Project managers are also required to visit the farms regularly to address problems

Each province is required to evaluate its performance every two years

It is vital to agree on what the project will be evaluated on at the onset

Clear key performance indicators should be set and understood by all.

Other Learnings

1. Identification of appropriate beneficiaries is always a challenge

Open and transparent process. Interested beneficiaries are selected based on a strict criteria which includes :

Ownership / lease-right or use-right of land;

Land must be sufficient to accommodate livestock at recommended numbers;

Daily supervision of livestock must be ensured (owner, herdsman);

Where applicants own cattle these must be certified disease free prior to the arrival of the project animals (Nguni cattle);

For group applications establish legal entities and constitutions;

Applicants are expected to be willing to participate in a fair and transparent selection process , including short listing, interviews and an on-site visit to verify information provided.

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Other Learnings

2. Exiting from Project

Set realistic timeframes and be willing to extend exit.

Beneficiaries change of mind , not interested in establishing commercial enterprises–

focus resources on those that are willing and have the ability to commercialise.

In Limpopo where the project is ready for commercialisation, only those beneficiaries that have the appetite for business are being selected for the next phase.

3. Frequent leadership changes can cause delays in implementation

Appoint partner champions , and agree on binding Terms, rules and regulations upfront

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Avoid

Providing services and products that are not needed by the community

Judging communities by sponsor’s own standards

Consulting stakeholders that are outside the community and lack credibility and support of the locals

Implementing initiatives with no clear aims and goals – this presents challenges particularly when a funder exits

Lack proper assessment of the readiness of beneficiaries

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Conclusion

• Long way to go but objectives beginning to be achieved

– Empowerment of emerging and sustainable farming enterprises– Attracted the private and public sector partners– Job creation in rural areas– Project can be replicated in various communities– Good potential for enterprise development along value chain

( backward and forward integration) e.g.

Beef production Niche Market potential ( organic Nguni Beef) Leather tanneries

Day Month Year

Q & A