Designing a shared-value agri fund to finance rural land reform

Land reform is the most pressing and emotional political issue in South Africa. Genesis Analytics was approached by a banking client to design a solution to support rural land reform and to transform the farming sector. The purpose of the fund was to support the transformation of sustainable large-scale commercial agricultural businesses owned by black South Africans.

The core problem was identified: that black farmers hold very little of the most highly productive and valuable land. Our research found that there were barriers to black farmers right along the value chain: from poor access to land, poor access to investment finance, poor access to working capital, poor access to markets, and to insufficient technical support.

Solving one of these would not be sufficient; all five gaps needed to be solved by one fund simultaneously.

Based on this, we designed a commercial agricultural investment fund based on Shared Value principles to allow banks, agricultural input companies, food retailers, and technical bodies to act and invest together to solve all five issues.

This was a shared-value solution: creating partnerships that together can innovate to find a solution to a major social challenge, using the private sector’s core expertise while generating commercial returns.

The client took the fund design to the banking industry CEOs, who overwhelmingly approved the fund and they will invest R8.9 billion in it over 10 years.