Stimulating the rural economy
TechnoServe, an organisation with international experience in alleviating rural poverty and linking small entrepreneurs and farmers to commercial markets, could show the government how best to tap the assets of the former homelands.
A not-for-profit company, it was started by an American medical doctor and businessperson, Ed Bullard, in 1968 in Ghana. It now operates in 28 countries in Latin America, Africa and Asia.
TechnoServe has been in South Africa since 2003 and has 26 staff members working on nine funded programmes, which assist nearly 900 entrepreneurs, 300 of them small commercial farmers. Small-farmer agriculture is its chief focus, but it also runs projects in tourism, construction and light manufacturing.
In Southern Africa, it is most famously known for rehabilitating Mozambique's cashew industry, which collapsed after the Portuguese left. TechnoServe took a leading role in establishing smaller, local processing factories and assisting small farmers to supply them.
TechnoServe is concerned not only with primary production, but also with the markets and other elements in the supply chain.
"A fundamental lesson we have learnt in the many countries in which we work is that, if you secure sustainable markets, small farmers will pull themselves out of poverty," said Earl Sampson, TechnoServe's country director in South Africa.
Locally, TechnoServe is trying to link up with the large wholesalers and retailers whose distribution systems handled 80% of fresh produce.
"The most important thing is to give the small farmers guaranteed off-take for all of their produce. Low grades will generally go to lower-priced informal and other local markets; higher grades will be sold to upmarket retailers," Sampson said.
The organisation has formed partnerships with the private sector, but recently it has linked up with the South African government. Sampson said that "growing our work to scale in South Africa, which means bringing on to the land hundreds of thousands of black farmers, cannot be done without the partnership and support of the government".
Local companies provide most of its funding, but a portion is now coming from the government for a programme to support small farmers in producing for both the government and commercial markets.
In South Africa, TechnoServe generally pursues projects with a cluster of farmers who have some sort of common asset, such as farming experience, equipment or local infrastructure – for instance, irrigation. These small farmers usually have four to five hectares of land.
A major concern is how to exit projects. For example, in a Mpumalanga sugar project, the community reverted to planting cheaper but inappropriate seed following TechnoServe's departure.
"A structure has to be created that will sustain the advances made. When we depart we try to leave behind a co-operative or company with a single chief executive at whom accountability stops."
TechnoServe tries to identify projects that will have the greatest impact. It believes microenterprises, which generally employ one person – the owner – will not solve South Africa's employment problem.
But small and medium enterprises, which employ a few people each, will. "One million entrepreneurs will create the five million jobs the president wants," Sampson said.
Many of these small enterprises could be small commercial farmers in former communal areas. But in most of them agriculture is worse off than it was during apartheid, mainly because much of the government support fell away in 1995 after the homeland administrations were scrapped and centralised in Pretoria.
In Jozini in KwaZulu-Natal, for example, almost 18 000 hectares of irrigation infrastructure are available, but only about 2 000 hectares are in use. The pattern is repeated in many places.
Although there are at least 20 000 black farmers, many more than there are commercial farmers, they account for only 2% of agricultural gross domestic product. Like their white counterparts, many black farmers are relatively old.
But in places such as Limpopo many young people are interested in farming, a trend that might grow if organisations like TechnoServe can make clusters of small farmers more commercially viable.
Spin-offs immediate for far-flung community
TechnoServe, which provides business solutions to alleviate poverty, says Massmart-Walmart's commitment to a three-year supplier development programme with the non-profit organisation shows that small-scale farmers can supply to large retail or wholesale chains.
The TechnoServe-Massmart deal stems from one of the key elements of the approval for Massmart's entry into South Africa – the creation of a R100-million supplier development fund to improve the competitiveness of South African manufacturers and producers. TechnoServe has partnered with Walmart before in South America and India with its Direct Farm programme.
The TechnoServe-Massmart pilot project is in the Trichardtsdal area of Limpopo and is starting with 30 to 50 small-scale farmers. The red soil is ideal for growing vegetables, but the long distances to the markets proved too high a barrier for small-scale farmers. But when TechnoServe saw the possibilities, it partnered with the Wasserman brothers, who were previously vegetable farmers, and established E-Fresh, a fresh produce market that takes the produce of local farmers and supplies it to hawkers and larger fresh produce markets.
The programme includes training, mentoring, technical assistance and establishing links to both finance and retail markets.
A pilot project was begun in December last year with 13 one-hectare crops of tomatoes, a good cash crop with high demand. The first crop was harvested in April and it has already had an impact on the area.
"TechnoServe has brought us a market [and] I have cash in my hands for the first time," said Boesman Matebula, who has been farming in the region for 25 years.
Matebula, who has three wives and is the father of 25 children, now employs 20 workers. "I feel like I am helping the community too. There were no jobs here before and the families are now much happier."
Phindile Nkosi is building a house for herself and her four children. This sole breadwinner said: "Now I can see what farming is. I used to sell 10 crates and think that was a lot. Now I'm selling to the market and doing much better."
Another entrepreneur, Gideon Thango, has created a large vegetable garden next to his tomato crop. Now the local community buys their spinach, beetroot, green peppers and chillies directly from him.
Thango, a father of four young children, employs seven workers who are assisted by between five and 10 casual labourers. "The training has helped so much. I have moved from eating to making profit."