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Nedbank goes beyond banking to help ensure the sustainable development of South Africa's agri sector

Johannesburg; November - Given the significant challenges that agri-businesses face today, it is no longer sufficient for banks to merely be funding producers, agri businesses and service providers to South Africa's agriculture sector.

That's the view of Zhann Meyer, Africa Head of Agricultural Commodities for Nedbank Corporate and Investment Banking (CIB), who points out that the combination of rising temperatures, growing food insecurity, and an increasingly water constrained future is putting immense pressure on all participants in the country's agri sector, and he emphasises the role that banks must play in helping to secure the sustainability of the sector.

"For Nedbank CIB, this imperative to go beyond banking lies at the heart of our purpose to use our financial expertise to do good," Meyer explains, "and it is a cornerstone of our commitment to leverage our position in society, and our relationships with our clients, to make a tangible contribution to the achievement of the Sustainable Development Goals (SDG’s)."

He cites a number of recent innovative transactions completed by Nedbank CIB for its agri-sector clients as evidence of the way in which Nedbank is delivering on this purpose and going beyond banking to contribute towards the achievement of the SDGs, notably SDG 12.

One of these is the recently concluded working capital finance facility engineered by Nedbank CIB for its long-standing agri client, IdeaFruit. The facility includes a medium term loan to construct and commission a photovoltaic energy plant. The concept, which resulted from collaborative innovation between Nedbank and IdeaFruit, will effectively allow the fresh produce exporters to harness solar energy to refrigerate up to 70 000 bins of apples and pears in controlled atmosphere pack houses, ahead of their export to international markets.

"The idea of using the heat of the sun to refrigerate fresh produce exemplifies the commitment of Nedbank to its brand promise to help its clients to See Money Differently," Meyer explains, "and through the application of innovative, out-of-the-box thinking, the funding facility has not only transformed the way IdeaFruit approaches refrigeration, but also saved the company an immense amount of money in energy costs, cut its carbon emissions significantly, and enabled it to contribute towards the achievement of SDG 12 through more sustainable production and consumption practices."

Meyer presents Nedbank CIB's relationship with the Humansdorp Cooperative in the Eastern Cape as another example of how the bank is shifting paradigms when it comes to serving agriculture stakeholders. The co-op serves over 1 300 farmers in the area, many of who are facing significant challenges as a result of climate change and water constraints.

"While we could have simply presented the Humansdorp Co-op with a loan to fund its support of these farmers," he explains, "we chose instead to deliver on our Nedbank purpose by taking the time to fully understand the challenges of farmers in the region, and then work with the co-op to find solutions to them."

As a result of this 'doing good by going beyond banking' philosophy, Nedbank CIB provided the Humansdorp Cooperative with funding comprising a flexible borrowing base and working capital facility that has been designed to allow it to support its farmers with sustainable farm interventions, ranging from water storage maximisation solutions and citrus orchard health interventions to thousands of square meters of shade netting to reduce evaporation and improve fruit quality.

"By investing our time and expertise into the careful development of these targeted finance solutions, we have not only set these farmers up to reduce their water usage," Meyer says, "but in the process, we are enabling them to expand their farming operations without placing undue pressure on the resources they have."

"The stellar growth in global populations will continue to put increasing pressure on food security levels in the years to come," Meyer concludes, "and with global agriculture already facing more than its fair share of environmental and economic challenges, it is imperative that financial institutions evolve in terms of their approach to agriculture investment. For us at Nedbank CIB, that means being innovative, solutions-driven business partners to all agri-sector stakeholders, rather than simply providing them with loans and bank accounts."


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