Most countries have a public institution to finance the buying and management of land, equipment, crops and livestock in the agricultural sector. South Africa is no different – the state-owned Land and Agricultural Development Bank of South Africa (Land Bank) partners with the private sector in several initiatives to support development in agriculture.

In a recent initiative, Nedbank partnered with Land Bank through Avo Solar to provide access to sustainable energy systems for farmers and agribusinesses. The aim is to enhance their operational efficiency and drive sustainable growth in the sector.

Land Bank’s Agro Energy Fund (AEF) has been created to fund the acquisition of alternative energy solutions for agricultural activities, and Nedbank is partnering with the AEF to support growth, resilience, and a greener future through sustainable energy.

Land Bank’s Agro Energy Fund

The AEF is a blended finance programme, established in partnership with the Department of Agriculture, Land Reform and Rural Development to provide funding support for farmers to buy alternative energy assets. This will reduce the impact of load-shedding and power failures on farming operations and the agricultural sector.

The fund will focus on finance for intensive agricultural activities, including irrigation, intensive production systems, and on-farm cold chain activities. The R1.2 billion fund, launched in 2023, has the potential to transform South African agriculture by harnessing solar energy to empower farmers nationwide, no matter how big or small their farming operations are. It is designed to make alternative energy solutions more accessible, thereby protecting food security, livelihoods and our planet.

If you own a farm or an agribusiness, here’s what you need to know about this game-changing opportunity.

Understanding the AEF

Applications are open to all farmers and agribusinesses. The funding is in the form of blended finance, made up of a grant portion and debt funding. To take advantage of the AEF programme, applicants must first qualify for the debt portion.

The blending of grant and loan portions are determined by a sliding scale in which smaller-scale businesses receive a higher grant portion. Qualifying businesses receive funding to buy capital equipment and infrastructure to support their transition to solar-powered alternative energy solutions.

Nedbank partnership with Land Bank

Avo Solar from Nedbank acts as a technical implementation partner for the AEF to make the process simpler for farmers and agribusinesses looking to install solar solutions. This means that, no matter which bank you bank with, Avo Solar can help with the following:

• Understanding your energy needs and providing expert advice,
• Designing the most appropriate solution for your needs, 
• Designing and costing the solution,
• Developing the financial model for the solution,
• Supporting you in the application process for AEF funding,
• Assigning a qualified installation company to install the solution, and
• Overseeing the installation and providing quality assurance.

An investment in solar power through Avo Solar means you get a constant supply of electricity for your farming operations. The investment pays for itself relatively quickly through savings on outages and electricity cost increases.

How to apply for AEF financing

To apply, you must be a South African citizen over 18 with a valid ID, or a registered business entity. You must also:

• Apply to implement an energy-efficiency project or a renewable energy installation that offsets electricity from the grid,
• Run an agricultural business at primary or secondary level,
• Demonstrate the capacity to use the energy requirements applied for,
• Operate as a smallholder, medium-scale, large-scale or commercial producer in the agricultural sector,
• Be involved in energy-intensive farming enterprises, including on-farm cold-chain activities,
• Provide proof of land ownership or access to land (lease tenure must last at least as long as the loan term), and
• Provide a quotation, audited financial statements or management accounts, and a business plan.

Contact a Land Bank representative for more information about the conditions for eligibility. You can apply for funding via the Land Bank website.

Land Bank’s AEF gives farmers across South Africa a great opportunity to harness solar energy, paving the way for a brighter, more sustainable future for agriculture and SA’s agribusiness sector.

In addition to Avo Solar, Nedbank’s agribusiness services offer a wide range of advisory and investment services to farmers. Our blogs include tips about more sustainable agribusiness and finance and investment assistance if you’re an emerging or small-scale farmer. For more information, email us at agriculture@nedbank.co.za or download our brochure.