Multidimensional lack of financial inclusion: the case for agrarian value chain finance institutions in rural Eastern Cape

Ntisana, Malwande

Multidimensional lack of financial inclusion: the case for agrarian value chain finance institutions in rural Eastern Cape

Thesis / Dissertation

2022

Abstract

The Eastern Cape region has a diverse composition of smallholder farmers that conduct operations, mainly in rural dwellings, within an informal trading context. The study found a composition of informal and formally composed smallholder farmers that operate within and outside of value chains. Generally, smallholder farmers that operate independently (outside of value chain formations) and informally within the Eastern Cape context remain excluded from the financial system as they are unable to attract external capital, investment and are unable access a market beyond their close and surrounding areas. Then, in terms of the formally composed smallholder farmers that conduct farming operations within a value chain community context, these farmers are aided and supported by value chain coordinators to conduct efficient farm operations. Generally, within this context, the farmers are required to produce pre-determined production scales for an existing market and whilst adhering to value chain farming requirements, they are skilled up and educated to operate sustainable food production systems. The study has restricted the analyse to the smallholder farmers that operate within value chains in order to investigate the contextual environment of these farmers as well as to examine the key components that make these value chains successful. The Africa Intercontinental Free Trade Agreement and the South African government's investment in various strategic assets (i.e., ports in the Eastern Cape), has been a signal that the Eastern Cape has the potential to participate in significant value chains. Furthermore, the advent of COVID 19 pandemic has caused major disruptions in traditional and existing value chains (in the agrarian sector as whole) and given rise to more conscious and aware consumers (who prefer produce from environmentally friendly farming practises and distribution). This study provides a general analysis of the informal smallholder farmers and underlines the success factors needed for value chains to enhance the smallholder famer's context and the outlines the means and ways to enhance the farmer's production capacity and access to finance, through value chain finance and participation. The panel investigated within the study consists of a sample of smallholder farmers, value chain coordinators, stakeholders etc. that participate in successful value chains in the Eastern Cape, in order to determine the context of smallholder farmer environment and to define the success factors of these successful supply chains. The 17-member interview panel enabled the determination of the study's two objectives and the conference proceedings augmented the contextual understanding of the Eastern Cape smallholder farmer landscape.

Keywords

development finance

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