Good Practice, Better Finance - Improving access to finance for sustainable producers

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The challenge
The solution
Supporting access to finance
Download project outputs

Introduction

About the project

Project title: Good practice, better finance: Enabling access to preferential finance terms as an incentive for improving sustainability performance in the agricultural sector

Lead organisation: Bonsucro

Partners: SRK Consulting, Cotton SA, AWS, WWF South Africa, Nedbank

Duration: May 2019 - November 2021

Contact: Boudewijn Goosens - Boudewijn@bonsucro.com

The challenge

For producers to adopt responsible practices, they need capital to buy new equipment, boost productivity, and make other changes that will allow them to meet credible sustainability guidelines and practices. However producers seeking loans to support such investments are often deemed high risk by financial institutions, because they often lack credit history and collateral. There are limited alternative data sources available to support these risk assessments, and the standards used by financial institutions overlook improvements at the farm or commodity-chain level that could inform credit allocation. As a result, smallholders are often left with little incentive or means to invest in sustainability.

The solution

To address this challenge, project partners Bonsucro, SRK Consulting, Cotton SA (the Better Cotton Initiative, or BCI), the Alliance for Water Stewardship (AWS) and World Wildlife Fund for Nature (WWF) South Africa, in collaboration with local participants such as Nedbank, Akwandze Agricultural Finance, RCL Foods, Sugar and Milling Division, and South African Cane Growers Association will generate real-time information and risk-assessment tools to guide financial institutions in their decision-making processes. This region- and commodity-specific information will incorporate environmental and social criteria derived from ISEAL member standards—boosting recognition of these standards as powerful mechanisms for lenders’ due diligence, and de-risking smallholders in the process.

Supporting access to finance

Using criteria in the BCI, Bonsucro, and AWS standards, the project will examine cotton and sugarcane production in South Africa’s Mpumalanga Province, an area where regular droughts and water-availability issues are increasing risk for both producers and lenders. Working with a wide range of stakeholders, the project aims to close the gap between IFC’s Performance Standards, the requirements of financial institutions, and ISEAL standards. The partners will pilot new methodologies and tools—such as data-capture technologies—to provide financial institutions with real-time data collection, transfers, and analyses.

Download project outputs

Good Practice, Better Finance - Slide Deck | Bonsucro

Good Practice, Better Finance - Slide Deck | Bonsucro2.81 MB

Environmental and Social Baseline Report - IU WMA, Mpumalanga, South Africa | SRK Consulting

Environmental and Social Baseline Report - IU WMA, Mpumalanga, South Africa | SRK Consulting4.2 MB

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