Programme area: The Programme is national in scope. Nevertheless, it would initially commence in four provinces - Eastern Cape, KwaZulu Natal, Limpopo and Mpumalanga - with both high prevalence of rural poverty and greater opportunities for agricultural development. Together, these four provinces comprises about 59% of South Africa’s total rural population and over two thirds of the rural poor. Within each province the Programme is expected to work in the poorest half of the local municipality areas. 

Target group: The Programme will target poor rural people that are landless and unemployed or whose livelihoods revolve around agriculture and who have an interest in engaging in more commercially orientated on-farm and off-farm economic activities.  Households that gain access to land through land reform programmes for small-scale farming are also expected to benefit. Within these categories, particular attention would be given to the involvement of women and youth as well as other vulnerable groups.

Programme objectives: The overall goal of the Programme is for the poverty of targeted rural households to be sustainably reduced. The objective is to create a viable smallholder agricultural sector with improved backward and forward linkages. 

Programme description: The goal and objective would be pursued through three Programme components, each with its own expected outcome.

• Community Empowerment. This component is designed to empower smallholder groups to articulate their needs and aspirations with regard to agricultural development, and to facilitate the integration of smallholder agricultural development plans into local, district and provincial development plans. The expected outcome is that poor rural communities are enabled to identify their needs and participate effectively in development planning processes.
• Agricultural Support Services. This component would help to make service providers more responsive and coordinated to address the priority needs of smallholders, improve business and vocational skills among small-scale farmers and rural entrepreneurs, and achieve better integration of smallholder farmers and Small, Micro and Medium Enterprise in agricultural supply chains. The expected outcome is that target smallholders achieve increased production and stronger market linkages.
• Smallholder Financial Services. This component would support the strengthening of policies, strategies and financial institutions, assist in the development of relevant financial products and services tailored to the needs of the target group, and establish a risk-sharing facility to expand the provision of financial services in rural areas. The expected outcome is that financial services are provided to smallholders and rural Small, Micro and Medium Enterprise through products and services tailored to their needs.

Important features: This Project would be the first IFAD-supported rural poverty reduction initiative in South Africa. The Programme has been designed in response to a request from the Government for IFAD assistance to deal with the issue of persistently high levels of rural poverty in South Africa, despite solid economic progress since the end of apartheid in 1994 and the country’s upper middle income status. Since there is no country strategy for South Africa, the Government of South Africa-IFAD partnership is evolving through extensive consultations in the Programme design process.

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Potential cofinanciers and domestic contribution: The total cost of the Programme, over the eight-year Programme life, is estimated at around US$ 151.6 million. IFAD would provide a loan of US$23.62 million toward financing further detailed implementation design during Year 1. The Spanish Food Security Cofinancing Facility Trust Fund would provide a loan of about US$ 30.0 million under ordinary terms. The private sector is expected to contribute about US$ 8.5 million and beneficiaries would contribute US$ 5.1. The funding gap is expected to be filled by other co-financiers. The Spanish Food Security Cofinancing Facility Trust Fund would provide a loan of about US$ 30.0 million under ordinary terms. The private sector is expected to contribute about US$ 8.5 million and beneficiaries would contribute US$ 5.1. There is currently a funding gap of US$ 19.7 million which is expected to be filled by other co-financiers.