Giba Communal Property Association signs partnership agreement with private investor

One lease is for 24 hectares of land for the development of a ginger farm over a 10-year period, with the option to renew at the sole discretion of the CPA. The second lease is for 103 hectares for the development of a macadamia farm over a 22-year period. The ginger will be used mainly for local consumption and the macadamias for export. The Giba CPA will receive income generated from the two lease agreements and will gain critical skills as the community will be involved in the business administration of the venture.

An estimated R25m will be invested in cultivating crops and improving infrastructure on the land under lease, and an estimated 130 permanent jobs will be created for the community.

Restituted land

The Giba CPA is an association of families who were awarded land rights in terms of the Restitution of Land Rights Act, and consists of approximately 417 registered beneficiary households. Additional households are currently being considered for verification and inclusion in the beneficiary list. The CPA was awarded restitution of 2,700 hectares of land in Hazyview and about 1,540 hectares of the land has been transferred to date; the remaining 1,166 hectares is state-owned land and is yet to be transferred.

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The community approached the Vumelana Advisory Fund to assist with identifying an investor and act as the transaction advisor for approximately 100 hectares of prime export grade sub-tropical orchards on the CPA land.

“We never thought something like this could happen for our community. Previously, we had partnered with an investor to develop a banana farm; the relationship did not work as we realised that it did not benefit the community. Among other challenges there was a lack of transparency, there were no skills transfer benefits for the community. Trust was a big issue and the relationship was not structured in a mutually beneficial manner,” said Richard Mathebula, chairperson of the Giba CPA.

He noted that, “The CPA has found that there is more certainty and security with the new partnership, as it is a long-term agreement (22 years), and this is important because of the nature of our business. CPAs need to find trustworthy institutions to assist them in identifying the right people with whom to establish partnerships; more so because a lot of families are involved and depend on the land for their livelihoods.”

Mathebula continued, “We are currently planning on establishing a commercial company to enable us to take equity in any new ventures established on the CPA land.”

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Creating wealthy, stable communities

Commenting about the partnership, Ernst Schmidt, managing director of W van R Schmidt, says, “Everyone in this partnership has something to offer. We’ve been involved in some investment in neighbouring countries but we think that investing in our own communities is of paramount importance. People need jobs. We need that to create wealth and stability locally. We want to make land reform work and we hope that such investments will help drive the success of the process.”

He noted that the relationship does not come without challenges, as there is historical mistrust between white farmers and black communities and unfortunately there are still so many people on both sides that exploit these fears for their advantage; but there is a massive amount of goodwill on both sides too, and all involved need to harness that.

“Building of trust is extremely important, and it’s an ongoing process. We found that having a facilitator in this transaction helped both parties a lot.” Schmidt highlighted that partnerships of this nature are very important, as there is so much land that is not being properly used at the moment for a number of reasons, including resources, financing and skills.

Peter Setou, chief executive of the Vumelana Advisory Fund, says, “Community private partnerships (CPPs) present a plausible solution to addressing some of the current challenges in land reform, and through such transactions, communities are able to generate an income and acquire the skills they need.”

Community private partnerships are formations that are established between private parties and communities that acquire access to land under the land reform programme. Typically, the communities bring their land and labour and the private partner brings capital and skills to the partnership. CPP contracts are structured to ensure that the partners are able to meet their obligations and exercise their rights in a manner that supports the profitable operation of the business venture into which they enter.