Essential Oils Project Creates Income for Keiskammahoek Farmers

ED-EC-APR10-0001

The expansion of an existing Rose Geranium Essential Oils Project by an additional 25 hectares will create more job opportunities and will generate income for local farmers.

NEED

Keiskammahoek consists of 40 rural villages situated mainly within a mountainous area. This area is blessed with fertile soil and an abundant supply of water, making it a very viable area for farming. Most of the farms are supplied directly with gravity-fed irrigation. Unfortunately very little use is being made of these facilities.

Major constraints among the farmers at present include a lack of managerial and financial skills, low access to capital, and limited infrastructure. It is clear that assistance is needed in order to increase the effective use of these arable lands.

Many farmers in these rural areas are limited to growing low value crops, such as cabbage, due to a lack of agricultural skills and equipment. These low value crops have a very limited market and are therefore not good crops for generating income. Equipping farmers with the skills and resources to be able to produce rose geranium oil will allow these subsistence farmers to become viable commercial farmers.

OVERVIEW

In order to further their work in the area, the Siyakholwa Development Foundation (SDF) would like to expand on the already existing Rose Geranium Oils Project. To date SDF has assisted in the plantation of 20ha of crops that produce rose geranium oil. The crops are planted on the land of local farmers who are provided with infrastructure and training as part of SDF’s programme.

The SDF Rose Geranium Oil Project is a three step process. The first step would be for the organisation to select the farmers that they would like to assist. They will then provide the infrastructure needed for these farmers to plant rose geranium crops on their land. The next step is the training by of farmers by the SDF on how to care for the crops. Farmers will then grow their crops to a certain height. The final step in the process is the harvesting. The SDF harvests the crops and then pays the individual farmers for the produce collected from their land.

The planting of an additional 25 hectares of rose geranium crops will provide jobs for an additional 57 community members and will also benefit the farmers directly through the income they generate through growing the crops.

WHAT WE LIKE ABOUT THIS PROJECT

  • The SDF has an extensive track record of managing similar projects.
  • The SDF has built a good relationship with communities and farmers in the area.
  • Creating jobs through this project will enable community members to live increasingly sustainable lifestyles.
  • The SDF have a far reaching impact on this community that is not limited to the positive effects of this project.

IMPACT HIGHLIGHTS

This project will directly impact the 8 farmers whose land will be utilised for the planting of rose geraniums by providing a more sustainable revenue stream for them. The other direct beneficiaries include the 57 community members who will be employed to manage, install and maintain the crops. The salaries of these direct beneficiaries range from R16 000pm for the project manager to R2 100pm for the harvesting team members.

The indirect beneficiaries include all the families of the direct beneficiaries as well as the community at large. The SDF manages socio-economic development programmes alongside its agricultural projects which enhance the standards of living of the community members in the area.

ORGANISATION ASSESSMENT

The main purpose of the SDF is to provide “on-the-ground” administrative, financial, and project management support as well as agricultural skills training to farmers living in rural areas. They have operated in Keiskammahoek since 1998, were registered in 2001 and commenced business as the SDF in January 2002.

The SDF has been involved in agricultural projects since 2002 and has developed systems and processes that are highly effective in running, managing and maintaining these projects. They have worked closely with the Department of Environmental Affairs as well as well- known organisations such as Unilever and The World Development Bank.

Their track record includes: * The feeding of 200 families through the planting of maize crops in 16 different villages * 100 hectares of land under paprika have been successfully producing crops since 2008. This project has created numerous jobs * A community works programme which focuses on other socio-economic development projects within the community * 20 hectares of rose geraniums have already been planted and successfully harvested

The organisation has managed to acquire all the infrastructure and machinery needed in order to distil the rose geranium oil and have also created marketing channels which will ensure the success of this project.

PROJECT PROFILE

Key Strengths

  • Concept: Equipping people with the skills and opportunities to generate their own income works well in rural communities such as Keiskammahoek.
  • Design: The current 20 hectares Rose Geranium Oil Project has been highly successful. Therefore expanding on this project is a good way to ensure project success.
  • Sustainability: The SDF has ensured that the crops they grow through projects they implement have access to the market, which increases sustainability. It also generates an income for the organisation which increases the SDF’s financial sustainability.

Key Risks - Low

  • Capability: Although SDF has extensive experience and has been in existence for almost ten years, not all of their projects have had a 100% success rate.
  • Design: At a certain point in each project the SDF will hand the project over entirely to the farmers. The hand over process has not always been successful as it is after the SDF have pulled out that some of the farmers have failed to keep the projects going.
  • Control: A large amount of the control of this organisation lies with Brian and Gerri.
  • External: As with most agricultural farming projects there are a number of external risks. Crops can fail because of many different factors such as climate and disease.

100% funded

Watch this space for impact reports

Project Profile

SASIX ID:

ED-EC-APR10-0001

ORGANISATION:

Siyakholwa Development Foundation

PROVINCE:

Eastern Cape

SECTOR:

Small Business Development

PROJECT DURATION:

12 months

PROJECT BUDGET:

ZAR 2 336 000

SHARES ISSUED:

46720

SHARES AVAILABLE:

0

Project Location

Project Risk

Organisation Rating

Project Budget

ItemCost
Management and Operational Staffing
Project manager48 000
Project co-ordinator192 000
Nursery supervisors60 000
Nursery workers50 400
Manager43 200
Field workers204 000
Admin staff35 280
Tractor driver36 000
Harvesting team25 200
Distillation workers25 200
Security guards27 600
Irrigation teams50 400
Technical assistant13 200
Interns97 200
Project Materials and Supplies
Containers and bags10 000
Laboratory equipment2 000
Fruit trees18 000
Fertilizer30 000
Chemicals10 000
Equipment and Capital Goods
Tractor295 000
Trailer40 500
Boiler230 000
Travel
Local travel72 000
Tractor diesel42 000
Consumables
Eskom power39 000
Wood6 000
Administration Expenses
Stationery18 000
2 way radio rental12 000
Phones and email14 400
Insurance7 200
Other
Payroll processing4 200
Audit and accounting fees54 000
Total expenses2 189 780
Total Requested from SASIX2 076 448
Administration, Monitoring and Evaluation Fee259 602
TOTAL2 336 050

Small Business Development

With South Africa's unemployment rate as high as 40 percent in terms of a broad definition, the accelerated creation of sustainable small and micro enterprises is essential both to economic growth and to future socio-political stability. Township and rural-based enterprises, in particular, have the potential to create jobs and alleviate poverty by channelling resources into disadvantaged communities.

Research shows that our country has a low rate of entrepreneurial activity compared with other developing countries, with entrepreneurs contributing only 35% of GDP, compared with 60% in countries like India and Brazil. In addition, only 80% of all new SA businesses survive past the first two years - a low rate when compared with other developing countries. According to the annual Global Entrepreneurship Monitor study, the key factor influencing entrepreneurial activity in South Africa is the lack of effective education and training in entrepreneurial skills and basic financial literacy.

The large majority of new small businesses are operated out of necessity - people eeking out a living through informal trading and service provision because there is no alternative. These necessity entrepreneurs frequently have little or no access to computers, telephones, transport, banks and government services, and lack the financial literacy and business administration skills to sustain and expand their businesses.

Opportunities exist to invest in educating informal traders and community members in business administration and financial literacy, and in supporting the expansion of entrepreneurship education in schools and colleges. There is a need to invest in the extension of services that advise and support start-up businesses to previously marginalised areas, and to support initiatives to create community investment trusts and co-operatives that undertake productive activity. There are also exciting opportunities to help dynamic entrepreneurs in poor communities to purchase new equipment or set up business premises, creating employment in their communities.

 

100% funded

Watch this space!

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Trades in this project

  • British American Tobacco South Africa (46720 shares)

Understanding risk

We use a comprehensive selection and evaluation process to assess SASIX projects. When evaluating an organisation's overall risk profile we look at:

Concept - the project's approach to addressing the need.

Design - the use of effective and proven methods.

Capability - the organisation's leadership depth and expertise.

Control - transparency, governance and financial management.

Sustainability - lasting impact.

External - factors outside of the organisation's control.