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Shared Interest brings economic power to South Africans

Tue, Nov 12, 2013

Donna Katzin

Donna Katzin

When apartheid ended in South Africa in 1994, 87 percent of its land was in the hands of 13 percent of the people. Today, 79 percent of the land is in the hands of whites, who comprise roughly nine percent of its population.

A transfer of political power in South Africa was not accompanied by a change of economic power, says Donna Katzin, executive director of Shared Interest, a 501(c)(3) non-profit social investment fund that raises money in the U.S. to support micro-lending, agricultural cooperatives and small businesses in South Africa. The urgency to this work is that “the many reforms that South Africa has been struggling to accomplish over the last 20 years are at risk of unraveling if things are not taken to the next stage quickly.”

Katzin was interviewed after a Sept. 17 fundraiser in the Kenwood home of Sandra, Tim and Deven Rand with actor Danny Glover, who is co-chair of Shared Interest’s Next Generation campaign. The campaign acknowledges the timeframe for Shared Interest work still to be done in South Africa and neighboring nations.

Katzin said that only eight percent of the land has been redistributed to low-income South Africans. “The goal was 30 percent first by 2004 and that 30 percent keeps getting extended. People who are restored to the land are at risk of selling it back to white people, which some are starting to do. They can’t ‘make a go of it’ and so we have to help people keep going and building on what has been done rather than letting it unwind.”

Shared Interest works not through direct loans but by guaranteeing commercial loans of $50,000 to $1.3 million to beneficiaries that include microfinance institutions, low-cost housing organizations, individual small enterprises, low-income (smallholder) black farmers and cooperatives, Katzin said. By facilitating guarantees for both grassroots lenders and major financial institutions, Shared Interest has sought to correct discriminatory lending of the apartheid era — and to allay fears of risk-averse bankers during the recent global financial crisis.

South Africa’s official unemployment rate is 24 percent but Shared Interest helped 145,473 individuals last year, according to its annual report. Since its inception in 1994, it has provided jobs for 1.9 million people, Katzin said.

Throughout its existence, the non-profit has provided guarantees of $16.34 million, which led to $96.47 million in commercial loans. No investor funds have ever been lost.

A micro-enterprise might start with $100 or $1,000, much like Betty Khosa, who bought blankets and shawls in Johannesburg to sell to neighbors in her isolated rural village. Since Khosa started in 2003, she has expanded to other villages and put her two children through school.

Housing funds supplement government subsidies and individual savings so that clients can build larger and better houses. The Kusaya microfinance institution, for example, leveraged subsidies for 583 people into facilities for 5,500 clients. One woman combined the $1,400 subsidy for her family with $140 she saved over six months and a $350 loan from Kusaya for building materials. Her husband provided his own sweat equity to increase the size of the house, while she continued to sew and sell clothes.

An example of rural development is the former school principal in KwaZulu-Natal province who had been raised on a farm and who formed a 33-member black-owned consortium when he saw an old farm for sale. The consortium received a government loan and a bank loan for the farm and equipment but it had no money for daily expenses. Once Shared Interest provided its loan guarantee, the bank more than matched it with working capital for a two-year transition period. The farm now maintains 30,000 chickens that produce 74,000 eggs a month.

During the Kenwood fundraiser, Katzin screened a video about the one-year-old One Vision vegetable chip processing plant. Located one hour from Cape Town, One Vision used a Shared Interest loan guarantee for working capital to open its doors and then to grow the number of jobs from 20 to 39 in its first year. In the process, it has helped local farmers by buying increasing quantities of vegetables.

The Next Generation Campaign seeks to help neighboring nations as well. “We have issued our first guarantee in Swaziland, and are preparing our first guarantee in Mozambique,” Katzin said.

Because of the lack of commercial credit for agriculture, small producers in Mozambique were limited to subsistence farming; they could not compete with abundant South African and even Chinese produce. Their farmland is nationally owned, so they cannot use it as collateral for loans.

Last year, Thembani, which is Shared Interest’s South African partner, hired Mozambican consultants with expertise in agricultural development to identify small producers and buyers for their products. The work was made possible by a grant and program-related investment from the Ford Foundation.

Suzanne Hanney
StreetWise Editor-In-Chief

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