Measuring the Impact of Agriculture & Rural Development Investment and Programs
Our client spends 3% NPAT on enterprise development activities. This investment is aligned with business objectives (broad-based black economic empowerment compliance requirements) through enterprise development, procurement and supplier development interventions. The company focuses on agricultural (farmer) and rural development programs (where their factories and their suppliers are).
In addition, the client spends 1% NPAT on socio economic development programs. These programs are focused on the communities where their operations are. These programs are generally located in rural areas across South Africa.
Furthermore, the client assists their suppliers (farmers) to transfer ownership of their farms to workers trusts. This is part of a larger national initiative of transformation. In this regard, 2% NPAT is allocated to investments into community trusts that assist individuals to become farm owners and future suppliers to our client.
The client wanted to measure the impact and return on investment of their enterprise and social development investments.
The outcome impact of the assignment was to inform future investment decisions.
What we did
- We conducted an impact management assessment to identify strategic objectives and investment impact intent.
- We supported this with stakeholder engagement to identify development and impact objectives & indicators.
- Once program, financial and performance management data was received, stakeholder engagement proceeded to validate the impact and return on investment achieved.
- Our impact analysis informed the impact management report. This report included a cost benefit and effectiveness assessment.
The impact and return on investment
1. Return on investment for the funder included:
Fulfilling license to operate conditions, improved reputation, improved stakeholder relations, improved alignment between business and social objectives as well as improved alignment between shared value were achieved. Empowerment, sustainability and corporate citizenship strategies and improved transformation performance against targets like gender equality. Improved financial and compliance performance, as well as improved reporting which contributed to an improved relationship with government. Increased operational efficiency and savings resulting from improved performance management were also achieved.
2. Impact on community trusts (local community farm owners):
Improved access to land, income from agricultural production, household income and land ownership rates. Access to capital & finance improved as well as sustainable crop production practices, knowledge of technologies and inputs.
3. Impact on local (rural) economy:
Agricultural labour employment improved thus reducing unemployment, increase in the sales & turnovers of Agri-enterprises and community or producer organisations. Growth in household income in rural areas also improved.
4. Impact on national economy:
Growth in agricultural businesses (economic value added), improved contribution to GDP, improved consumer price index, improved affordability of food and overall change in agricultural trade balance or exports was achieved.
5. Impact on commercial farmers:
Improved productivity & production and diversification of production as well as an increase in the production of high value crops. Increased opportunity to export products was also reported.
6. Impact on consumers:
Improved food security and reduction of the number of under nourished population.
7. Impact on natural resources:
Preservation of natural resources, reduced loss of soil from watershed, more sustainable extraction of water and improved adaption to climate change were all achieved.