- What is the history of the Economic Partnership Agreement between South Africa and the EU?
The European Union (EU) and South Africa have a trade agreement relating to wine and spirits that forms part of a broader trade relationship between the two regions. The Agreement on Trade, Development and Cooperation between the EU and South Africa was signed on 11 October 1999 and is referred to as the “TDC Agreement”, which entered into force on 1 January 2000.
A Wine and spirits agreement was also concluded, which forms part of the EU-South Africa TDC Agreement, which entered into force on 1 January 2002. It was later integrated into the EU-Southern African Development Community (SADC) Economic Partnership Agreement (EPA), enacted in October 2016.
- What are the main objectives of the wine agreement between the EU and South Africa:
- Protection of Geographic Indications (GIs)
Under the wine and spirits agreements, South Africa and the EU mutually recognise and protect each other’s geographical indications. This means the EU recognises South Africa’s unique wine-producing regions and ensures that South African wines with these labels can only come from those areas.
South Africa, in turn, agreed to phase out the use of specific names associated with European wine regions, such as Port and Sherry, which are now reserved exclusively for products made in those specific European regions.
- Market Access
The agreement allows for preferential access for South African wines into the EU market, reducing tariffs and increasing quota limits. As a result, South African wines have gained better entry to European consumers, making the EU one of South Africa’s most important export markets for wine. In return, South Africa grants the EU better market access for EU wine exports into the South African market.
- Support for the South African Wine Industry
The agreement includes provisions for financial assistance to South Africa’s wine industry, mainly to promote transformation, sustainability and marketing support (outside the EU).
- Quality and Standards
Both regions agreed to harmonise specific standards and regulations to ensure high-quality wine production and facilitate trade. This includes mutual recognition of oenological practices and labelling standards.
- Impact on Trade beneficiation
South Africa’s wine industry has greatly benefited from this agreement, with the EU being a top destination for its wine exports. In 2024, South Africa can export 119 million litres tariff-free to the EU with a quota of 70:30 (packaged: bulk).
- Why is the EU granting funding to the South African Government for assistance to the Wine industry?
In 2002, with the formalisation of the wine and spirits agreement, the EU agreed that wine and spirits could be exported from South Africa to the EU over a determined period, tariff-free, with a volume quota and that a fund valued at €15M would be made available to restructure the wine industry.
Unfortunately, the EU did not pay the funds as per the 2002 undertaking, and in 2016, with the renewal of the EPA agreement, this was set as a condition of fulfilment.
Government to Government with input by industry consensus was reached in December 2019 when it was agreed that the funds would be used for:
- To promote more equitable access to land or adequate infrastructure in the wines and spirits (grape-based) sector.
- Ensure marketing support for wine brands for markets outside the EU.
- To facilitate the provision of education, training and capacity development of farm workers, black farmers, black-owned brands and other related beneficiaries such as women and youth in the sector; and
- To facilitate the provision of comprehensive interventions to address socioeconomic development issues in the wine sector, addressing worker wellness, housing, and gender objectives and ensuring social sustainability standards are met.
- Who will manage the funds, and to whom does one apply for funding?
The Enterprise Development aspect of the programme will be managed under a memorandum of understanding (MoU) between the Department of Agriculture, Land Reform and Rural Development (DALRRD) and the Land Bank (EU 10 million). In contrast, marketing and distribution will be managed under a MoU between DALRRD and NAMC (National Agricultural Marketing Council) for EU 5 million.
These agreements ensure accountability for the funds provided. NAMC and Land Bank presently solicit industry input on the fund’s practical and responsible use.
South Africa Wine will work closely with both institutions to ensure effective processes and support expertise is available. The industry also has representation on the oversight committee.
- How does one apply for funding?
Land Bank and NAMC are expected to request proposals when their remaining legal requirements are met. South Africa Wine shall ensure all stakeholders are alerted to the application criteria and deadlines.
The Land Bank will confirm its criteria at the fund launch. It will afford funding to qualifying applicants through a blended grant, which means that the applicant will be required to apply for a loan supplemented with a grant.
The NAMC shall confirm its criteria at the time of funding launch but is expected to address objectives related to marketing wine and spirits products outside of the EU common market.
- What monitoring and evaluation requirements must be met?
Applicants must consent to regular monitoring and evaluation audits by the Land Bank, industry, or external parties related to the project.
- Is the applicant required to have a Land Bank loan before or after awarding an EU grant?
The EU grant shall be utilised to blend loans from all licensed banking institutions, not just the Land Bank.
- Is refinancing available through the Fund?
No, refinancing is not available through the Fund. However, the Land Bank may consider it separately as co-financing with the Fund.
- Who may apply for funding? What ownership criteria must be met for funding eligibility?
Projects must be located within the value chain of wines and spirits (grape-based) in South Africa.
Applicants in the sector who aim to promote equitable access to land and adequate infrastructure in the wine and spirits sector, facilitate education, training, and capacity development for industry stakeholders, and address socio-economic development issues within the sector.
Projects must be majority black-owned or have at least 51% black shareholding. If this threshold is not already met, the applicant must demonstrate the ability to achieve it through the funding. Projects should demonstrate a proven benefit to women-owned enterprises, youth-owned enterprises, and other marginalised and previously disadvantaged groups or individuals.
Projects must be able to expedite economic development and transformation in the wines and spirits sector, emphasising inclusive growth.
No funding shall be advanced if the prospective beneficiary has pending litigation proceedings, pending liquidation proceedings, a judgment or court order not set aside, or business rescue proceedings that have not been set aside.
- Who shall benefit from the fund?
Black farm employees, black-owned business owners, and communities directly linked to grape and wine production have been cited as direct beneficiaries of the fund. Strong emphasis will be placed on the empowerment of women.
- Who oversees the fund to ensure that it is managed correctly? How will the outputs be monitored?
A multi-stakeholder steering committee that adheres to strict terms of reference. The committee has industry and Government representation. Performance and results monitoring will involve continuous technical and financial monitoring by the implementing partner, regular progress reports, and possible project monitoring visits by the Commission or independent consultants.
Performance and results monitoring will involve continuous technical and financial monitoring by the implementing partner, regular progress reports, and possible project monitoring visits by the Commission or independent consultants.
- How does the intervention address education, training, and capacity development?
The intervention plans to capacitate black brands, farmers, and related beneficiaries to comply with legal requirements, increase the listing of black-owned brands, and provide training opportunities for youth and farm workers across the industry value chain.
- What socio-economic development issues does the intervention seek to address? Are there specific social compliance and ethical certification requirements?
Yes, applicants must adhere to social compliance and obtain the ethical certification of the Wine and Agricultural Ethical Trading Association for existing businesses. If this is not in place, funding provisions must be made to implement it.
The intervention aims to embed plans for socio-economic improvement in project proposals, improve worker wellness and social sustainability standards, provide training on life skills programs, and encourage WIETA accreditation for black-owned farms. Where applicable, applicants must have a social development plan that addresses the development needs of farm workers.
- When will the fund be available for applications?
Before the fund is launched and opened to applications, the implementing organisations must meet all remaining provisos set under treasury regulation.
- What financial and administrative systems must be implemented?
Applicants must consent to implement proper financial and administrative systems for reporting, business management information systems, and monitoring and evaluation purposes where applicable.
- When will criteria be made available, and when will the fund be launched?
The most recent estimate is that the fund will be launched in October 2024 after final approval of the criteria by the steering committee that the funders have assembled to oversee the implementation of the fund.
Contact persons:
Phil Bowes phil@sawine.co.za
Karin Kleinbooi karin@sawine.co.za
