Affected agencies include Asgisa Eastern Cape, the EC Appropriate Technology Unit (Ecatu), and the EC Rural Finance Corporation (ECRFC).

The Eastern Cape government has merged three state-owned development finance agencies in an attempt to eliminate duplication and to get "more bang for its buck".

The agencies, which together are allocated about R500-million annually for development programmes, have funded and ploughed millions into projects in rural communities, particularly in the former Transkei homeland.

The agencies - the Accelerated Shared Growth Initiative for SA in the Eastern Cape (Asgisa-EC), the EC Appropriate Technology Unit (Ecatu), and the EC Rural Finance Corporation (ECRFC) - are finalising details of the merger.

Senior government officials within the provincial capital, Bhisho, have since August last year declined to confirm any mergers of state-owned agencies or say which agencies faced mergers.

The boards of directors and managements of the three agencies have held several meetings to conclude the process.

Asgisa-EC, which was registered in 2007, has leased more than 5000ha of fallow land in villages in the former Transkei, in Ongeluksnek, Butterworth, Qumbu, Butterworth and Mount Frere, for crop farming, which has produced more than 20000 tons of maize.

The other agencies have been instrumental in promoting and facilitating financial assistance and technology, such as wire-making equipment and mud bricks, for rural communities.

This week presentations made at an agro-processing seminar in East London revealed that the province's agricultural sector was worth billions of rands.

Moreover, it comprised 14.8million ha of farming land and the largest concentration of livestock, namely 2.6million cattle, seven million sheep, and 50% of all the goats in the country.

A source said the merger and several other envisaged consolidations were set to boost the province's agricultural sector even further.

However, the merger process has been described as a sensitive one which could affect several senior posts and involve reshuffling the three boards of directors.

In August last year Saki Macozoma, after he had stepped down as chairman of Asgisa-EC, said any mergers of the agencies would "clearly necessitate reconstitution of the boards.

"There are (also) legitimate policy and operational reasons why the Asgisa-EC board can be reshuffled."

On Wednesday, Andrew Murray, the chief executive Eastern Cape Socio-Economic Consultative Council, welcomed the merger.

He said the process was "viable ... and key in eliminating duplication".

Murray added that the merger, and any others, would ensure better synergy and co-ordination in the sector.

"At the moment we have a number of entities that have got capability which is not being sufficiently shared.

"This merger is a case of bringing them together, streamlining their operations and efficiencies so we get a better bang for our buck. We (can) get them to focus better on vital priorities."

Another agency which sources believe could be merged with another state-owned organisation is the Eastern Cape Development Corporation.

But chief executive Sithembele Mase, who took up the post only two weeks ago, said he was unaware of any such moves.