presentation to portfolio committee on economic development sefa

Corporate Plan 2015/16 Portfolio Committee of Small Business Development

Parliament

06 May 2015

Index

• Introduction

• DSBD/sefa Corporate Plan Alignment: Common Strategic Themes

• Vision, Mission and Values

• Five Principles Underpinning sefa’s Operations & Strategy

• sefa’s Targeted Groups

• Investment criteria & approach

• sefa’s Distribution Model

• Portfolio of Products

• sefa’s Footprint

• Loan Book Performance

• 2015/16 Strategic Thrust

• Alignment of sefa to DSBD’s objectives

• Financial Overview

• Risk Management

• Property Portfolio

• sefa challenges

• Case Studies

• Annexure - Historical Context 2

Introduction

• Establishment of sefa in April 2012 is a result of government’s investigation

and resolve to streamline provision and access to finance for SMMEs.

• Investigation into SAMAF and Khula identified a number of concerns,

including:

High operating costs

Duplication of services

Poor market visibility to small business and

Poor uptake of products available

• The establishment of sefa was therefore conceived to radically increase the

provision and access to finance to SMME’s

• sefa operates as a wholly owned subsidiary of the IDC and derives its

legislative mandate from the IDC Act of 1940 (amended in 2001) and reports

to the Minister of Small Business Development effective 1 April 2015.

• sefa’s corporate plan implementation contributes to the Department of Small

Business Development medium term expenditure objectives.

3

Introduction (cont’d)

The sefa Corporate Plan is mainly guided by the following legislation, policies and Strategies:

4

• The Public Finance Management Act of 1999 and as amended

• National Small Business Act of 1996 and as amended in 2004;

• The National Credit Act • The Short Term Insurance Act • The Co-operatives Act of 2013 • Broad-Based Black Economic

Empowerment Amendment Act, 2013 • Industrial Development Corporation

Act, 1940 as amended in 2001

• The Integrated Small Business Development Strategy (2004)

• The Medium Term Strategic Framework (Outcome 4: Decent employment through inclusive growth) sefa’s Key Strategic Objective is to

increase access and provision of finance to SMMEs and Co-operatives and contribute towards job creation/maintenance

• The New Growth Path • The Industrial Policy Action Plan • The National Development Plan • The DSBD 2015-19 Strategic Plan

DSBD/ sefa Corporate Plan Alignment: Common Strategic Themes

a) Access to finance

b) Market Access: Public & Private Sector Procurement

c) Decentralised access/LED & Presidential Poverty Nodes

d) Partnership Development

e) Franchising

f) Start-up funding

g) High growth/high impact SMMEs

h) Co-operatives (primary & secondary)

i) Targeted groups (women, disabled & youth)

j) Spatial: Rural & Townships

k) Priority Sectors

l) Informal sector/micro enterprise finance

m) Incubation

n) Red tape reduction

o) Shared Infrastructure

5

6

DSBD

Strategic Plan

2015-19:

Themes

DSBD

strategic

objective

link to DSBD Program sefa activities / offering

a) Access to

finance

To facilitate

radical

economic

transformation

through

increased

participation of

small

businesses

and

cooperatives in

the

mainstream

economy

Incentives, grants and soft

loans: To provide incentive

programmes that promote

broader participation in the

mainstream economy by small

businesses and co-operatives

(BBSDP, WBDS and

YBBSDP)

sefa offers asset finance, working capital, term loans,

micro enterprise finance, bank & supplier guarantees and

other specialised products through its direct and

wholesale lending channels to SMMEs and co-

operatives. sefa focuses on small businesses that require

funding ranging from R500 to R5m.

The loan programme outcomes over the next three years

will result in:

• 131 882 SMMEs receiving financial support

• R4.3 billion of loan financing approvals

• R3.1 billion disbursements and

• 218 000 jobs created or maintained

DSBD / sefa Corporate Plan Alignment

7

DSBD Strategic

Plan 2015-19:

Themes

DSBD strategic

objective

link to DSBD

Program

sefa activities / offering

b) Market

access: Public

and Private

Sector

Procurement

To facilitate the

development and

growth of small

businesses and co-

operatives to contribute

to inclusive and shared

economic growth and

job creation through

public and private

sector procurement

Market Access

Support: To forge

partnerships with

other spheres of

government for the

sustainable

development of

SMMEs and Co-

operatives through

ensuring access to

markets

• Through the direct lending loan programme, sefa offers bridging loans

and asset finance for working capital (stock and operating overheads)

and purchase of equipment to SMMEs and co-operatives awarded

contracts by public and private sector institutions. The majority of

sefa’s direct lending clients are provided funding to deliver on contracts

from the public sector and high exposure levels are in the areas of

construction.

• sefa also crowds-in public and private sector institutions to provide

customised technical and financial support to SMMEs and Co-

operatives participating in their enterprise development and supply

chains. Examples are the Godisa Development Fund (sefa, Transnet

& Anglo Zimele), Aluminium Beneficiation Initiative (sefa, Hulamin &

BHP-Billiton), Women in Rail Facility (sefa & PRASA) and DOE

Feeding Scheme Co-operatives (sefa, Co-ops, GP & KZN Depts of

Education).


8

DSBD Strategic

Plan 2015-19:

Themes

DSBD strategic

objective


c)

Decentralised

access / LED

To facilitate

radical economic

transformation

through increased

participation of

small businesses

and co-operatives

in the mainstream

economy

LED and Intergovernmental

relations: To promote

spatially balanced economic

development and

productivity improvements

by developing policies,

strategies and programmes

that focus on small

businesses and co-

operatives in

underdeveloped regions

(Decentralisation, co-location

and LED Strategies)

• Currently sefa provides access to its products and service through:

o 10 Main Offices & 7 branch co-locations

o 11 Active Microfinance Institutions

o 8 Funds & Joint Ventures

o 10 Co-operative Financial Institutions

o 6 Retail Financial Intermediaries

o 4 Strategic Partnerships

• sefa’s strives to have an access point per district municipality and has

a roll-out plan in place to implement this. Priority will be given to the

Presidential Poverty Nodes.

• The strategy is to focus on co-location and partnerships with seda,

municipal LED offices, local Chambers of Commerce and Industry

and the IDC.

• sefa has an on-line application facility accessible by any entrepreneur

with internet access.


9

DSBD

Strategic Plan

2015-19:

Themes

DSBD

strategic

objective

link to DSBD

Program


d)

Partnership

development

Facilitate

partnerships

with all

spheres of

government

as well as the

private sector

to ensure

mutual

cooperation

that will

benefit small

businesses

and co-

operatives

Enterprise

Development:

facilitate the

establishment

of new and

productive

enterprises as

well as the

sustainability

and growth of

existing

enterprises

• sefa has a relationship with our sister agency, seda and trained 34 seda

branch offices to assist entrepreneurs with sefa applications and also to

receive such applications.

• sefa will enhance existing networks and partnerships with organisations

including co-location with IDC, seda and other institutions such as

Municipalities, Local Economic Development Agencies, Provincial DFIs

(GEP, MEGA, ECDC, NWDC) and Business Chambers.

• Other public & private partnerships include Business Chambers and

Associations at National & Local Level such as SACCI & Black Business

Council, South African Institute of Chartered Accountants, Institute of

Business Advisors, Franchising Association of South Africa, CBDA, TUSK,

NDA, NYDA, Masisizane (Old Mutual), Transnet, PRASA, Anglo Zimele,

Tourism-TEP, Aluminium Beneficiation Initiative with Hulamin & BHP-Billiton.

• sefa has partnered with the International Labour Organisation (ILO) with a

view to fund micro enterprises & co-operatives in rural and peri-urban areas

benefiting from ILO entrepreneurial training programmes.

• The envisaged partnership with the Unemployment Insurance Fund,

Department of Labour, will extend sefa financing and support to rural and

peri-urban areas.

• Partnerships and collaboration with government departments such as Rural

Development & Land Reform & Military Veterans. Also provide funding to

SMMEs and Co-operatives awarded contracts by the public sector including

departments of Basic Education & Human Settlements, ESKOM, IDZs and

municipalities.


10

DSBD Strategic Plan

2015-19: Themes

DSBD strategic

objective

link to DSBD

Program


e) Franchising Facilitate partnerships

with all spheres of

government as well as

the private sector to

ensure mutual

cooperation that will

benefit small

businesses and co-

operatives

Entrepreneurship

and Franchising: To

identify potential

entrepreneurs and

provide them with the

necessary business

skills as well as

identifying SMMEs

and Co-operatives

that have the potential

to franchise

• sefa provides funding for franchises through its Direct

Lending Program and also plays a role in the

development of new concepts that are more

affordable and focussed on the township economies.

• sefa signed a Memorandum of Understanding with

the Franchising Association of South Africa with the

objective to facilitate transformation in the sector and

to promote and develop franchising systems and

business concepts from black township

entrepreneurs.


11

DSBD Strategic Plan

2015-19: Themes

DSBD strategic

objective


f) Start-up funding To facilitate radical

economic

transformation through

increased participation

of small businesses and

cooperatives in the

mainstream economy

Enterprise

Development: facilitate

the establishment of

new and productive

enterprises as well as

the sustainability and

growth of existing

enterprises

• The majority of sefa loan products is tailored to

support entrepreneurs in the start-up phase of

the development cycle (1-3 years).

• In order to facilitate the sustainability of these

start-up enterprises, sefa also has a post-

investment mentorship program that provides

customised support to entrepreneurs facing

start-up risk.

• sefa will also partner with the DSBD regarding

the establishment of a National Enterprise

Development Fund.

g) High growth / high

impact SMMEs

• sefa strives to balance its portfolio between the

different segments of the SMME sphere, from

survivalists, social entrepreneurs to “Gazelles”.

• sefa will also support the “Gazelle” programme

of the DSBD through its Direct Lending

Program and the Khula Guarantee Scheme.


12

DSBD Strategic Plan

2015-19: Themes

DSBD strategic

objective


h) Co-operatives

(primary & secondary)

To facilitate radical

economic



of small businesses

and cooperatives in the

mainstream economy

Primary Cooperatives

Development: To

manage and support

individual primary co-

operatives with start-up

support which will

enable co-operatives

members to run the co-

operative on co-

operatives principles

(CDA, CIS and

Secondary Marketing

Cooperatives)

• sefa provides loan financing to co-operative

via its direct and wholesale lending channels -

Co-operative Financial Institutions (CFIs)

• Signed an MOU with CBDA to coordinate

support to CFIs and collaborate in

projects/programmes (including the proposed

Banking Platform) for sector development.


13

DSBD Strategic Plan

2015-19: Themes

DSBD strategic

objective


i) Targeted groups:

Women


economic transformation

through increased

participation of small

businesses and

cooperatives in the

mainstream economy

Gender, Youth and

People with disabilities:

To increase the

establishment of and

sustainability of existing

women-owned SMMEs

and Co-operatives, to

increase the number and

sustainability of SMMEs

and Co-operatives run by

people with disabilities

and the mainstreaming

of youth enterprises

• A minimum of 45% of all sefa loan facilities

are targeted at women owned businesses.

• sefa established a dedicated Joint Venture

Fund (Identity Fund Managers) as vehicle to

finance women owned businesses

Disabled • A minimum of 2% of all sefa loan facilities are

targeted at enterprises owned by people

living with disabilities.

• sefa will, amongst others, work with DSBD

and seda to identify and support companies

owned by people living with disabilities.

Youth • A minimum of 30% of all sefa loan facilities

are targeted at youth owned entrepreneurs.

• sefa in collaboration with IDC and NYDA

established a dedicated youth financing

scheme.


14

DSBD Strategic

Plan 2015-19:

Themes

DSBD strategic

objective

link to DSBD

Program


j) Spatial: Rural &

Townships


economic

transformation

through increased


businesses and

cooperatives in the

mainstream economy

LED and

Intergovernmental

relations: To

promote spatially

balanced economic

development and

productivity

improvements by

developing policies,

strategies and

programmes that

focus on small

businesses and co-

operatives in

underdeveloped

regions

(Decentralisation, co-

location and LED

Strategies)

• A minimum of 45% of all sefa funding is targeted to

SMMEs located in priority provinces.

• Implementing agent for a donor funded Bakery Co-

operative Project in rural areas of the Western Cape

• Implementing the Grocat coal briquette

manufacturing in the townships of Gauteng,

Mpumulanga and Northwest.

• Financing programmes to support sugar farmers in

KwaZulu Natal and Mpumulanga.

• Piloting Bulk Buying project for spaza shops

programme in Limpopo with private sector and tribal

authorities as partners.

• To finance SMMEs and Co-operatives in rural areas

& townships, trained by the ILO and other private

sector players across all economic sector

• Outreached events and advertising (including bill

boards)


15

DSBD Strategic Plan

2015-19: Themes

DSBD strategic

objective


k) Priority sectors To facilitate radical


through increased


businesses and

cooperatives in the

mainstream economy

Special projects: To

initiate, develop and

implement enterprise

development

interventions through

value chains and clusters

in prioritised areas

• sefa’s loan policies and products is informed

by government’s economic policies (NGP,

IPAP, NDP).

• sefa plans to increase percentage of loans to

businesses in the productive sectors of the

economy to 60% over the next two years

• Through the relationship with the IDC, sefa

develops and finances SMMEs to participate

in the IDC’s large industrial & localisation

projects

• sefa finances SMMEs that are beneficiaries of

Government's land reform programme and

small businesses in agro-processing industry

using the Land Reform Empowerment Fund

(LREF) and its own resources.


16

DSBD Strategic Plan

2015-19: Themes

DSBD strategic

objective


l) Informal sector /

micro enterprise

finance


economic



of small businesses and

cooperatives in the

mainstream economy

National Informal

Business Upliftment

Strategy: To create a

conductive business

environment for informal

businesses and to

provide adequate skills

and infrastructure to

support informal

businesses

• Provides micro enterprise finance through

Micro-Finance Institutions (MFIs) located in

rural and peri-urban areas.

• Piloting a supplier credit programme for short

term trade credit to micro enterprises.

• Piloting a new lending platform to informal

traders using the fresh produce markets.

• In partnership with the ILO to support informal

& formal small businesses and Co-operatives

across economic sectors located in townships

and rural areas.

• Partnering with the private sector for support to

the micro-enterprises in the retail sector (AJ

Containers)


17

DSBD Strategic Plan

2015-19: Themes

DSBD strategic

objective


m) Incubation To facilitate radical


through increased


businesses and

cooperatives in the

mainstream economy

Special projects: To

initiate, develop and

implement enterprise

development

interventions through

value chains and

clusters in prioritised

areas

• sefa will aggressively market its loan products to

entrepreneurs located in seda and private sector

incubators

• sefa Awethu Youth Fund – Start-ups from the

incubation programme are assisted with seed

capital, mentorship and entrepreneurship

training facilities.


18

DSBD Strategic Plan

2015-19: Themes

DSBD strategic

objective


n) Red Tape

Reduction

To advocate for a

conducive regulatory

environment for small

businesses and co-

operatives to enable

access to finance,

investment, trade and

market access in an

equitable and

sustainable manner.

Roll-out of the red tape

reduction guidelines in

order to ensure that the

guidelines are

institutionalised at all

state institutions.

sefa strives to have a customer-centric approach

with reduced red tape in its processes: This is

being done through:

• Improved access to sefa (real and virtual)

• Reduced turnaround times

• Clarity of sefa systems and procedures

• Automation of some components of our

process

• Improved co-ordination within sefa

• Improved communication with our clients

• Development of a Client Relationship

Management System

• Client surveys that measures customer

satisfaction


19

DSBD Strategic Plan

2015-19: Themes

DSBD strategic

objective


o) Shared economic

Infrastructure

Facilitate partnerships

with all spheres of

government as well as

the private sector to

ensure mutual co-

operation that will

benefit small

businesses and co-

operatives.

Implementation of the

Shared Economic

Infrastructure Facility

to enable strong

partnership agreements

with Provincial and

Local Governments.

sefa currently has 52 properties (industrial and

retail) in 5 provinces. Property portfolio is viewed

as a strategic asset in the context of government

policy of: Providing affordable infrastructure to

small businesses; Building Sustainable Small

Businesses; and Creating employment.

sefa will work with DSBD to ensure that these

assets are optimally applied to maximise the

appropriate support to SMMEs and co-operatives.


Vision, Mission and Values

To be the leading catalyst for the development of sustainable Small, Medium and Micro

Enterprises and Co-operative Enterprises through the provision of finance

Our mission is to provide simple access to finance in an efficient and sustainable manner to

SMMEs and Co-operative enterprises throughout South Africa by:

• providing loan and credit facilities to SMMEs and Co-operative enterprises;

• providing credit guarantees to SMMEs and Co-operative enterprises;

• creating strategic partnerships with a range of institutions for sustainable SMMEs and

Co-operative enterprises development and support;

• developing (through partnerships) innovative finance products, tools and channels to

speed up increased market participation in the provision of affordable finance.

• Kuya sheshwa!” - Speed and urgency

• Passion for development: Solution-driven attitude, commitment to serve

• Integrity: Dealing with clients and stakeholders in an honest and ethical manner

• Transparency: Ensuring compliance with best practice on the dissemination and

sharing of information with all stakeholders

• Innovation: Continuously looking at new and better ways to serve our clients

VIS

ION

M

ISS

ION

V

AL

UE

S

20

Five Principles Underpinning sefa’s Operations & Strategy

• Market Failure: sefa’s activities are geared towards correcting market failure and crowding-in the private sector. The

organisation plays in high risk spaces where the private sector would normally never look at, and thereby increase the

probability of venture capital, Angel finance, and most importantly start-up finance. The size of SMMEs, and amount of

funding they require, are the major key impediments of access to funding to small businesses since smaller loans are

expensive to administer.

• Catalytic or unlocking latent potential: sefa strives to be a leading catalyst for the development of sustainable

micro, small, and medium sized and co-operative enterprises through the provision of finance; targeted capacity

building and business support to enhance viability and growth of SMMEs and co-operatives. sefa will unlock SMME

and co-operatives opportunities emanating from preferential procurement, localisation, black industrialist programme,

B-BBEE, enterprise and supplier development programmes.

• Transformative: The strategy will also be one of the transformation tools that seeks to redress the SMME and co-

operatives funding gaps for R50 000 to R5 000 000 accentuated by the inability to accumulate savings and assets

required by commercial lenders.

• Partnership: Cooperation, Coordination and Collaboration: sefa forms strategic partnerships and consolidates

existing ones so that both government and the private sector take responsibility for addressing the challenges faced in

enterprise development. It is envisaged that the DSBD will play a major role in facilitating collaborated effort for small

business & co-operatives development and financing between sefa, seda, public sector, private sector and

international organisations.

• Focus on the SMMEs and co-operatives: sefa will ensure that SMMEs and co-operatives across the spectrum are

able to access finance since the private sector focuses on the high-end of the market. sefa will endeavour to make its

funds available especially to the SMMEs and co-operatives that requires smaller loans that are administratively

expensive to the private sector. 21

sefa’s Target Groups

Targeted Groups

women,

black people,

youth,

people in rural

communities and

townships

people living with

disabilities.

services (including retail, wholesale, IT and

tourism);

manufacturing (including agro-processing);

agriculture (specifically land reform beneficiaries

and micro-farming activities);

construction (small construction

contractors);

Mining (specifically small miners);

green industries (renewable energy, waste

and recycling management).

sefa

fun

ds in

the

follo

win

g s

ec

tors

Lending policy is informed by government’s economic policy - NGP, IPAP, NDP

22

We fund enterprises that…

• are owned by South African citizens and permanent residents

• are legally registered with fixed physical address

• are within the required contractual capacity

• Operate in South Africa

• have a written proposal or business plan that meets the requirements of sefa’s loan

application criteria

• demonstrate the character and ability to repay the loan

• have provided personal and/or credit references (if available)

• have the majority shareholder as the owner manager of the business

• where available, can provide relevant securities/ collateral

• have a valid tax clearance certificate

23

• High appetite for risk in exchange for high developmental impact

• Provision of capital and/or interest moratorium (Payment Holiday) up to 12 Months

• Financing SMMEs including start up businesses that are often perceived as high risk

• Addressing the financing gap for loans below R500k

• Provision of pre and post loan business support

• Provision of funding to entrepreneurs with adverse credit records provided they can demonstrate active remedy of their indebtedness

• Lending not solely based on security backing – long term sustainability potential

• Specific focus on youth owned businesses

24

What makes sefa different?

sefa’s distribution model

R50k to R5m Up to R5m R500 to R5m

sefa

DIRECT

LENDING

sefa

WHOLESALE

LENDING

sefa Funding

Model

SMMEs can access sefa funding solutions through any of the above channels

CREDIT

GUARANTEE

SCHEMES

Finance

Intermediaries: (CFIs,

MFIs, Joint Ventures

& Funds, Retail

Finance

Intermediaries)

Registered

financial

institutions

sefa regional

offices and seda

co-locations

25

Portfolio of Products

DIRECT LENDING

SECTOR-SPECIFIC

FINANCING

PRODUCTS MICRO-FINANCE

CO-OPERATIVE

FINANCIAL

INSTITUTIONS (CFIs)

CREDIT

GUARANTEE

SCHEME

• Working Capital

Facilities

• Asset Finance

• Term Loans

• Revolving Loans

• Bridging Loans

• Short-term Trade

Finance

• Land Reform -

Land Reform

Empowerment

Facility for

emerging black

farmers.

• Tourism: iKwezi

Tourism Facility

(sefa /Tourism

Enterprise

Partnership (TEP))

• Sugar Farming:

sefa/ Hulett Sugar

(THS) Facility

• Mining: sefa

Anglo-American

Mining Fund

• Youth:

sefa/Awethu Youth

Fund

• sefa has

partnered with 11

active MFIs

nationally

• sefa has partnered

with 10 CFIs

across the country

• Designed to

indemnify

commercial banks

and suppliers who

extend credit to

SMME.

• Supplier Credit

Guarantee

programme is in

its pilot phase.

• funding from R50k

up to R5 million • small scale

finance – between

R500 and R50k.

• facilities from R500

up to R50k

26

S

S

S

S

S S S S

S

S

S

S

S

S

S

S

S

S

S

– 10 sefa Main Offices

– 4 Strategic Partnerships

– 8 Specialised Funds/Joint Ventures

– 7 sefa colocations

– 10 Co-operative Financial Institutions

– 6 Retail Financial Intermediaries

– 11 Active Microfinance Intermediaries

S – 37 proposed new access points

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

S

Footprint – Locations

28

Main Offices Co-location S CFI MFI RFI SP JV

1 Bloemfontein George Alfred Nzo Apel Observatory, WC Bellville Midrand, JHB Braamfontein, JHB

2 Braamfontein Saldanha Amajuba Bellville Cape Town, CBD Bloemfontein Rosebank, JHB Illovo, JHB

3 Cape Town Tshwane Amatole Cape Town Port Elizabeth Durbanville, WC Springs Johannesburg, CBD

4 Centurion – H/O Ekurhuleni Cape Winelands Durban Pietermaritzburg Midrand, JHB Tongaat Johannesburg, CBD

5 Durban Soweto Central Karoo Gauteng Phoenix, Durban Newlands, WC Malelane

6 East London Mthatha Chris Hani Limpopo Phuthaditjhaba Stellenbosch Midrand

7 Kimberley Port Elizabeth Dr Kenneth Kaunda Limpopo Whiteriver, MP Rivonia, JHB

8 Nelspruit Dr Ruth Segomotsi Mompati Limpopo Mamelodi, Tshwane Westville, Durban

9 Polokwane Fezile Dabi Limpopo Sunninghill, JHB

10 Rustenburg Gert Sibande North West Chislenhurston, Sandton

11 Greater Sekhukhune North West Klerksdorp

12 iLembe Elim

13 John Taolo Gaetsewe Malamulele

14 Lejweleputswa Tzaneen

15 Mopani Polokwane

16 Namakwa Mokopane

17 Ngaka Modiri Molema

18 Nkangala

19 Overberg

20 Pixley ka Seme

21 Sedibeng

22 Sisonke

23 Siyanda

24 Thabo Mofutsanyane

25 Ugu

26 Joe Gqabi

27 Umgungundlovu

28 Umkhanyakude

29 Umzinyathi

30 Uthukela

31 Uthungulu

32 Vhembe

33 Waterberg

34 West Coast

35 West Rand

36 Xhariep

37 Zululand

38

S

Footprint Building Mechanisms

• sefa strives to be accessible on a district/metropolitan municipal level

• Target: 37 new access points

− Phase 1 - access points to be concluded by March 2016: 30 new access points

− Phase 2 - access points to be concluded by September 2016: 7 access points

• sefa will enhance existing networks and partnerships with organisations including co-

locations with IDC, seda and other institutions such as Municipalities, Local Economic

Development Agencies, Provincial DFIs and Business Chambers.

• sefa has a relationship with seda and trained 34 seda branch offices to assist

entrepreneurs with sefa applications and also to receive such applications on behalf of

sefa.

• Different type of access points will be matched to different specific types of districts and

Metropolis as well as Presidential Poverty Nodes

29

2011/12 2012/13 2013/14 2014/15

ex-Khula

and

ex- samaf sefa sefa

sefa

(unaudited)

Approvals R211 million R440 million R1 065 million R987 million

Disbursements R143 million R198 million R549 million

R664 million

Since its establishment sefa’s loan book growth has

outperformed the combined loan books of its predecessor

institutions.

Loan Book Performance

30

2015/16 Strategic Thrust

31

1. Increase access to finance

for small businesses and co-

operative enterprises

2. Strengthening Human

Resource capacity

3. Marketing of the sefa

products and services

4. Consolidating the Post

Investment and Monitoring

Support

2015/16 Strategic Thrust 1 – Increase access to finance for small businesses and co-operatives

• Enhance and strengthen partnerships with seda, chamber of commerce and

sector specific institutions

• Strengthen the due-diligence capacity

• Streamline the loan management processes through increased use of online

and workflow technology

− Improve the turnaround times

• Implement effective business support services

• Implement effective customer resolutions processes

• Implement loan programmes for targeted groups

• Grow the micro-enterprise loan book through innovative products (supplier

credit, partnerships with community organisations, etc.).

32

2015/16 Strategic Thrust 2 - Strengthening Human Resource capacity

• Building the capacity of staff to increase productivity and improved

customer centricity/ satisfaction

• Re-skill and re-deploy identified personnel that is mismatched in their

current role profiles/ jobs

• Build and strengthen sefa institutional culture

• Leadership development to ensure a values driven organisation

• Increasing staff engagement and effective communication

• Review and redesign a comprehensive orientation programme; and

• Implementation of employee relations programme to harmonise and

improve the working relationship and organisational discipline.

33

2015/16 Strategic Thrust 3 - Marketing of the sefa products and services

• Implement a strategic outreach and marketing programme with

Stakeholder/ Partner organisations

• Implement a customer relationship management strategy that

encompasses the different client touch points

• Design and implement a stakeholder relationship strategy and

programme

• Implementation of an evaluation tool to measure the

effectiveness of the marketing and outreach campaigns

34

Create awareness about the sefa products and services

− Outdoor Marketing: 44 billboards evenly distributed/located in strategic priority

areas initially in the 4 provinces of Gauteng, EC, Limpopo and KZN

− Print: Advertorials:

Flight magazines such as Indwe, Khuluma;

Local community newspapers (Weslander, George Herald, Polokwane Express,

etc)

− Radio Interviews/ adverts: Vernacular radio stations (Motsweding FM, North-

West FM, etc)

− Outreach events:

Roadshows

Exhibitions

Trade shows

35

2015/16 Strategic Thrust 3 - Marketing of the sefa products and services (cont’d)

2015/16 Strategic Thrust 4- Consolidating the Post Investment and Monitoring Support

• Centralise the post investment monitoring function

• Strengthen the collections capability through the introduction of a

Debit Order facility and increase collections capacity

• Strengthen and expand the Investment Monitoring Committee to

encompass both the Direct and Wholesale loan programmes

• Expand the post investment business support services.

36

Co-operative Enterprise Strategy

• Leverage public and private sector partnerships and resources for the

establishment and growth of co-operative enterprises

− To promote partnership with state agencies, government departments,

municipalities and private sector

− To provide access to finance and services to CFIs and co-operative

enterprises

− To ensure sustainability and growth of sefa funded co-operatives

• Products and Services

− Wholesale business loans to CFI to on-lend to small businesses

− Institutional Strengthening support/ Capacity Building grants

− Direct business loans to co-operative enterprises.

37

Growing the Co-operative Loan Book

Support to Co-operative Financial Institutions (on-lending to small businesses)

Institution Amount Description Province

Mathabatha Financial Co-

operative

R150,000 Owned by 2844 members with

total assets of R2.3 million.

Limpopo

Kwa-Machi Financial Co-

operative

R150,000

Owned by 590 members with

total assets of R1.9 million.

KZN

Ditsobotla Co-operative Bank

R1,4m

Owned by 1257 members with

total assets of R9,3 million.

Northwest

Partnership-CBDA

Project sefa

contribution

Partner

Banking platform project R10 million Technology platform for CFIs

that will enable better

management of the

organisational resources,

accountability and access for

end users to the commercial

banking platform.

CBDA

38

Growing the Co-operative Loan Book (cont.)

Support to Co-operative Enterprises

PROJECT AMOUNT DESCRIPTION PROVINCE

Retail Cluster

(Bulk buying)

R10 million Centralised distribution centre that bulk

buys and distributes to local township &

rural enterprises.

Limpopo

Feeding

scheme

R30 million Financing to co-operative feeding schemes

who received contracts with Department of

Education. The project will be piloted in

Gauteng and KZN.

KZN/Gauteng

Tshepo 10 000

Youth

R30 million Support to youth owned co-operatives that

received short term contracts from the City

of Tshwane

Gauteng

Pipelines

Energy

Renewable

R30 million A partnership with the dti to finance co-

operative beneficiaries to produce energy

through biomass and agriculturist

Northern Cape

Egg Production R30 million The project has secured an off-take

agreement with Top-play to distribute eggs

to different retailers

Eastern Cape

TOTAL R130 million

39

DSBD Strategic Objective 1:

To facilitate the development and growth of small businesses and co-operatives to contribute to

inclusive and shared economic growth and job creation through public and private sector procurement DSBD Performance Indicator/ Measure

sefa Key Performance Indicators/Measures

(approvals)

sefa 2015/16

sefa 2016/2017

sefa 2017/18

sefa 2015 - 2018

• Increased number of SMMEs and Co-operatives accessing public and private sector procurement opportunities

• An increase in the provision of adequate skills and infrastructure support to informal businesses

• Direct Lending Number Value

• Wholesale Lending Number Value

• Co-operative enterprises Number Value

• Survivalist and Micro

enterprises financed Number Value • Credit Guarantee Number Value TOTAL (excl. Credit Guarantees) Number Value

628

R540.6m

3 176 R355.0m

194 R97.0m

37 800 R97.0m

156 R177.5m

41 954 R1 267.1m

774

R627.5m

3 498 R400.0m

221 R110.5m

39 000 R110.5m

176 R196.5m

43 669 R1 445.0m

928

R677.7m

3 862 R472.0m

261 R130.5m

41 000 R130.5m

208 R216.1m

46 259 R1 626.8m

2 330

R1 845.8m

10 536 R1 227.0m

676 R338.0m

117 800 R338.0m

540 R590.10m

131 882 R4 338.9m

• Productive industrial sector target: 40% in 2015/16 and 60% thereafter • Majority of sefa direct lending is targeted towards public and private sector procurement

Alignment of sefa to DSBD’s objectives

DSBD Strategic Objective 2

To facilitate radical economic transformation through increased participation of small businesses and

cooperatives in the mainstream economy DSBD Performance Indicator/ Measure

sefa Key Performance Indicators/Measures

sefa

2015/2016

sefa

2016/2017

sefa 2017/2018

Total sefa 2015 - 2018

Increased participation of SMMEs and Co-operatives in the mainstream of the economy

Overall disbursements by intermediaries to end users and through direct lending Targeted Groups:

Youth

Priority rural provinces

Women owned

Black owned

Less than R500k

People living with disabilities

R 885,4m

R 265.6m

R398.4m

R398.4m

R619.7m

R177.0m

R17.7m

R1 039.4m

R311.8m

R467.7m

R467.7m

R727.5m

R207.8

R20.7m

R 1 158.4m

R347.5m

R521.2m

R521.2m

R810.8m

R231.6m

R23.1m

R3 083.2m

R924.9m

R1 387.3m

R1 387.3m

R2 158.0m

R616.4m

R61.5m

Alignment of sefa to DSBD’s objectives (cont’d)

DSBD Strategic Objective 4: Facilitate partnerships with all spheres of government as well as the private sector to ensure mutual cooperation that will benefit small businesses and co-operatives DSBD Performance Indicator/ Measure

sefa Key Performance areas

Forging sustainable partnerships with the private sector to benefit SMMEs and Co-operatives Accelerated Partnership Agreements with Provincial and Local Government

• sefa has a relationship with our sister agency, seda and trained 34 seda branch offices to assist

entrepreneurs with sefa applications and also to receive such applications.

• sefa will enhance existing networks and partnerships with organisations including co-location with IDC,

seda and other institutions such as Municipalities, Local Economic Development Agencies, Provincial DFIs

(GEP, MEGA, ECDC, NWDC) and Business Chambers.

• Other public & private partnerships include Business Chambers and Associations at National & Local Level

such as SACCI & Black Business Council, South African Institute of Chartered Accountants, Institute of

Business Advisors, Franchising Association of South Africa, CBDA, TUSK, NDA, NYDA, Masisizane (Old

Mutual), Transnet, PRASA, Anglo Zimele, Tourism-TEP, Aluminium Beneficiation Initiative with Hulamin &

BHP-Billiton.

• sefa has partnered with the International Labour Organisation (ILO) with a view to fund micro enterprises &

co-operatives in rural and peri-urban areas benefiting from ILO entrepreneurial training programmes.

• The envisaged partnership with the Unemployment Insurance Fund, Department of Labour, will extend

sefa financing and support to rural and peri-urban areas.

• Partnerships and collaboration with government departments such as Rural Development & Land Reform &

Military Veterans. Also provide funding to SMMEs and Co-operatives awarded contracts by the public

sector including departments of Basic Education & Human Settlements, ESKOM, IDZs and municipalities.

Alignment of sefa to DSBD’s objectives (cont’d)

Approvals and Disbursements over 5 years

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 Total

R'000 m R'000 m R'000 m R'000 m R'000 m R'000 m R'000 m

Direct Lending 485.000 540.600 627.500 677.700 731.900 790.500 3 368.200

Wholesale SMMEs Lending 283.000 355.000 400.000 472.000 596.400 624.000 2 447.400

Credit Guarantees 50.000 177.500 196.500 216.100 237.700 261.500 1 089.300

Co-operatives 6.400 97.000 110.500 130.500 154.000 172.500 664.500

Wholesale micro enterprise finance 153.000 97.000 110.500 130.500 154.000 172.500 664.500

Total 977.400 1 267.100 1 445.000 1 626.800 1 874.000 2 021.000 8 233.900

Disbursements

Disbursements to SMMEs via all Product

Channels 800.000 885.400 1 039.400 1 158.400 1 293.800 1 418.300 5 795 300.000

Approvals

43

SMMEs/ Co-operatives Financed and Jobs Created/ Maintained over 5 years

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

SMMEs financed 37 758 41 798 44 183 46 726 49 465 52 319

Jobs created 57 255 67 912 72 572 77 780 83 058 89 121

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

100 000

SMMEs financed Jobs created

44

Financial Overview

• 28% increase in revenue from 2015 to 2016

• Staff costs

− an annual salary adjustment

− proposed head count increase of 16% which is centered

around the core business strategy to increase the loan book

by 52%.

• Cost containment in line with instructions from National Treasury

Instructions

• Management of sefa impairments and bad debts.

• Increased organizational efficiencies and streamlining of internal

processes

45

Statement of Comprehensive Income

2020 2019 2018 2017 2016 2015 Forecast

R'000 R'000 R'000 R'000 R'000 R'000

Revenue 420,493 351,776 303,595 254,875 204,112 159,516

Expenses (701,641) (644,039) (635,763) (631,771) (562,787) (454,058)

Personnel expenses (252,102) (235,939) (220,660) (207,012) (166,937) (119,575)

Investment property expenses - - (24,117) (43,870) (57,419) (66,945) Movement on impairments

provisions, bad debt provisions (281,909) (246,193) (236,094) (233,218) (240,924) (199,291)

Grants paid to Khula Institutional Support (47,000) (45,000) (42,000) (40,000) - -

Other operating expenses (120,630) (116,907) (112,892) (107,671) (97,507) (68,247)

Profit/(loss) before grant income (281,148) (292,263) (332,168) (376,896) (358,675) (294,542)

Grant income - - - - 706 113

Profit/(loss) before tax (281,148) (292,263) (332,168) (376,896) (357,969) (294,429)

Income tax expense - - - - - -

Profit/(loss) after tax (281,148) (292,263) (332,168) (376,896) (357,969) (294,429)

Grants capitalised to shareholder's loan 310,986 293,756 277,483 264,124 406,397 257,604

*Surplus/(deficit) after subsidies 29,838 1,493 (54,685) (112,772) 48,428 (36,825)

46

Statements of Financial Position

2020 2019 2018 2017 2016 2015 Forecast

TOTAL ASSETS R'000 R'000 R'000 R'000 R'000 R'000

Non-current assets 3,247,180 2,671,328 2,155,381 1,801,770 1,451,246 1,131,443

Other 441,293 422,311 403,524 486,070 494,297 501,770

Loans and advances 2,805,887 2,249,017 1,751,857 1,315,700 956,949 629,673

Current Assets 279,213 236,125 98,629 131,892 258,844 407,678

Trade and other receivables 32,766 31,602 30,144 31,341 30,447 16,238

Other - - - - - 11,200

Cash and cash equivalents 246,447 204,523 68,485 100,551 228,397 380,240

3,526,393 2,907,453 2,254,010 1,933,662 1,710,090 1,539,121

EQUITY AND LIABILITIES

Equity attributable to

owners of the parent 2,254,662 2,224,825 2,133,630 1,822,018 1,615,789 1,421,362

Non-current liabilities 13,274 11,995 10,675 9,332 8,318 5,612

Current liabilities 1,258,457 670,633 109,705 102,312 85,983 112,147

3,526,393 2,907,453 2,254,010 1,933,662 1,710,090 1,539,121

47

Revenue Mix

Interest from lending operations remains the main drivers of growth of Revenue

-50000

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

2020Budget

2019Budget

2018Budget

2017Budget

2016Budget

2015Forecast

2014 Actual

Indemnity fees Interest from lending operations

Investment property rental income Other income

Investment income Net fair value gain/(loss) on financial assets

48

Interest earned by portfolio over 3 years

Direct Lending steady increase is in line with sefa strategy

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

2016 2015 2014

24 % 24%

35%

9%

10%

20%

67%

65%

44%

0%

1%

1%

SME Wholesale portfolio Micro Wholesale SME Direct Lending ISA and NBF

49

Funding Mix (Including Govt Grant) - 2015/16

Indemnity fees 1%

Interest from lending

operations 23%

Investment property rental

income 4%

Other income 4%

Investment income

2%

Net fair value gain/(loss) on

financial assets -2%

Grants capitalised to shareholder's

loan 64%

Indemnity fees Interest from lending operations

Investment property rental income Other income

Investment income Net fair value gain/(loss) on financial assets

Grants capitalised to shareholder's loan50

2020 2019 2018 2017 2016

Year on year growth in revenue 20% 16% 19% 25% 28%

Year on year growth in expenses 9% 1% 1% 12% 24%

Cost: income (excluding grant) 100% 113% 132% 156% 158%

Cost: income (including grant) 57% 62% 69% 77% 53%

Growth in interest and admin fees

generated from loans % 22% 22% 23% 30% 76%

Key Ratios over 5 years

51

Risk Management Model

sefa adopted an integrated risk management strategy, based on international best practice, to

ensure that the achievement of its stated objectives.

52

sefa’s Risk Universe

53

Property Portfolio

• sefa has inherited the property portfolio from its predecessor institutions. The parks are meant to incubate small

micro and medium sized enterprises including co-operatives by making available access of affordable and subsidised

infrastructure to enterprises thus creating jobs and contributing to economic development.

• sefa property portfolio

− currently has 52 properties in 5 provinces: Gauteng; Kwa-Zulu Natal; Western Cape; Eastern Cape & Free State

− split into 30 industrial & 22 retail commercial properties

− valued at R184 million as at 31 March 2014.

• sefa has provided support via provision of affordable infrastructure and its developmental impact of the property

portfolio is:

− Portfolio - total of 948 tenants/businesses

− black owned businesses – 95%

− women owned businesses – 35%

− no of jobs created – 3792 (average of 4 jobs per tenant/business)

− Type of business activities: - furniture manufacturing, upholstery and cabinets making; dress making, clothing design,

curtain & dress making; printing; dry cleaning depot; welding works; footwear manufacturing; Retail; Shoe & Leather

Bags Repairs; Butchery; Dry Cleaners; Motor repairs; Engine rebuilding and others.

54

Property Portfolio (cont’d.)

• sefa’s property portfolio is viewed as a strategic asset in the context of government policy of:

− Providing affordable infrastructure to small businesses

− Building Sustainable Small Businesses

− Creating employment

55


• Challenges

− Non-payment of rentals had a detrimental effect on sefa’s ability to maintain the

properties

sefa has had a low collection rates for rentals ranging from 1% in some areas in Gauteng to 70%,

in other areas, with the average collection rate at a low 35%.

Total arrears = R68 million as at 31 December 2014

− High cost of refurbishment resulting from the age of the properties

− Deterioration of physical state and condition of the properties

− Interpretation of historical agreements between the dti and tenants associations

Organised tenants (such GAPIPA and OWIPA) in reaction to historical agreements between the

dti and tenants resulting in high levels of arrears.

− Tenants struggling from a financial perspective (low profitability)

− High reliance on expensive external property managing services

− Lack of dedicated in-house resources

56


• sefa’s approach

− Strengthen collection of rentals

− In-house property management

Sefa is considering In-house management and acquisition of specialised property management skills of these

industrial parks.

− Engaging with DSBD to align the strategy on properties with the DSBD’s strategic priority

− Perform urgent repairs and maintenance on identified priority areas

− Sale and transfer of ownership of some properties

sefa has a strategy to sell off some properties that will facilitate transfer to existing long-term

tenants

In order to satisfy the dti historical agreement with GAPIPA, sefa is in negotiations with GAPIPA

in this regard

An Instalment Sale Agreement (ISA) financing model was developed to provide an affordable

instrument of empowering tenants who could not afford to raise finance to acquire business

premises

57

Overview of sefa Challenges

• High levels of impairments

• Repayment of public contract-based finance – cessions from public

entities

• Low levels of funding to enterprises owned by people with

disabilities

• Full optimisation of the Khula Credit Guarantee Scheme

• sefa property portfolio (rental arrears)

• Pricing to end-users

• sefa recapitalisation for growth

• Internal capacity development

58

Case Studies

59

NBZ Ambulance Services

• After working as a paramedic for the Usher Memorial Hospital in Kokstad for 9 years, Nomfanelo realised the need for a private ambulance services for the Mount Free community.

• Nomfanelo’s dream was to assist the community as it took about two and half hours for government ambulances to respond to emergency calls all the way from Kokstad.

• One day, whilst mulling over this she turned her radio on and heard sefa being interviewed, where it announced that it will visit Bizana on a roadshow to talk to existing and aspiring entrepreneurs about availability of funding for small businesses.

• The following day she drove to the roadshow event and made a thereafter made formal application for funding.

• The rest is history as sefa granted her an asset finance loan of R350 000 to acquire her own ambulance

• To date, 6 jobs have been created

60

Financial Services Co-operative

• Kwa-Zulu Ladies is a Financial Services Co-operative based in Kwa-Zulu Natal funded by sefa to the value of R1 757 078 of which R1 198 052 was meant for on-lending and the remaining R559 026 was for capacity building. The total funds has been disbursed to the cooperative.

• The co-operative provides loans and saving services to its members. K Ladies has offered different types of loans which include enterprise/business loans to its members.

• The aim of the business loans is to contribute towards job creation .

• Nyonende Farm is one of the projects that K. Ladies has funded. The business is located in Pietermaritzburg and is involved in hatchery activities. The business was issued with a loan of R16,000 to buy stock (eggs to produce chicks which are sold to farmers).

• The owners are the first black farmers in Pietermaritzburg to own hatchery and have been trained to run the hatchery. The co-operative plans to sell chickens to their clients and deliver them to supermarkets, prisons and hospitals. The business has 8 employees.

61

Non-Financial Co-operatives

GROCAT-MANUFACTURING CO-OPERATIVES

• Grocat Commodities, a subsidiary of Afgri, entered into a partnership with sefa to mobilise young people and form manufacturing co-operatives to produce briquettes to be used for cooking and heating purposes. The briquettes are produced from coal duff and biomass.

• A total facility of R14, 016,000 was approved by sefa towards to the establishment of 24 manufacturing youth co-operatives. sefa contributes R11, 616,000 whilst Grocat contributes R2, 400,000.

• Each co-operative qualifies for total funding of R584, 000, out of that R384, 000 is meant for business loan to buy machinery and equipment, and site establishment; while R100, 000 sefa grant is for business support and R100, 000 interest free loan is from Grocat.

• Two co-operatives have been established under the facility to date (at Kagiso and Garankua).

62

Enterprise Lending

FHATU CHICKENS

• Fhatu Chickens is a female owned close corporation, which started its operation in 2006. It is a broiler chicken farming operation operating on a farm in Doornspruit at Makhado.

• In June 2012 the business was offered a contract to supply eggs to Pick n’ Pay and Boxer Stores in the Limpopo province. This was an opportunity of a life time to any egg producer with the backup from Highveld Egg Co-operation Ltd, but the contract lapsed as they could not raise funds and start their own production.

• In February 2014 the client approached sefa for a R3 million loan to expand its egg production operation of the business. The funding was for the purchase of 20 000 chickens’ layers and provision of working capital. The loan was disbursed in April 2014.

The project created 13 permanent jobs

63

Enterprise Lending

Green Home Products (Pty) Ltd

• Green Home Products (Pty) Ltd is an established operation which came into being 8 years ago, in March 2007. It wholesales and retails pure biodegradable products focussing on the take away market. Some of the products that they sell are:

• Wooden spoon products made out of bamboo.

• Bagasse which is a fibrous matter that remains after sugarcane or sorghum stalks are crushed to extract their juice. The packaging of this product is fully biodegradable and compostable after use.

• The company is owned and managed by Catherine Morris. She is passionate about the environment and its survival, hence the field of biodegradable packaging. Mrs Morris hold 92% of the shareholding in this business.

• Green Home Products (Pty) Ltd approached sefa for a loan of R1m in order to expand their business by acquiring more products in order to meet the market demand.

• At the time of applying for the loan the client already employed 12 people. With sefa’s funding the client was able to increase her complement by 3 to 15 staff members.

• sefa started to disburse at the end of December 2014 and the business performance in relation to expectation has been achieved to date. The client is also adhering to her payment arrangements.

64

Agriculture – Land Reform Empowerment Fund (LREF)

ROBELA FARMING ENTERPRISES

• Robela Farm Enterprises is owned by Antoinette Robela. The farm is located in Brits, North West province and farms with vegetables such as tomatoes, cabbage, cucumber, lettuce and spinach under tunnels. The farm was financially assisted through the LREF, by sefa strategic partner, Capital Harvest Emerging Farmer Finance with a loan of R600, 000

• According to Capital Harvest, the biggest challenge of Robela farm is farming scale which is not sufficient to farm on a profitable basis. Therefore, as part of financial assistance, Capital Harvest allocated the majority of the farm enterprise development expenditure by purchasing a Ford Ranger 2.2 Tdci valued at R230, 000 for the Robela Farm Trust which, from Capital Harvest perspective, is an absolute necessity to be able to farm the property properly.

• Capital Harvest indicated that once they have completed the first season with the client(Robela) and the farm shows potential, they (Capital Harvest) will provide further loan funding to enable the addition of other

tunnels to scale up the production of tomatoes and cucumber

• The project has created 26 permanent jobs

65

Support to Youth Enterprise

sefa/Awethu Youth Fund

• Entrepreneur: Themba Khumalo (aged 23)

• Investment Approved: R3.825 million

• Investment Disbursed: R2.7 million (to date)

• Description: Using a decentralized production model and recycled materials from industrial applications, GroBlock produces concrete bricks that are not only environmentally friendly but also price competitive. GroBlock partners with large wholesalers of building and construction materials, co-locating in their yards, decreasing transport costs and improving time-to-market.

• Operational Highlights: Since commencing operations in April 2014, the GroBlock team has:

− piloted the first plant in the yard of a major building materials supplier in Vosloorus, reaching production of 5000 units / day;

− Managed to achieve target unit cost in the second week of production;

− Secured both waste inputs from the foundry and boiler industries for use in the production of bricks, further lowering unit cost per brick;

− Adopted time in motion studies to maximize efficiencies at the pilot plant, thereby increasing the productive capacity;

− Raised R440 000 of third-party capital (an ED Grant from General Electric SA) to commission a second machine to increase capacity in order to meet key client demand; and

− Implemented a comprehensive business performance tracking system whereby budget, targets, actual production and actual costs are tracked on a daily basis by Themba.

• Employees: 10 currently (including Themba), planned to be 12 when the second machine comes fully online (by first quarter of 2015).

• Growth Prospects: GroBlock aims to be operating 4 plants by the end of 2016.

66

Meqheleng Waste Management (Pty) Ltd

• Meqheleng Waste Management (MWM) is a Ficksburg-based black-woman owned company.

• Obtained working capital facility of R493 000 from sefa in order to deliver on contracts awarded by Nampak and Consol to supply waste papers and bottles for recycling.

• Employed10 local youth.

• Business is owner-managed by Ms Caroline Kgomo.

• Ms Kgomo was one of the participants in the Entrepreneurship Challenge Competition hosted by the International Labor Organization (ILO) in 2014.

67

Aluminium Beneficiation Facility

• The R100 million Aluminium Beneficiation Facility was established by sefa in collaboration with

the Aluminium Beneficiation Initiative (“ABI”), a Hulamin and BHP Billiton initiative;

• The initiative aims to identify and support 100 entrepreneurs in the aluminium fabrication sector

and guide them into sustainable businesses.

• The R80 million of the facility is targeted at financing South African entrepreneurs with innovative

ideas in aluminium fabrication.

• The R20 million contractors fund is aimed at financing Hulamin and BHP Billiton contractors to

meet their working capital and expansion needs.

• Hulamin and BHP Billiton committed to develop SMMEs by providing technical resources in

aluminium extrusion, business support through ABI.

68

Thank You

69

Annexure:

Historical Context

70

Key Policy Decisions in Facilitating

Access to Finance Pre-Merger

Key Policy Decisions in Facilitating Access to Finance Pre-Merger (cont.)

PERIOD STRATEGIC PROGRAMME INITIATIVE

1995 • White Paper on Small Business Development

• Wholesale Approach

o Tap on the existing financial infrastructure

o Bank Infrastructure – footprint, financial resources, and expertise

o NGO sector to service the micro enterprise sector (Donor Funded)

• State Resources were to enable the private sector to lend to SMME market

1996 - 2012 Khula Enterprise Finance Limited

• Facilitation of finance to SMMEs via financial intermediation (banks, MFIs, RFIs,

etc..)

• Guarantee Programme to enable the banking sector to lend to Small Business

• Establishment of Wholesale Programme – Joint Venture Funds, Lending to SMMEs

Retail Financial Intermediaries (RFIs) and Micro Finance Institutions (MFIs)

• Strategic focus was to build intermediaries that can be profitable and sustainable

2005 - 2012 South African Micro Finance Apex Fund (SAMAF)

• Expand micro enterprise finance to the economy

• Focus on institutional grants and capacity building

• Establishing MFIs and Financial Service Co-operatives

• Khula transferred MFI loan book to SAMAF

72



2008 - 2010 Khula Direct

• Cabinet Decision (2008)

• National Treasury R55m pilot approval

o R50m on-lending facility

o R5m Capacity building programme

• Pilot Direct Lending programme implemented (2011) in Pretoria, Johannesburg and

East London

2010 New Growth Path (NGP)

• Identified enterprise development as a key priority, with the aim of promoting small

business and entrepreneurship

• Articulated need to support labour intensive sectors. These include the following

sectors:-

o Services (repairs, cleaning, tourism, small construction contractors);

o Manufacturing (including agro-processing);

o Agriculture (specifically land reform beneficiaries and micro-farming activities);

o Mining (specifically small miners);

o Commercial (retail and wholesale);

o Construction; and

o Green economy.

73



2012 Small Enterprise Finance Agency (sefa)

• Government resolved to streamline provision and access to finance for SMMEs

• The establishment of sefa was therefore conceived to radically increase the

provision and access to finance to SMME’s

• Cabinet Decision - Establishment of a new wholly owned subsidiary of the IDC

combining Khula, SAMAF and IDC’s small business activities

• Mandate of the Agency – IDC Act

o 3(d) to foster the development of small and medium enterprises and co-

operatives

o Schedule 2 company under the PFMA

74

presentation to portfolio committee on economic development sefa

Documents