A SUMMARY OF KHULA OUTPUTSTO THE PORTFOLIO COMMITTEE

25 March 2003

High-level Objectives

To make an impact on the transformation of the South African economic landscape by contributing towards the DTI strategic objectives

Facilitate mobilization and directing of resources (public & private sector funding) towards SME development.

Core Strategic Objectives

To achieve a return on investment that ensures retention of the capital base. (Finance)

To offer sustainable credit and capital through a network of efficient distribution intermediaries. (Customers)

Core Strategic ObjectivesScaling and growing the operations, through

managed risk, to achieve impact and outreach. (Finance)

To acquire, develop and retain the human talent to meet the short, medium and long-term needs of Khula. (People)

To develop and implement an integrated business marketing strategy. (Process)

Growth StrategiesMobilise banks for mass or scale delivery.

– Training workshops with bankers and marketing

– Mainstream and roll-out a credible mentorship

To stimulate the provision of venture [start-up] and small scale equity finance.

To research and package innovative products that can mobilise and attract the financial industry participation in Khula mandate.

Build on nation wide communication campaign

Growth Strategies Segment the market and design a suitable product

mix and structure accordingly.– Emerging and matured markets

To support the distribution network in line with market needs.– capacitate and develop to serve the all market

segments [from under-banked to bankable enterprises]– To improve outreach and efficiency of emerging

market network Improve market access through business linkage

initiatives

Where are we ? 1996 – 2003 & year ending 2003 [28/02]

Corporate

Objectives

Cumulative

1996 - 2003

Target

2003

Actual

2003

Rating

2003

Approved

Business Loans

R363,6m R70,0m R77,8m

Committed Guarantees

R348,2m R258,0m R145,0m

Approved LRCF Loans

R56,9m R20,0m R20,8m

Approved

Equity deals

R12,9m R14,0m R9,6m

Where are we ? 1996 – 2003 & year ending 2003 [28/02]

Corporate

Objectives

Cumulative

1996 - 2003

Target

2003

Actual

2003

Rating

2003

Approved -RFI

Cap, Seed loans; Capacity Build

R173,7m R22,9m R27,7m

Approved -MCO

Seed loans on-lend & ops; Capacity Build

R28,3m R16,1m R10,1m

Thuso Mentorship: Business Plans After-care visits

R67,9m994

R24,0m210

R23,0m341

Where are we ? 1996 – 2003 & year ending 2003 [28/02]

Impact Stats &

Property Income

Cumulative

1996 - 2003

Targets

2003

Actual

2003

Rating

2003

Total Gross

Jobs Created:

All Programmes

1 064005 124 498 126 764

No of Guarantees

Committed2544 1 290 496

Thuso B Plans 306 120 97

Property Income R8,3m R7,6m R8,3m

522558

759

850800

0

100

200

300

400

500

600

700

800

900

3/98 3/99 3/2000 3/2001 3/2002

Credit Guarantees“Numbers”

Credit GuaranteesCredit Guarantees“Rands”“Rands”

R 64,148

R 102,418

R 141,329

R 170,086R 179,965

R 0

R 20,000

R 40,000

R 60,000

R 80,000

R 100,000

R 120,000

R 140,000

R 160,000

R 180,000

3/98 3/99 3/2000 3/2001 3/2002

R'000

Khula Equity Funds

Rand value of deal approved = R 18mNumber of deal approved = 11 Jobs created = 492 Investee Companies:

83% Male 17% Female

17% Rural 83% Urban

100% PDI

Land Reform Empowerment Facility

Funds loaned out to Date = R57 mNumber of projects = 16Number of PDI (Shareholders) = 794

– Male 360 Female 434

Job created = 1,261– Males 592 Females 669

Retail Financial Intermediaries

Funds loaned out to Date = R338 mNumber of RFI’s = 16Number of RFI Clients = 165 880

– Male 30% Female 70%– Black 96% White 4%– Urban 70% Rural 30%

Job creation estimate = 948 466

Khula-starts

Funds loaned out to Dec 2002 = R17 mNumber of Khula-starts = 17Number of Khula-starts Clients = 26 041

– Males 13% Females 87%– Black 100% White 0%– Rural 95% Peri-Urban 5%– 6 Provinces (Excl WC,NC,FS)

Jobs created = 50 000 (Approx)

Loans Representation in S.A. Limpopo 2 RFI’s; 2MCO’s

North West 1 RFI; 1 MCO

Gauteng 7 RFI’s; 1 MCO

Mpumalanga 3 RFI’s; 5 MCO’s

Freestate 1 RFI; 0 MCO’s

KwaZulu Natal 3 RFI’s; 5 MCO’s

Northern Cape 1 RFI; 0 MCO’s

Eastern Cape 2 RFI’s; 4 MCO’s

Western Cape 2 RFI’s; 0 MCO’s

Required capital is obtainedSeed activities are inherent risk mitigation

mechanisms of Khula balance sheet. [network and capacity support of RFI’s and quality mentoring]

Investment levels are necessary to off-set the price shortfall results.

A stable and committed human resource especially at senior level is achieved.

Summary of Assumptions

Summary of Assumptions

Political support is unwavering [all government levels] and based on sound corporate administration.

Access to markets becomes sensitive to SMME needs. [Government and state enterprise procurement systems adapt]

Financial institutions [including insurance houses] do come to the party

Sizwe Tati

Managing Director

Khula Enterprise Finance (Pty) Ltd

25/03/03

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