Sefa Presentation to the Portfolio Committee on Small Business Development

Thakhani Makhuvha

Chief Executive Officer

Parliament

Cape Town

03 September 2014

Contents

•About us–Mandate / Vision

–Mission

–Values

–Product offerings

•Legislative and policy framework

•Strategic Objectives

•Model of operation

•Footprint

•Developmental impact

Our vision

To be the leading catalyst for the development of

sustainable SMMEs through the provision of

finance.

Our mission

Our mission is to provide simple access to finance in an

efficient and sustainable manner to SMMEs throughout South

Africa by:

• delivering Wholesale and Direct Lending credit facilities or

products;

• providing credit guarantees to SMMEs;

• supporting the institutional strengthening of Financial

Intermediaries so that they can effectively assist SMMEs;

• creating strategic partnerships with a range of institutions

for sustainable SMME development and support;

• monitoring the effectiveness and impact of our financing,

credit guarantee and capacity development activities; and

• developing (through partnerships) innovative finance

products, tools and channels to speed up increased market

participation in the provision of affordable finance.

Our values

• kuyasheshwa! We act with 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 and

• innovation: Continuously looking for new and

better ways to serve our clients.

Portfolio of products

Our Direct Lending channel

offers the following products:

• Working Capital Facilities

• Asset Finance

• Term Loans

• Revolving Loans

• Bridging Loans

• Short-term Trade Finance.

The Institutional Support

offers the following:

• Institutional Strengthening

• Technical Support

• Rental Property( Industrial

and commercial)

Through our Wholesale

Lending channel, we offer

these financial products:

• Business Loans – (RFIs,

Joint Venture Funds)

• Microfinance;

• Financing of Co-operatively

owned enterprises

• Credit Guarantee Scheme;

• Land Reform Empowerment

Fund.

Legislative and policy framework

sefa strives to conform and adhere to all regulatory and statutory requirements. We have Audit and Compliance Committees whose core functions are to guide sefa through regulatory requirements and/or changes with the intent of preventing the severe non-compliance implications (including but not limited to financial and reputational consequences). Among other legislations, we ensure conformity to the following:

ENABLING

LEGISLATION• The Industrial

Development

Corporation (IDC)

Act

CORPORATE

GOVERNANCE• The Companies Act 71

of 2008 (the Companies

Act)

• Public Finance

Management Act of

1999 (PFMA)

OTHER RELATED & SUPPORTING LEGISLATION• Broad-Based Black Economic Empowerment Amendment Act, 2013 (Act No. 53 of 2003); and Codes of Good Practice

• National Small Business Act, No 102 of 1996

LENDING

LEGISLATION• National Credit Act (NCA)

• Short Term Insurance Act,

53 of 1998 (STIA)

• Co-operatives

Amendment Act No 6 of

2013

• Financial Intelligence Act

Strategic objectives

1. Increase access and

provision of finance to

SMME’s and thereby

contribute towards job

creation

2: Develop and

implement a

national footprint

for effective

product and service

delivery 3. Build an effective

and efficient sefa

that is a sustainable

performance driven

organisation

4. Build a learning

organisation

5. Build a sefa that

meets all legislative,

regulatory and good

governance

requirements 6. Build a strong and

effective sefa brand

emphasizing

accessibility to

SMMEs

Model of operation

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)

R50k to R5m Up to R5m R500 to R5m

Formal registered

financial institutionssefa regional offices and

seda co-locations

Our footprint

Developmental impact

BREAKDOWN OF THE 46 407 SMMEs

FUNDED AND THE R822 MILLION

DISBURSED

• 10, 291 were youth owned enterprises with

loan funding support to the value of R157

million;

• 44, 302 were women owned businesses

with funding support to the value of R362

million;

• 36, 729 were rural-based enterprises with a

total funding of R429 million; and

• 43, 643 were black owned enterprises

funded to the value of R599 million.

Youth Businesses Funded in 2013/14

9 65 332 18 9807 60

R 6.2m

R 41.6m

R 7.2mR 9.7m

R 40.5m

R 52m

0

10000000

20000000

30000000

40000000

50000000

60000000

Credit Indemnities Direct Lending CFIs Special Funds MFIs RFIs

Youth businesses funded per Channel

Total Youth Owned Enterprises Amount Funded

Women owned businesses: 2013/14

0

20000000

40000000

60000000

80000000

100000000

120000000

140000000

160000000

180000000

200000000

CreditIndemnities

Direct Lending CFIs Special Funds MFIs RFIs

10 64 696 134 43330 68

R2,5 m

R68,7 m

R11,6 m

R21,9 m

R189,4 m

R68,3 m

Women Owned Initiatives funded per Channel

Total Female Owned Enterprises Amount Funded

Rural areas/Priority Provinces

Total SMMEs in Rural-based (Priority Provinces) Amount Funded

Credit Indemnities 6 R 2 755 653.35

Direct Lending 79 R 101 542 657.10

CFIs 103 R 756 000.00

Special Funds 300 R 89 573 082.82

MFIs 36146 R 139 123 618.52

RFIs 95 R 96 193 271.68

0

20

40

60

80

100

120

140

160

AM

OU

NT

FUN

DED

MIL

LIO

NS

Priority province based SMMEs funded

Black Businesses Funded in 2013/14

Number of Enterprises per Channel

Amount Funded

0

50000000

100000000

150000000

200000000

CreditIndemnities

DirectLending

CFIs SpecialFunds

MFIs RFIs

11 194 1059 310 41991 78

R 9.7m

R 196.4m

R 20.7m

R 83.9m

R 187m

R 101.7m

Black Businesses Funded per Channel

sefa Regional● & Branch Offices ◦

GEOGRAPHIC LOCATION LENDING ACTIVITIES

Regional Office Address

• Application process

• Due diligence

• Management of collateral

• Application of Credit Risk Ratings

• Financing SMMEs including start up

businesses that are often perceived as high risk

• Addressing the financing gap for loans

between

R50 000 and R5m

1. Free State ● Office 4 & 5, Preller Square, Graaf Reinet Street, Dan Pienaar, Bloemfontein

2. Kwa-Zulu Natal●199 Anton Lembede Street

2102 Embassy Building - Durban

3. Gauteng, (South Western) JHB

No. 33 Hoofd Street, Braampark

Forum 1, Ground Floor

Braamfontein, Johannesburg

4. Gauteng, (North Eastern) Tshwane ◦ 4TH Floor, Block C, Old Mutual Building, 536 Schoeman Street, Tshwane.

5. Western Cape – CT ● 2 Long Street, 9th floor, FNB Building, Cape Town

6. Eastern Cape, (Western ◦7. Districts) PE

No. 68 Cape Road, Mill Park

Port Elizabeth. 6000

7. Eastern Cape, (Eastern Districts) EL ●Chesswood Office Park, 8-10 Winkley

Street, 2nd Floor Berea, East London

8. Western Cape, (Western Districts);

Claremont - CT●

1st Floor 200 on Main

Cnr Main and Bowwood Road

Claremont - 7708

9. Northern Cape NC ● 72 Long St, Business Partners Building, Kimberley.

10.Mpumalanga, Nelspruit● Suite No 5, Alcrest Building, Cnr MacAdams & Rothery Streets, Nelspruit.

11. Limpopo ● Suite 4, Biccard Park, 43 Biccard Street, Polokwane.

12.North West, Rustenburg ● 32b Heystek St, Sunetco Building, Rustenburg.

17

Co-operative Financial Institutions

CO-OPERATIVE NAME LOCATION SMME LENDINGFlash/ Sebenza Financial Cooperative Cape Town, Western Cape WHOLESALE LENDING

• On-lending loans: These are loans offered

through Financial Savings Co-operatives to

on-lend to members.

• Capacity-building grants: These are

services offered to Financial Savings Co-

operatives as grants to subsidize operating

costs and acquire assets such as furniture

etc.

DIRECT LENDING

• Business loans: Loans issued to

enterprising co-operatives and are priced as

per direct lending pricing model.

• Mentorship: Mentorship services provided to

co-operatives which received business loans.

R500 up to R5m loans to SMMEs

Kwa-Zulu Natal Financial Cooperative Durban, KwaZulu-Natal

Sibanye Cape Financial Cooperative Bellville, Western Cape

Mankotsana Financial Co-operative Apel, Limpopo

Kuvhanganyani FSC Limpopo

Boikago SACCO North West

Ditsobotla Primary Co-op Bank North West

Mutapa Financial Cooperative Limpopo

Mmetlakhola FC Gauteng

Tlharihani SACCO Limpopo

♦

Financial Savings

Co-operatives

MFI NAME PROVINCE SMME LENDING

Akanani Finance Co Limpopo

SMMEs can access funding from R500 up

to R50 000 from these Micro Finance

Intermediaries

Aloga financial services Gauteng

Get Ready Investment Holdings Limpopo

Ikusasa Empowerment Trust North West

Opportunity Finance KZN

Phakamani Foundation Mpumalanga,

Sakthi Financial Services KZN

Small Enterprise Foundation Limpopo

Tetla Development Services WC

Moliko Trust Free State

Tiisha Enterprise Finance Limpopo

Extra Credit Trading Eastern Cape

G50 Women financial services Limpopo

Kuyasa Fund Western Cape

Mazwe Financial Services Gauteng

Ndiza Finance Gauteng

Micro-finance Intermediaries▲

Retail Finance Intermediaries▪

RFI NAME LOCATION FUNDING FACILITIES

Capital Harvest Emerging Farmer

Finance

Stellenbosch, Western

Cape

SMME loans

between R500 up to

R50 000

Retmil Financial Services (Pty) Ltd Westdene, Bloemfontein,

Free State

Mettle Administrative Services (Pty) Ltd Bellville, Western Cape

Cape Capital Investment & Finance Co

Ltd

Newlands, Wester Cape

CapX Invoice Discounting (Pty) Ltd Durbanville, Western Cape

Droogfontein Incubation Farm Midrand, Gauteng

Partnerships∞

PARTNERSHIP

NAME

LOCATION OBJECTIVES

Tourism Enterprise

Partner (TEP)

Johannesburg,

Gauteng

To boost and sustain

SMMEs in the tourism

sector

sefa/ Tongaat Hulett

Sugar (THS) Facility

– R50 000 000.

Tongaat,

KwaZulu Natal

To fund sugar-cane

small scale farmers in

KZN

sefa/BAW Facility Johannesburg,

Gauteng

Taxi business funding

Land Reform

Empowerment

Facility

National Support to Land

Reform Beneficiaries

FUND NAME LOCATION BENEFICIARIES

Godisa Supplier Development Fund Johannesburg, Gauteng Offers SMMES Business Loans of up R5m

Anglo American sefa Mining Fund Johannesburg, Gauteng Designed to aid small and medium sized

black empowerment businesses that are

involved in small scale mining and related

activities within the Republic of South

Africa.

sefa Awethu Youth Fund Johannesburg, Gauteng For young township entrepreneurs in

Gauteng

Identity Development Fund Johannesburg, Gauteng For black-women owned entities

Khula–Akwandze Fund Johannesburg, Gauteng Agricultural funding

UTHO Capital Infrastructure SME Fund Johannesburg, Gauteng Equity funding

Business Partners Khula Start- Up Fund Durban, KwaZulu-Natal Business Start-up funding

Enablis Khula Loan Fund and Khula Enablis

Acceleration FundJohannesburg, Gauteng Technological funding

Specialised Funds*

THANK YOU