STRATEGIC PLAN 2019/20 – 22 · Fund Management, which comprises: The Venture Capital & Corporate...

2019/20 – 22STRATEGIC PLAN

Strategic Plan For the years 2019/20 – 22

31 January 2019

National Empowerment Fund

Strategic Plan for the years 2019/20 - 22 2

1. Table of Contents

1. Table of Contents ......................................................................................................... 2

2. Acronyms and Abbreviations ..................................................................................... 3

3. Overview by the Chairman .......................................................................................... 4

4. Official Sign-Off ............................................................................................................ 5

5. Strategic Overview ....................................................................................................... 6

6. Products and Services .............................................................................................. 17

7. Key programmes aligned to Government Priorities ................................................ 29

8. Financial Plan ............................................................................................................. 47

9. Risk Management and Fraud Prevention Plan ............................................................ 50

Appendix A: Financial Projections ................................................................................. 50



2. Acronyms and Abbreviations

APP : Annual Performance Plan

Approved : Final committee approval obtained, legal agreements not signed

B-BBEE : Broad-Based Black Economic Empowerment

BFS : Bankable Feasibility Study

Commitments : Legal agreements signed. (Deals may have been approved in current and previous financial periods.) All Conditions Precedent may not have been met yet.

CPs : Conditions Precedent

DFIs : Development Finance Institutions

Disbursements : Total cash advancements made against all approved deals (deals may have been approved in current and previous financial periods) subject to all Conditions Precedent having been satisfied by the investee.

GDP : Gross Domestic Product

IDC : Industrial Development Corporation

IPAP : Industrial Policy Action Plan

IRR : Internal Rate of Return

KZN : KwaZulu-Natal

MOU : Memorandum of Understanding

NEF : National Empowerment Fund

PFMA : Public Finance Management Act

PIU : Pre-Investment Business Support Unit

POIU : Post Investment Business Support Unit

SEDU : Socio-Economic Development Unit

SME : Small and Medium Enterprise

SPF : Strategic Projects Fund



3. Overview by the Chairman

Black economic empowerment remains a national imperative for an inclusive economy. As a

driver and thought-leader in promoting and facilitating black economic participation through

the provision of financial and non-financial support, the NEF has evolved steadily into a

credible and effective development finance institution. Having approved 957 transactions

worth R9.5 billion to date, the NEF is positioned to make a meaningful contribution to the

transformation of the economy. In order to continue to deliver on its mandate, it remains critical

that funding is secured in order to ensure the long-term sustainability of the fund.

Since the Strategic Plan was conceptualised in 2014 there are no significant changes to the

strategy of the NEF going forward. The key strategic focus continues to be recapitalisation

and securing new capital from the IDC and/or other government institutions. It remains critical

to urgently implement the business combination process with the IDC as approved by the

stakeholder ministries. Delays in finalising the recapitalisation of the organisation have

consistently resulted in the Board reducing annual targets in order to ensure that activities of

the NEF are managed within available funds. These reductions impeded the impact that the

NEF could have in the economy to advance radical transformation and facilitate the formation

of decent job opportunities.

Another key focus area in the immediate short term has been the improvement of efficiencies

within the fund. The NEF’s strategy is aligned to the dti’s strategic priorities as well as the

National Development plan, specifically through our targets to provide finance to business

ventures established and managed by black people, and thereby investing in black

empowered businesses that have employment creation opportunities in priority sectors

identified in the IPAP, as well as in rural areas and the agricultural sector.



5. Strategic Overview

5.1. Vision

Our vision is to be the leading provider of innovative transformation solutions for an

economically inclusive South Africa. We seek to be the lead financier of B-BBEE

investments in the DFI space.

5.2. Mission

The National Empowerment Fund is a catalyst of Broad-Based Black Economic

Empowerment in South Africa.

We enable, develop, promote and implement innovative investment and

transformation solutions to advance sustainable black economic participation in the

economy.

5.3. Values

The NEF has implemented a values & culture programme which has been

developed, communicated and implemented through various workshops with staff.

The values are:

1. Ethics

2. Motivation

3. Performance

4. Ownership

5. Worthy

6. Excellence

7. Respect

5.4. Strategic goals and objectives

The NEF’s key strategic outcome oriented goals against which performance is

reported are to:

1. Provide finance to business ventures established and managed by black

people.

2. Invest in black empowered businesses that have high employment creating

opportunities.

3. Support the participation of black women in the economy.

4. Facilitate investment across all provinces in South Africa.

5. Encourage and promote savings, investment and meaningful economic

participation by black people.



6. Advance black economic empowerment through commercially sustainable

enterprises.

7. Establish the NEF in the South African economy as a credible and meaningful

DFI.

8. Establish the NEF as a sustainable DFI.

In order to achieve these objectives the NEF is structured to deliver against this mandate by

performing the following core activities:

� Fund Management, which comprises:

� The Venture Capital & Corporate Finance Division, which is comprised

of uMnotho Fund, the Strategic Projects Fund (SPF) and the Women

Empowerment Fund.

� The SME & Rural Development Division, which consists of Pre-

Investment Unit, iMbewu Fund, Rural & Community Development Fund

and Regional Offices.

� General Counsel, which provides the following:

� Legal support;

� Post-investment support services to the invested portfolio;

� Turnaround, workout and restructuring services,

� Socio-economic Development and Asset Management Units through

which the NEF provides support to communities, aims to foster a

culture of savings and investment among its beneficiaries as well as

promote Enterprise Development.

These core areas are strategically supported by the following units:

� Human resource;

� Finance;

� Information Systems and Technology;

� Supply Chain Management;

� Strategy and Planning;

� Marketing and Communications; and

� Facilities.

Empowerment Dividend

The NEF seeks to measure and assess its impact not only on the basis of financial return, but

in accordance with what is referred to as the Empowerment Dividend which is the socio-



economic impact of the NEF’s investment activities, as provided for in the Broad Based Black

Economic Empowerment Act.

The elements of the Empowerment Dividend are measured as follows:

� Contribution to Broad Based Black Economic Empowerment – the NEF

assesses each transaction against the results of the B-BBEE scorecard, before and

after funding, to ensure that each transaction contributes to the advancement of B-

BBEE.

� Participation by black women – the NEF emphasises the empowerment of women

by providing for an additional weighting for black women participation.

� Job Creation – Contribution towards employment creation and the number of jobs

created per rand invested or jobs sustained through investment in expansion type

activities.

� Investment in Priority Growth Sectors – The number of investments facilitating

black ownership and control of existing and new enterprises in the priority sectors of

the economy as identified by the IPAP and the National Development Plan.

� Geographic Spread - Geographic spread of investments and contribution towards

increased economic activity across all provinces, particularly in areas of regional

economic disadvantage.

� Investment Return - The real return that each Fund realises on capital employed,

after the impairment ratios experienced for that fund, as a combined measure of debt,

equity and quasi equity invested.

5.5. Products and Services

In pursuit of this mandate the NEF provides financial and non-financial support to investees.

The financial support provided comprises the provision of innovative financing products to

black entrepreneurs and black empowered businesses via the five funds of the NEF, which

are iMbewu Fund, Rural & Community Development Fund, uMnotho Fund, the Strategic

Projects Fund and the Women Empowerment Fund.

The non-financial support provided comprises pre-investment services and post-investment

services which include mentorship and training for investees. The Turnaround, Workout and

Restructuring services provides support to investee companies that are in distress; and the

Socio- Economic Development Unit focuses on fostering a culture of savings and investment



among its beneficiaries by offering investor education seminars around the country as well as

by promoting enterprise development.

5.5.1. Financial Support

The NEF provides funding to black empowered businesses and entrepreneurs from R250 000

to R75 million across a range of sectors, for venture capital, start-up, expansion and business

acquisition purposes. The NEF differentiates itself not only with a focused mandate for growing

black economic participation, but by also assuming a predominantly equity-based risk to

maximise the Empowerment Dividend in that it places little if no reliance on the credit strength

of its applicants with the emphasis being on the investment risk of the funding advanced. The

investment risk associated with transactions that apply for funding is mitigated against the

evaluation of the entrepreneur, their ability to make sound commercial decisions which are

also in support of national priorities and government policy such as that contained in the National Development Plan and in support of targeted investments as identified in the dti’s

IPAP. The work of the NEF therefore straddles and complements other DFIs by allowing these

organisations to work in close collaboration in the promotion of B-BBEE with the intervention

of the NEF in many cases as the provider of equity funding allowing for the unlocking of the

bulk of the funding required from other sources.

NEF funding is provided via two divisions viz.

1. SME & Rural Development Division, which comprises two funds, viz.

a. iMbewu Fund; and

b. Rural & Community Development Fund.

The division is also comprised of:

c. the Pre-Investment Unit; and

d. The regional offices.

2. Venture Capital & Corporate Finance Division, which is comprised of:

a. uMnotho Fund; and

b. Strategic Projects Fund

c. Women Empowerment Fund

5.5.2. Non-financial business support

The NEF provides non-financial support through four of its business units, specifically:



� The Pre-Investment Unit, which provides the first line of non-financial assistance to

prospective investees. The unit provides support to applicants seeking funding, in

additional to entrepreneurial development training.

� The Post-Investment Unit, which manages the investment portfolio and assists

investees with mentorship and training.

� The Turnaround, Workout and Restructuring Unit has been a key addition

complimenting the services of the Post-Investment Unit. Its purpose is to provide

support investee businesses that are experiencing operational and financial

challenges. This team works together with the entrepreneurs in assessing and re-

structuring the financial and/or operational aspects of the businesses.

� The Socio-Economic Development and Asset Management Unit, through which the

NEF provides support to communities, aims to foster a culture of savings and

investment among its beneficiaries through such programmes as the national

investor education programme; as well as promoting Enterprise Development.

5.6. Recent Court Rulings

There are no recent court rulings which would impact on the NEF’s ability to implement its

strategy.

5.7. Updated Situational Analysis

5.7.1. Overview of the NEF’s Performance

The NEF has grown into a credible development finance institution that has managed to

steadily increase approval and disbursement activity over the last few years. From inception

to the end of 31 December 2018, the organisation approved 957 transactions worth R9,5

billion and made disbursements of circa R6,5 billion. The number of job opportunities geared

to be supported since inception is 97 220 (67 318 (69%) of which are new).

Year to date ending 31 December 2018, the NEF has approved 30 transactions worth a total

of R174 million. The NEF committed transactions worth R62 million, and disbursed a total of

R214 million. The Women Empowerment Fund underlies the NEF’s commitment to women

empowerment. Women-owned businesses account for 28% of the new deals disbursed to

date, as at 31 December 2018.

The NEF has built strong systems and processes to grow its portfolio, and is able to continue

to increase deal activity once the fund is recapitalised. In doing so, the NEF would be able to

continue making a meaningful contribution to the economy.



5.7.2. Economic Outlook

Global Economic highlights

According to the World Bank, the global economy is expected to slow to 2.9% in 2019,

compared to 3% in 2018. This is largely as a result of stagnating global investment, low global

trade growth, low productivity and higher levels of debt. Furthermore, the impact of the US

and China trade war makes a globale recession very likely by 2020, says the Bank.

Recent low commodity prices have aggravated these factors with conflict and geopolitical

tensions continuing to weigh on economic prospects in several regions. Financing conditions

have tightened, industrial production has moderated, trade tensions have intensified and some

large imerging markets and developing economies have experienced significant financial

stress.Faced with these headwinds, the recovery in emerging markets and developing

economies has lost momentum.

The Bank further warned that the possibility of escalating trade restrictions involving major

economies remained elevated despite the temporary pause in tariff hikes agreed between the

US and China, and the successful negotiation of the new US-Mexico-Canada Agreement,

which have somewhat tempered trade policy uncertainties.This uncertainty is likely to weigh

on firms willingness to invest, export and engage in international value chains, with negative

effects on the global trade outlook.

Emerging-market economies are expected to grow at 4.2 % in 2019, with advanced

economies expected to grow at 2%.

Key global implications to South African markets

The UK’s withdrawal from the EU may enable the Southern African Customs Union to

negotiate improved access for agro-processing and agricultural products to the UK market as

the restrictive conditions hitherto imposed by other EU countries will no longer have to be

accommodated.

South Africa’s motor vehicle exports to the UK may benefit from Brexit should vehicles

produced in the EU face more difficult market entry. However, should the UK vehicle producing

industry suffer setbacks, its demand for South African vehicle parts and components may

decline.



Import competition would most likely intensify if Chinese and Mexican clothing manufacturers

lose substantial market access in the US. This would counter ongoing efforts to stabilise the

domestic sector.

It is worthy to note that South Africa’s prudent macroeconomic and fiscal policies, which

include inflation targeting and a flexible exchange rate, enable the economy to adjust to global

volatility, and provide a stable platform for investment.

South African Economic highlights

On the domestic side, the South African economy faced a challenging year in 2018 where the

GDP had a negative growth in two consecutive periods, causing a major stir, that the country

was going into recession. However in the third quarter of 2018, the economy grew by 2.2%,

bring an end to the country’s second recession since 1994.

Following the two consecutive quarters of decline, the South African economy recorded a

promising recovery of 2.2% growth in GDP for the third quarter. This recovery was as a result

of higher contributions in a number of industries, most notably by transport, finance,

manufacuturing and business service.

High unemployment remains a key challenge in the South African economy as the

unemployment rate remained stagnant at 27.7% since the first quarter of 2017, which is the

highest observed since September 2003. Of the increased number of job-seekers, 56% were

young people aged 15-34, driving the youth unemployment rate to 38.6%.

According to the revised World Bank forecast, the South African economy is projected to grow

by 1.3% in 2019, an adjustment from its June 2018 estimate of 1.8%. The Bank cited that high

unemployment, slow growth in household credit extension as well as fiscal consolidation which

limits government spending, as the reasons for the downward adjustment.

However, a recovery is expected in 2020/21 to 1.7%, which, it is anticipated will be supported

by a stronger regional growth, more favourable weather conditions, reliable electricity supply,

less volatile labour relations, and stabilising commodity prices. The projected recovery of 1.7%

for 2020 is however a significant far cry from the 5.4% growth required in order to attain the

NDP aspirations.

Considerations for the NEF

In the midst of a global and domestic difficult economic environment, the NEF remains

committed to its role in contributing to the achievement of national goals of poverty alleviation,

transformation and economic growth. In addition, the NEF recognises its responsibility as a



funder to black-owned businesses to encourage investment activites in the country that will

further contribute to job creation opportunities in a time where unemployment continues to be

a challenge.

NEF is excited about the ambitious goals shared by the President of the Republic of South

Africa, H.E Cyril Ramaphosa, in State of the Nation Address 2018. We commend and support

these aspirations to accelerate transformation as they directly address the triple challenge of

poverty, inequality and unemployment whilst striving for economic growth. The goals include:

� The establishment of the Digital Industrial Revolution Commission in partnership with

the private sector and civil society, to enable the country to seize the opportunities and

manage the challenges of rapid advances in information and communication

technology;

� The introduction of the first national minimum wage in South Africa that strives to

reduce wage inequality; and

� The free higher education and training for first year students from households with a

gross combined annual income of up to R350,000 as well as the introduction of the

Youth Employment Service (YES) Programme that will assist in upskilling the nations

labour force and increase the competitiveness of South Africa’s economy.

Armed with the above-mentioned national goals which are supported by the continuous

regulatory improvements, positive business confidence and economic outlook, we look

forward to 2018 and the years ahead.

In addition, the President has also stressed the importance of supporting start-ups and small

businesses to sustain the growth of the South African economy. In response to this call and

with a strong commitment to advancing an empowerment dividend comprising of job creation

opportunities, women economic empowerment, investment across all provinces in the country;

the NEF serves to lend support and credibility to black-owned businesses which have a higher

risk profile in a climate where otherwise investment in these businesses would be minimal.

The NEF is therefore, equipped and experienced to make higher risk and sustainable

investments that will advance economic transformation and realise the B-BBEE.

NEF has participated in selective pieces of legislation that address the B-BBEE Act and

therefore, in this regard, we believe that our engagement in discussions at Parliamentary



sessions is a justification and recognition of NEF as a thought leader in the advancement of

economic transformation.

With a strong commitment to advancing an empowerment dividend comprising of job

opportunities creation, women economic empowerment, investment across all provinces in

the country; the NEF serves to lend support and credibility to black-owned businesses which

have a higher risk profile in a climate where otherwise investment in these businesses would

be minimal. The NEF is therefore equipped and experienced to make higher risk investments

that will advance economic transformation.

Identifying Growth Strategies

In this challenging environment, the NEF recognises that in order to enhance support to future

investees/entrepreneurs in ways that ensure viability and sustainability it needs to focus on

strategically positioning itself in order to not only identify business opportunities with good

market prospects that require funding but also to take advantage of them. State-led initiatives

such as the newly established Black Industrialists Programme as well as Operation Phakisa

present opportunities for the NEF to expand its activities to tap into sectors where an enabling

environment is being created by various government programmes.

Also, some structural constraints that have restricted economic growth in the past have led to

opportunities for entrepreneurs to capitalise on. For example, South Africa was plagued with

an electricity supply crisis since 2008, and which led to the emergence of green industry

entrepreneurs that specialise in renewable energy and harness natural resources e.g. wind

and solar radiation, and process them to create electricity for both the local and international

markets. The NEF also recognises the country’s high unemployment rate as an obstacle

towards real transformation and is proud of the progress it continues to make towards the

support and creation of employment opportunities. The NEF strives to maximise the

empowerment dividend through targeting investment activities with the most potential for job

creation, with a social multiplier effect, as well as sustainable business success.

The NEF continues to contribute to the national transformation agenda whilst remaining

responsive to the economic environment and adjusting accordingly. Also, discussions at

Board level continue to challenge the organisation to constantly interrogate ways in which it

operates and evaluate whether or not they enable the organisation to effectively fulfil its

mandate.



5.7.3. The NEF’s Target market The NEF provides funding to black entrepreneurs for start-up and expansion companies as

well as for acquiring equity in existing white-owned businesses in line with the transformation

objectives of B-BBEE. The target market is further segmented into the following tiers:

� Black individuals and groups with significant operational experience and an

extensive investment portfolio and accumulated capital (Tier 1).

� Black individuals and groups with operational experience which could include having

concluded a limited number of BEE transactions. This sector typically has limited

accumulated capital with existing Investments still encumbered / “not in the money

yet” (Tier 2).

� Black individuals and groups with limited business or entrepreneurial experience

(Tier 3).

� White individuals and groups who own, manage and/or control economic means and

are potential partners for, or opponents to, economic transformation (Tier 4).

5.7.3.1. Challenges faced by the target market

In bridging the economic divide the NEF strives to address the following market failures:

� Limited own capital,

� Poor quality of business plans,

� Lack of accurate and reliable financial information,

� Limited management skills, including financial, marketing and technical expertise,

� Lower bargaining power and strong competition from established businesses with

entrenched market dominance,

� Inadequate access to affordable capital, and

� Lack of access to international markets.

In response to these challenges, the NEF has developed financial and non-financial services

to assist the target market. The NEF offers funding in the range from R250 000 to R75 million,

and projects are funded and structured individually, with a focus on sustainability. Suitable

applicants therefore have access to affordable capital through the NEF.



5.7.4. Analysis of Strengths, Weaknesses, Opportunities and Threats (SWOT)

A brief summary of the NEF’s strengths, weaknesses, opportunities and threats is listed

below:

Strengths

� Innovative and solutions-based products.

� Institutional and operational maturity.

� Maintenance of high standards of corporate

governance. The NEF has rigorous accounting,

governance and regulatory frameworks together with

sound financial management systems. The NEF

also has a good internal control environment.

� Non-financial support provided.

� Growing national footprint, together with increased

visibility through local conferences, exhibitions and

civil society initiatives, which optimises visibility of

the NEF.

� Employee Wellness, training, performance

management, together with the Values and Culture

Programme is contributing to a healthy and

performance-orientated organisational culture.

� Technically strong and committed staff.

� Track record in BEE funding.

� Established portfolio with lessons learnt database.

Opportunities

� Providing access to funding for BEE entrants.

� Thought leadership on B-BBEE.

� Ability to contribute towards job support and

creation.

� Contribute to closing the gaps in the economic

value chain.

� Support of agriculture and other priority sectors.

� Low cost of funding.

� Expansion into other parts of Africa.

Weaknesses

� Need to be recapitalised in order to continue fulfilling

mandate.

� Need to rebuild staff morale.

� Sustainability and quality of deal flow which impacts

impairments and write-offs. Low approval rate on

number of applications received due to the poor

quality of the applications.

� Need to improve efficiency of information systems.

Threats

� Inability to secure additional capital.

� Lower consumer and investor confidence.

� Slow pace of transformation across the

economy.

� B-BBEE being viewed as a stand-alone policy

with organisations only complying with minimum

requirements.

� Potential gearing of the balance sheet could

increase the cost of funding for investees.

� Potential loss of key staff.



6. Products and Services

6.1. Financial Support

6.1.1. iMbewu Fund

The iMbewu Fund seeks to address market failures experienced by black-owned SME’s.

The fund has three products, viz. Franchise, Contract and Entrepreneurship products. An

overview of the products is outlined below.

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Strategic Plan for the years 2019/20 – 22 19

6.1.2. Rural and Community Development Fund

The Rural and Community Development Fund facilitates community involvement in projects

by supporting the B-BBEE Act objectives of empowering local and rural communities. In

accordance with the B-BBEE Act, it aims to increase the extent to which workers, cooperatives

and other collective enterprises own and manage business enterprises.

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invo

lvem

ent a

nd o

wne

rshi

p by

co

mm

uniti

es in

pro

ject

s pr

omot

ing

soci

al

uplif

tmen

t

Typ

es o

f co

mp

anie

s/p

roje

cts

Focu

s on

sm

all t

o la

rge

vent

ures

whe

re

partn

ersh

ips

betw

een

NEF

, BEE

par

ties

or

com

mun

ity e

ntity

, and

tech

nica

l par

tner

is

invo

lved

Med

ium

siz

ed n

ew v

entu

re p

roje

cts

with

to

tal f

undi

ng re

quire

men

ts o

f bet

wee

n R

1m

and

R50

m

Rur

al a

nd c

omm

unity

pro

ject

s us

ing

entit

ies

such

as

co-o

pera

tives

and

priv

ate

com

pani

es

Typ

es o

f in

stru

men

t D

ebt,

equi

ty, q

uasi

equ

ity a

nd p

refe

renc

e sh

ares

D

ebt,

equi

ty, q

uasi

equ

ity a

nd p

refe

renc

e sh

ares

D

ebt,

equi

ty, q

uasi

equ

ity a

nd p

refe

renc

e sh

ares

Bla

ck e

qu

ity

thre

sho

ld

Min

imu

m o

f 50

.1%

Pri

cin

g

Pri

me

(+/-

) E

mp

ow

erm

ent

Div

iden

d o

r D

evel

op

men

t Im

pac

t In

flu

ence

d

Ter

ms

of

Inve

stm

ent

and

oth

er t

erm

s

� 5

to 1

0 ye

ars

� C

lear

exi

t Stra

tegy

�

Up

to 1

0 ye

ars

� To

tal p

roje

ct e

quity

≥ 4

0%

� N

EF E

xpos

ure

≤ 50

% o

f pro

ject

co

sts

� U

p to

10

year

s



6.1.3. uMnotho Fund

This Fund is designed to improve access to BEE capital and has five products: Acquisition

Finance, New Ventures Finance, Expansion Finance, Capital Markets Fund, and Liquidity and

Warehousing. These products provide capital to black-owned and-managed enterprises, black

entrepreneurs who are buying equity shares in established white-owned enterprises, new

ventures finance and BEE businesses that are or wish to be listed on the JSE. Funding ranges

from R2 million to R75 million. The Fund pricing is to achieve returns that are in line with the

level of risk taken by the NEF.

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

22

A

cqu

isit

ion

Fin

ance

New

Ven

ture

Fin

ance

E

xpan

sio

n C

apit

al

Cap

ital

Mar

kets

L

iqu

idit

y &

War

eho

usi

ng

P

rop

erty

Fu

nd

Inve

stm

ent

thre

sho

ld

R2

milli

on to

R75

milli

on

R5

milli

on to

R75

milli

on

R5

milli

on to

R75

milli

on

R2

milli

on to

R75

milli

on

R2

milli

on to

R75

milli

on

R5

milli

on to

R75

milli

on

Pro

du

ct

pu

rpo

se

BEE

appl

ican

ts

seek

ing

to fu

nd

equi

ty p

urch

ases

of

betw

een

R2

milli

on

and

R75

milli

on in

exis

ting

busi

ness

es.

BEE

parti

es s

eeki

ng

to p

artic

ipat

e in

med

ium

-siz

ed

Gre

enfie

lds

proj

ects

with

tota

l fun

ding

requ

ests

of b

etw

een

R10

milli

on a

nd R

200

milli

on.

Fund

ing

prov

ided

to e

ntiti

es th

at a

re

alre

ady

blac

k -

empo

wer

ed, b

ut

seek

exp

ansi

on

capi

tal t

o gr

ow th

e

busi

ness

.

This

pro

duct

inve

sts

in

BEE

ente

rpris

es,

parti

cula

rly th

ose

owne

d

by b

lack

wom

en th

at

seek

to li

st o

n th

e JS

E or

its ju

nior

AltX

mar

ket.

The

uMno

tho

Fund

will

also

hel

p lis

ted

BEE

com

pani

es to

rais

e

addi

tiona

l cap

ital f

or

expa

nsio

n.

This

pro

duct

ass

ists

BEE

shar

ehol

ders

who

nee

d to

sel

l

a po

rtion

or a

ll of

thei

r sha

res

(as

min

ority

sta

kes

in u

nlis

ted

firm

s ar

e ha

rd to

sel

l). A

lso

acqu

ires

and

tem

pora

rily

war

ehou

ses

thes

e sh

ares

befo

re o

n -se

lling

thos

e to

new

BEE

shar

ehol

ders

, and

refin

ance

s BE

E sh

areh

oldi

ngs

whe

re e

xist

ing

finan

cing

stru

ctur

es a

re c

ostly

and

/or

inef

ficie

nt.

This

pro

duct

see

ks to

cate

r for

BEE

gro

ups

seek

ing

to b

uy e

quity

in

exis

ting

prop

erty

busi

ness

es; d

evel

op

new

pro

perty

ven

ture

s;

and

to p

rovi

de

expa

nsio

n fin

ance

to

entit

ies

that

are

alre

ady

empo

wer

ed.

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

23

A

cqu

isit

ion

Fin

ance

New

Ven

ture

Fin

ance

E

xpan

sio

n C

apit

al

Cap

ital

Mar

kets

L

iqu

idit

y &

War

eho

usi

ng

P

rop

erty

Fu

nd

Pro

du

ct

crit

eria

� M

ediu

m to

larg

e co

mpa

nies

�

Focu

s on

pa

rtner

ship

s w

ith e

xist

ing

man

agem

ent

team

s an

d ot

her

equi

ty in

vest

ors

� Ac

tive

BEE

invo

lvem

ent i

n in

vest

ee

com

pani

es

� BE

E fin

anci

al

cont

ribut

ion

on a

ca

se-b

y-ca

se

basi

s

� M

ediu

m-s

ized

gr

eenf

ield

pr

ojec

ts w

ith to

tal

fund

ing

requ

ests

of

bet

wee

n R

10

milli

on a

nd R

200

milli

on.

� BE

E-sp

ecifi

c fin

anci

al

cont

ribut

ion

asse

ssed

on

a ca

se-b

y-ca

se

basi

s �

NEF

exp

osur

e to

th

e pr

oduc

t ge

nera

lly n

ot to

ex

ceed

50%

of

the

tota

l pro

ject

co

sts

� Pr

oven

m

anag

emen

t ex

perie

nce

with

in

the

cons

ortiu

m

� Ac

tive

BEE

invo

lvem

ent i

n in

vest

ee

com

pani

es

� A

ctiv

e BE

E in

volv

emen

t in

inve

stee

co

mpa

nies

�

Secu

rity

to

incl

ude

pers

onal

gu

aran

tees

and

se

curit

y ov

er

busi

ness

as

sets

� M

ediu

m to

larg

e co

mpa

nies

�

Focu

s on

pa

rtner

ship

s w

ith

exis

ting

man

agem

ent

team

s an

d ot

her

equi

ty in

vest

ors

� Ac

tive

BEE

man

agem

ent

parti

cipa

tion

� Ac

tive

BEE

invo

lvem

ent i

n in

vest

ee c

ompa

nies

�

BEE

finan

cial

co

ntrib

utio

n on

a

case

-by-

case

bas

is

� M

ediu

m to

larg

e co

mpa

nies

�

Focu

s on

par

tner

ship

s w

ith e

xist

ing

man

agem

ent

team

s an

d ot

her e

quity

in

vest

ors

� Ac

tive

BEE

man

agem

ent

parti

cipa

tion

� Ac

tive

BEE

invo

lvem

ent i

n in

vest

ee c

ompa

nies

�

BEE

finan

cial

con

tribu

tion

on a

cas

e-by

-cas

e ba

sis

� M

ediu

m to

larg

e co

mpa

nies

�

Alig

nmen

t with

pr

iorit

y se

ctor

s �

Activ

e BE

E in

volv

emen

t in

inve

stee

co

mpa

nies

�

BEE

finan

cial

co

ntrib

utio

n on

a

case

-by-

case

bas

is

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

24

A

cqu

isit

ion

Fin

ance

New

Ven

ture

Fin

ance

E

xpan

sio

n C

apit

al

Cap

ital

Mar

kets

L

iqu

idit

y &

War

eho

usi

ng

P

rop

erty

Fu

nd

Typ

es o

f in

stru

men

t

Inve

stm

ent

inst

rum

ent c

an

incl

ude

a co

mbi

natio

n of

deb

t, eq

uity

and

m

ezza

nine

fina

nce.

Inve

stm

ent

inst

rum

ent c

an

incl

ude

a co

mbi

natio

n of

deb

t, eq

uity

and

m

ezza

nine

fina

nce.

Inve

stm

ent

inst

rum

ent c

an

incl

ude

a co

mbi

natio

n of

de

bt, e

quity

and

m

ezza

nine

fina

nce.

Inve

stm

ent i

nstru

men

t ca

n in

clud

e a

com

bina

tion

of d

ebt,

equi

ty a

nd m

ezza

nine

fin

ance

.

Inve

stm

ent i

nstru

men

t can

in

clud

e a

com

bina

tion

of d

ebt,

equi

ty a

nd m

ezza

nine

fin

ance

.

Inve

stm

ent i

nstru

men

t ca

n in

clud

e a

com

bina

tion

of d

ebt,

equi

ty a

nd m

ezza

nine

fin

ance

.

Bla

ck

equ

ity

thre

sho

ld

Min

imu

m o

f 25

.1%

M

inim

um

of

25.1

%

Min

imu

m o

f 50

.1%

M

inim

um

of

25.1

%

Min

imu

m o

f 25

.1%

M

inim

um

of

50.1

%

Pri

cin

g

In

flu

ence

d b

y E

mp

ow

erm

ent

Div

iden

d o

r D

evel

op

men

t Im

pac

t. D

ebt

linke

d t

o p

rim

e ra

te a

nd

eq

uit

y b

ased

on

tar

get

IRR

Ter

ms

of

Inve

stm

ent

and

oth

er

term

s

Typi

cal i

nves

tmen

t ho

rizon

of 4

to 7

ye

ars .

Typi

cal i

nves

tmen

t ho

rizon

of 5

to 1

0 ye

ars.

Typi

cal i

nves

tmen

t ho

rizon

of 4

to 7

ye

ars .

Typi

cal i

nves

tmen

t ho

rizon

of 4

to 7

yea

rs.

Ty

pica

l inv

estm

ent h

oriz

on o

f 4

to 7

yea

rs.

Ty

pica

l inv

estm

ent

horiz

on o

f up

to 1

0 ye

ars

on s

enio

r deb

t an

d up

to 1

5 ye

ars

on

mez

zani

ne d

ebt a

nd

equi

ty in

stru

men

ts.



6.1.4. Strategic Projects Fund

The Strategic Projects Fund will facilitate the acquisition of equity in large strategic projects

where the NEF assumes the role of BEE partner.

The fund aims to play a central role in early stage projects by identifying, initiating, scoping

and developing projects that are in sectors identified by government as the key drivers to

South Africa’s economic growth. These projects will be taken through 6-stages of the project

development phases.

The phases being the following:

Scoping and Concept Study, Pre-Feasibility Study, Bankable Feasibility Study, Financial

Closure, Construction Phase, and Technical Completion.

Through the Strategic Projects Fund, NEF will facilitate B-BBEE in the following ways:

� Warehouse equity for B-BBEE in early stage projects at valuations with little or no

premium paid to access the projects. This enables NEF to distribute its warehoused

equity to B-BBEE at lower valuations once the project is operational;

� Take early stage risk on behalf of black people as early stage projects have higher

execution risks compared to operational companies. The NEF will assume most of

the financing risk and devise instruments to carry or transfer equity to B-BBEE once

project fatal flaws have been mitigated;

� Manage the project and venture capital finance structuring complexities as it is more

complex and difficult to raise capital for new ventures as compared to uMnotho

finance deals where valuations can be ascertained based on historical performance

and risks are clearly understood;

� Enable project promoters to focus on making projects bankable and operational by

giving the B-BBEE status as NEF is the only DFI gazetted as a B-BBEE facilitator;

� Once the initial project risks have been reduced, the NEF will transfer its

shareholding to selected B-BBEE groups through a transparent process.



6.1.5 The Women Empowerment Fund

Purpose of the Women Empowerment Fund programme, established in the financial year

2014/15 is to accelerate the women economic empowerment through the provision of funding

to businesses owned by black women.

� Finance will be provided from R250 000 to R75 million across the whole of the NEF

existing product suite described above.

� Depending on type of funding the horizon of funding provided ranges between 4 and

10 years.

� Minimum of 51% black female ownership is a main criteria.

� Black women have to be operationally involved at the managerial and board levels.

� Other empowerment dividend pillars have to be considered.

6.2. Non-financial Support

6.2.1. Investor Education

The NEF’s Investor Education campaign is planned to hold over 167 training sessions

across the country over the strategic period, providing information necessary to make

prudent savings and investment decisions.

6.2.2. Pre-Investment Business Support

Applicants for funding may be excellent entrepreneurs, but often struggle to navigate the

necessary application procedures and to manage their businesses and this is often evident

during the initial assessment of the funding application. The NEF therefore assists with funding

advice, business planning and general assistance to help ensure that applications are of

sufficient quality to complete all steps in the application process.

As the first point of contact for many potential clients, the PIU's primary functions are to:

� Provide information on NEF products and procedures;

� Control and assist in drawing up funding applications;

� Identify applications that will qualify for funding;

� Keep clients informed on the progress of their applications;

� Advise applicants and assist with drawing up business plans; and

� Where applicable, recommend entrepreneurs for incubation.



Entrepreneurship Development Strategy

By 2010 the NEF through its Fund Management Divisions faced a number of challenges in

delivering on its Mandate. These challenges included:

� The number of applications received, of up to 100 per month.

� The quality of these applications, as evidenced by an approval ratio of less than 3%

of applications received.

� The sophistication of the target market in terms of the ability to package bankable

business plans.

� The skills of the target market in terms of business experience and industry

knowledge.

� High impairments (especially in the SME Fund) where a total impairments ratio

(including write offs) of about 40% was experienced.

� The limited own contribution and lack of collateral prevalent in the typical NEF

application.

The NEF’s Pre-Investment Unit then developed the Entrepreneurship Development Strategy

in order to better assess and support the development of black entrepreneurs. The Rationale

for this strategy was to take cognisance of the NEF mandate and operating environment with

a view to:

� Enhancing the NEF’s interventions to aspirant black entrepreneurs in order to

mitigate financial risk for the NEF whilst supporting sustainable black businesses;

� Identify potential tools that can be used by the NEF to better assess the

entrepreneurial readiness of potential applications;

� Propose refinements to the NEF’s investment process in order to provide a more

efficient investment process particularly in the case of SME’s whilst maintaining

sound investment methodologies i.e. provision of SMART capital;

� Explore additional financial interventions aimed at providing black entrepreneurs with

early stage funding to address limited own capital; and

� Enhance NEF impact in developing entrepreneurship in South Africa more broadly

with focus on Financial and Non-Financial Support as well as advocacy on issues

pertaining to entrepreneurship.



The Pre-Investment Unit has implemented a business incubation model in order to support

the development of aspirant black entrepreneurs. The NEF realises the value and impact that

can be made through incubation and has established partnerships with various incubation

service providers.

6.2.3. Post-Investment Business Support

Black empowered businesses need to be robust and self-sustaining for B-BBEE to succeed.

In recognition of this fact, the NEF has established structures to monitor its clients for risk and

provide advice when needed. Although start-ups are inherently higher risk, the rewards for

success are jobs and increased capital for further start-ups.

The Post Investment Unit manages this process of client monitoring and support. The unit is

responsible for:

� Monitoring and preparing management information on investments

� Administering investment contracts

� Coordinating mentorship programmes

� Facilitating investment valuations with fund managers

� Working with distressed assets and recommending solutions such as liquidations,

turnarounds and restructurings

� Conducting strategic reviews

The Post-Investment Unit also facilitates access to training for investees according to the

needs of the business.



7. Key programmes aligned to Government Priorities

7.1. Alignment to the dti’s priorities

The NEF actively contributes to the following strategic objectives of the dti.

the dti Strategic Objectives NEF Strategic Objectives Programmes/ Activities

Facilitate transformation of the

economy to promote industrial

development, investment,

competitiveness and employment

creation.

Provide finance to business

ventures established and

managed by black people.

Approval and Commitment

activities by the funds. (iMbewu

Fund, Rural & Community

Development Fund, uMnotho

Fund, Women Empowerment

Fund and Strategic Projects

Fund).

Invest in black empowered

business’ that have high

employment creating

opportunities.

Approval and Commitment

activities by the funds. (iMbewu

Fund, Rural & Community

Development Fund, uMnotho

Fund, Women Empowerment

Fund and Strategic Projects Fund)

Black economic empowerment is

advanced through commercially

sustainable enterprise.

Non-financial support activities

including mentorship,

entrepreneurial development, and

portfolio management activities

Facilitate broad-based economic

participation through targeted

interventions to achieve more

inclusive growth.

Encourage and promote savings,

investment and meaningful

economic participation by black

people.

Investor education campaign.



7.2. Alignment to the National Development Plan

Enabling milestones listed in the National Development Plan to which the NEF can

contribute include:

� Increasing employment from 13 million in 2010 to 24 million in 2030.

� Broaden ownership of assets to historically disadvantaged groups.

By focusing on its mandate which is to promote and facilitate black economic participation in

the economy, the NEF is able to contribute towards the transformation of the economy. In

particular, the NEF can contribute towards the achievement of these milestones by

contributing to the creation of employment through the financial and non-financial support of

entrepreneurs.

Through the funding of sustainable local black-owned ventures, the NEF would be actively

contributing towards supporting local, black-owned, small and medium sized enterprises, and

in doing so, supporting the job creation abilities of these firms. The NEF also strives to

contribute towards the promotion of labour absorbing industries by funding transactions in the

priority sectors. In addition, the funding provided by the NEF can support local business and

contribute towards attract funding from private investors through co-funding arrangements.

The NEF is able to contribute towards the creation of an integrated rural economy through its

Rural & Community Development Fund, which focuses on funding agricultural projects in rural

areas. In doing so, the fund contributes to the development of rural economies, as well as the

development of agriculture and agro-processing and tourism in rural areas.

Through the continuation of its Investor Education Programme, the NEF endeavours to

inculcate a spirit of entrepreneurship, as well as savings and investment.

“Employment scenarios prepared by the Commission suggest that most

new jobs are likely to be sourced in domestic-orientated businesses, and in growing small- and medium-sized firms.”

(Page 39, National Development Plan)

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

3

1

7.3.

A

lign

men

t w

ith

Ou

tco

me

4 o

f th

e M

ediu

m T

erm

Str

ateg

ic F

ram

ewo

rk

The

alig

nmen

t of t

he N

EF’s

stra

tegy

and

act

iviti

es w

ith O

utco

me

4 of

the

Med

ium

Ter

m S

trate

gic

Fram

ewor

k is

pre

sent

ed b

elow

. S

ub

-Ou

tco

me

Act

ion

s In

dic

ato

rs

NE

F T

arg

et &

Act

ion

s

1.

Pro

du

ctiv

e in

vest

men

t is

effe

ctiv

ely

cro

wd

ed in

thro

ug

h t

he

infr

astr

uct

ure

bu

ild

pro

gra

mm

e.

Su

pp

ort

fo

r lo

cal

sup

plie

rs f

or

infr

astr

uct

ure

pro

gra

mm

e.

% s

har

e o

f lo

cal

inp

uts

in g

ove

rnm

ent

infr

astr

uct

ure

.

The

NEF

su

ppor

ts

the

gove

rnm

ent’s

in

frast

ruct

ure

prog

ram

mes

by

supp

ortin

g lo

cal s

uppl

iers

. Fo

r ins

tanc

e, th

e N

EF h

as fu

nded

loca

l B-B

BEE

supp

lier i

nvol

ved

in th

e PR

ASA

rollin

g st

ock

supp

ly c

ontra

ct. T

he p

roje

ct a

lso

aim

s to

pro

vide

Bla

ck w

omen

ow

ned

busi

ness

es w

ith a

n ef

fect

ive

plat

form

from

whi

ch th

ey c

an tr

ansi

tion

into

inde

pend

ent b

usin

esse

s.

Pas

sen

ger

Rai

l Ag

ency

of

So

uth

Afr

ica

(PR

AS

A)

(R90

mill

ion

co

mm

itte

d)

� PR

ASA

initi

ated

a r

ollin

g st

ock

fleet

ren

ewal

pro

cure

men

t pr

ogra

m

wor

th R

50bn

with

exp

ecte

d m

aint

enan

ce c

ontra

ct o

f R

10bn

ove

r 10

year

s to

repl

ace

the

agin

g st

ock.

� PR

ASA

inte

nd fo

r loc

al B

lack

ent

repr

eneu

rs to

par

ticip

ate

econ

omic

ally

in th

e ro

ll ou

t of t

he ro

lling

stoc

k.

Dur

ing

the

initi

al s

tage

s, th

e N

EF w

areh

ouse

d th

e sh

ares

inte

nded

to b

enef

it

Activ

e Bl

ack

Ente

rpris

es, I

nves

tor B

lack

Ent

erpr

ises

, Em

ploy

ee T

rust

s, a

nd

the

Educ

atio

n Tr

ust w

hich

will

bene

fit a

ppro

xim

atel

y 12

0 pe

ople

.

The

proj

ect a

ims

to a

chie

ve a

min

imum

of 6

6% a

vera

ge lo

cal c

onte

nt.

T

he

bu

ildin

g o

f st

rate

gic

infr

astr

uct

ure

sti

mu

late

s

cro

wd

ing

in o

f p

rod

uct

ive

inve

stm

ent.

New

pro

du

ctiv

e

inve

stm

ents

uti

lise

the

infr

astr

uct

ure

pro

vid

ed b

y ev

ery

SIP

.

By s

uppo

rting

tou

rism

inf

rast

ruct

ure

and

film

ind

ustry

pro

ject

s, t

he N

EF i

s

inve

stin

g in

stra

tegi

c in

frast

ruct

ure

that

has

the

abi

lity

to a

ttrac

t pr

oduc

tive

inve

stm

ent.

Two

of th

ese

inve

stm

ents

are

out

lined

bel

ow:

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

3

2

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

Gra

sko

p (

R33

.4 m

illio

n in

vest

ed)

� Th

e G

rask

op G

orge

are

a is

bei

ng d

evel

oped

into

a m

ajor

tour

ism

nod

e on

the

Pano

ram

a To

uris

t R

oute

in M

pum

alan

ga t

hrou

gh t

he n

ew A

dven

ture

Cen

tre.

� Th

e m

ain

feat

ure

of th

e pr

ojec

t is

the

cons

truct

ion

of a

n ou

tdoo

r lift

sys

tem

that

will

be a

ble

to fe

rry p

eopl

e up

and

dow

n of

f the

clif

f-fac

e in

to th

e fo

rest

envi

ronm

ent b

elow

. The

fore

st e

nviro

nmen

t will

have

var

ious

ele

vate

d an

d

grou

nd w

alkw

ays

that

will

allo

w v

isito

rs to

exp

lore

the

uniq

ue e

nviro

nmen

t.

� Su

ppor

ting

this

out

door

lift s

yste

m w

ill be

a n

ewly

con

stru

cted

tour

ism

cen

tre

that

will

prov

ide

a m

ultit

ude

of to

uris

m p

rodu

cts

and

serv

ices

, inc

ludi

ng: a

rest

aura

nt, b

ar, r

etai

l out

lets

, kid

s pl

ay a

rea

and

cent

re m

anag

emen

t offi

ces

that

will

supp

ort t

he e

ntire

dev

elop

men

t.

� In

the

med

ium

-term

the

proj

ect w

ill co

nstru

ct a

36-

bed

hote

l in th

e G

orge

that

will

supp

ort P

hase

I th

roug

h th

e pr

ovis

ion

of a

dditi

onal

sup

port

infra

stru

ctur

e

such

as

the

hote

l gue

st p

arki

ng, l

aund

ry, o

ffice

s et

c. T

he p

roje

ct w

ill cr

eate

145

jobs

.

Cap

e P

oin

t F

ilm S

tud

ios

� C

ape

Poin

t Film

Stu

dios

(CPF

S) a

ims

to d

evel

op th

e fir

st p

urpo

se b

uilt

four

Prec

inct

s Se

a an

d U

nder

wat

er S

ound

Sta

ge in

the

Sout

hern

Hem

isph

ere.

� Th

ere

has

been

gro

win

g de

man

d fo

r pro

duct

ion

faci

litie

s of

an

inte

rnat

iona

l

stan

dard

in S

outh

Afri

ca b

y H

olly

woo

d pr

oduc

ers.

� Th

eref

ore,

CPF

S ai

ms

to a

ddre

ss th

is s

hortf

all b

y of

ferin

g un

ique

and

nic

he

wat

er s

tage

faci

litie

s th

at a

re c

urre

ntly

not

ava

ilabl

e in

the

coun

try in

add

ition

to e

xist

ing

soun

d st

ages

.

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

3

3

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

� Th

e pr

ojec

t ha

s gr

eat

job

crea

tion

pote

ntia

l an

d w

ill as

sist

to

revi

ve a

n

econ

omic

ally

-dep

ress

ed a

rea

in A

tlant

is, C

ape

Tow

n. T

his

proj

ect w

ill cr

eate

50 d

irect

and

450

0 in

dire

ct jo

bs.

2.

Th

e p

rod

uct

ive

sect

ors

acco

un

t fo

r a

gro

win

g

shar

e o

f p

rod

uct

ion

an

d

emp

loym

ent.

IPA

P im

ple

men

ted

an

d

revi

ewed

reg

ula

rly

in

term

s o

f im

pac

ts o

n

gro

wth

, em

plo

ymen

t,

inve

stm

ent,

ou

tpu

t,

exp

ort

s an

d A

fric

an

reg

ion

al d

evel

op

men

t.

IPA

P s

ecto

r

inte

rven

tio

ns

tow

ard

s

gro

wth

, em

plo

ymen

t

crea

tio

n a

nd

mo

re

equ

itab

le in

com

es

un

der

way

.

In 2

007,

the

NEF

est

ablis

hed

the

SPF,

to p

rovi

de v

entu

re c

apita

l ent

repr

eneu

r

fund

ing

in e

arly

dev

elop

men

t sta

ge p

roje

cts

with

in s

trate

gic

Sout

h Af

rican

econ

omy-

driv

ing

sect

ors

as p

er g

over

nmen

t’s IP

AP.

In l

ine

with

IPA

P, S

PF w

as e

stab

lishe

d to

: cr

eate

new

man

ufac

turin

g an

d

indu

stria

l ca

paci

ty,

crea

te a

n in

clus

ive

econ

omy

and

new

job

opp

ortu

nitie

s,

incr

ease

Sou

th A

frica

’s e

xpor

t ear

ning

pot

entia

l and

redu

ce im

port

depe

nden

cy,

as w

ell a

s to

incr

ease

co -

inve

stm

ent a

nd li

nkag

e w

ith fo

reig

n di

rect

inve

stm

ent.

SPF

focu

ses

its i

nves

tmen

ts i

n th

e st

rate

gic

Sout

h Af

rican

eco

nom

y-dr

ivin

g

sect

ors,

inc

ludi

ng b

ut n

ot l

imite

d to

; m

iner

al a

nd r

esou

rces

ben

efic

iatio

n,

infra

stru

ctur

e,

gree

n/re

new

able

in

dust

ries,

m

anuf

actu

ring,

ag

ro-p

roce

ssin

g,

busi

ness

pro

cess

ser

vice

s an

d to

uris

m.

SPF

curre

ntly

has

abo

ut 2

7 pr

ojec

ts u

nder

dev

elop

men

t.

The

tota

l pot

entia

l num

ber o

f job

opp

ortu

nitie

s to

be

crea

ted

is o

ver 8

5 00

0.

The

impl

emen

tatio

n of

the

proj

ects

requ

ires

appr

oxim

atel

y R

28 b

illion

in c

apita

l,

of w

hich

app

roxi

mat

ely

R4

billio

n is

due

by

the

NEF

, in

res

pect

of

its e

quity

inte

rest

s he

ld in

the

proj

ects

.

Ag

ricu

ltu

ral P

olic

y

Act

ion

Pla

n (

AP

AP

)

dev

elo

ped

, im

ple

men

ted

AP

AP

sec

tor

and

cro

ss-c

utt

ing

inte

rven

tio

n t

ow

ard

s

Th

e R

ura

l &

Co

mm

un

ity

Dev

elo

pm

ent

Fu

nd

foc

uses

on

the

prov

isio

n of

finan

ce t

o ru

ral

and

agric

ultu

ral

com

mun

ities

, w

hich

sup

ports

em

ploy

men

t

crea

tion

in ru

ral a

reas

and

the

agric

ultu

ral s

ecto

r. T

his

is a

chie

ved

by:

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

3

4

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

and

rev

iew

ed r

egu

larl

y in

term

s o

f im

pac

t o

n

gro

wth

, em

plo

ymen

t,

rura

l in

com

es,

inve

stm

ent,

ou

tpu

t,

exp

ort

s an

d A

fric

an

reg

ion

al d

evel

op

men

t.

gro

wth

, em

plo

ymen

t

crea

tio

n a

nd

hig

her

rura

l in

com

es

un

der

way

.

1.

Prom

otin

g ac

cess

to fi

nanc

e fo

r bla

ck e

ntre

pren

eurs

.

2.

Prom

otin

g ec

onom

ic

trans

form

atio

n in

or

der

to

enab

le

mea

ning

ful

parti

cipa

tion

of b

lack

peo

ple

in th

e ec

onom

y.

3.

Incr

ease

the

parti

cipa

tion

of c

omm

uniti

es, w

orke

rs, c

o-op

erat

ives

and

oth

er

colle

ctiv

e En

terp

rises

ow

n an

d m

anag

ed b

y bl

ack

peop

le.

4.

Cre

atin

g su

stai

nabl

e ru

ral e

nter

pris

es a

nd th

ereb

y as

sist

ing

in th

e cr

eatio

n

of jo

b op

portu

nitie

s an

d su

stai

nabl

e in

com

es.

The

Rur

al &

Com

mun

ity D

evel

opm

ent F

und

forg

es r

elat

ions

hips

with

var

ious

depa

rtmen

ts a

nd a

genc

ies

that

are

act

ive

in th

e se

ctor

. W

e in

tend

to c

oncl

ude

thre

e M

OU

s to

sup

port

our i

nter

vent

ions

and

a jo

int p

ropo

sed

fund

to a

ddre

ss

the

key

elem

ents

of

sect

or d

evel

opm

ent,

espe

cial

ly A

gro

proc

essi

ng a

nd

Fore

stry

tran

sfor

mat

ion.

A

gri

cult

ure

, Fo

rest

ry a

nd

Fis

her

ies

Mar

ket

and

Tra

de

Dev

elo

pm

ent

Str

ateg

y.

Tra

de

and

Dev

elo

pm

ent

Str

ateg

y an

d c

ross

-

cutt

ing

inte

rven

tio

ns

tow

ard

s g

row

th,

emp

loym

ent

crea

tio

n a

nd

hig

her

rura

l in

com

es

un

der

way

.

M

inin

g B

enef

icia

tio

n

Act

ion

Pla

n (

MB

AP

)

dev

elo

ped

imp

lem

ente

d

and

rev

iew

ed r

egu

larl

y in

term

s o

f im

pac

t o

n

gro

wth

, em

plo

ymen

t,

rura

l in

com

es,

inve

stm

ent,

ou

tpu

t,

exp

ort

s an

d A

fric

an

reg

ion

al d

evel

op

men

t.

MB

AP

dev

elo

ped

and

imp

lem

ente

d.

In s

uppo

rt of

the

MBA

P, th

e N

EF h

as s

uppo

rted

seve

ral m

iner

al b

enef

icia

tion-

rela

ted

proj

ects

.

Lic

iatr

on

(R

15 m

illio

n in

vest

ed)

� Li

ciat

ron

is a

n op

en-p

it m

inin

g en

tity

that

spe

cial

ises

in g

rani

te d

imen

sion

ston

e qu

arry

ing.

The

com

pany

is

loca

ted

in K

omga

, Ea

st L

ondo

n an

d

mar

kets

its

prod

ucts

bot

h lo

cally

and

inte

rnat

iona

lly.

� 83

jo

b op

portu

nitie

s w

ill be

su

ppor

ted

thro

ugh

this

in

vest

men

t (3

3

mai

ntai

ned

and

50 n

ew).

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

3

5

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

D

eter

min

e vi

able

sh

ale

gas

� E

xplo

rati

on

pla

n

dev

elo

ped

� A

pp

rop

riat

e

leg

isla

tio

n d

evel

op

ed

Eco

no

mic

ally

via

ble

shal

e g

as r

eser

ves

det

erm

ined

.

Alth

ough

not

invo

lved

in s

hale

gas

exp

lora

tion,

by

supp

ortin

g a

nucl

ear i

ndus

try

train

ing

initi

ativ

e th

e N

EF

seek

s to

co

ntrib

ute

tow

ards

cl

ean

ener

gy

deve

lopm

ent i

n So

uth

Afric

a.

Nu

clea

r L

earn

ing

To

ur

(Fra

nce

, 201

2)

In a

ntic

ipat

ion

of th

e ro

ll-ou

t of t

he N

ucle

ar B

uild

Pro

gram

me

in S

outh

Afri

ca,

the

NEF

sou

ght t

o ed

ucat

e its

elf a

nd b

lack

ent

repr

eneu

rs o

n th

e nu

clea

r ene

rgy

sect

or v

alue

cha

in re

late

d to

nuc

lear

pla

nts

henc

e it

sent

a d

eleg

atio

n of

14

to

Fran

ce in

201

2 to

atte

nd th

e Ar

ea N

ucle

ar L

earn

ing

Tour

.

� Th

e N

EF, i

n co

llabo

ratio

n w

ith th

e N

ucle

ar In

dust

ry A

ssoc

iatio

n of

Sou

th

Afric

a (N

IASA

), ho

sted

the

Nuc

lear

Indu

stry

Em

pow

erm

ent C

onfe

renc

e in

Oct

ober

20

12

in

prep

arat

ion

for

and

to

mar

ket

the

Nuc

lear

Bu

ild

Prog

ram

me,

as

wel

l as

to p

rovi

de a

net

wor

king

pla

tform

for n

ucle

ar in

dust

ry

stak

ehol

ders

, inc

ludi

ng n

ucle

ar p

lant

OEM

s, fu

ndin

g in

stitu

tions

and

bla

ck

entre

pren

eurs

(ser

vice

pro

vide

rs, e

quip

men

t sup

plie

rs, i

nves

tors

etc

.).

� Th

e N

EF fa

cilit

ated

for a

tota

l of 1

4 de

lega

tes

to a

ttend

the

Area

Nuc

lear

Lear

ning

Tou

r in

Fra

nce

in 2

012.

The

obj

ectiv

es o

f th

e to

ur i

nclu

ded;

crea

ting

an u

nder

stan

ding

of n

ucle

ar b

asic

s an

d ph

ysic

s, e

stab

lishi

ng a

n

appr

ecia

tion

of th

e nu

clea

r ind

ustry

from

ura

nium

min

ing

to n

ucle

ar p

ower

plan

t eq

uipm

ent

prod

uctio

n, i

nclu

ding

dev

elop

ing

an u

nder

stan

ding

of

proj

ect f

inan

cing

nuc

lear

pla

nts

and

risk

miti

gatio

n.

� Fu

rther

mor

e, it

was

exp

ecte

d of

the

blac

k SM

E’s

who

par

ticip

ated

in th

e

lear

ning

to

ur

that

th

ey

wou

ld

iden

tify

and

expl

ore

for

expl

oita

tion,

entre

pren

euria

l opp

ortu

nitie

s w

ithin

the

valu

e ch

ain

of th

e pr

opos

ed S

outh

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

3

6

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

Afric

an N

ucle

ar b

uild

Pro

gram

me,

incl

udin

g id

entif

ying

pot

entia

l fu

ndin

g

mea

ns fo

r any

inve

stm

ent p

rosp

ects

.

The

ultim

ate

goal

of

th

e pr

ogra

mm

e is

to

su

ppor

t bl

ack

SME’

s an

d

entre

pren

eurs

who

may

wan

t to

posi

tion

them

selv

es in

this

sec

tor .

Im

ple

men

t N

atio

nal

To

uri

sm S

trat

egy

and

revi

ew im

pac

t re

gu

larl

y

in t

erm

s o

f im

pac

t o

n

gro

wth

, em

plo

ymen

t,

inve

stm

ent,

ou

tpu

t,

exp

ort

s an

d A

fric

an

reg

ion

al d

evel

op

men

t.

To

uri

sm S

trat

egy

inte

rven

tio

ns

tow

ard

s g

row

th,

emp

loym

ent

crea

tio

n a

nd

hig

her

inco

mes

fo

r p

oo

r

ho

use

ho

lds

un

der

way

.

The

NEF

’s in

terv

entio

ns in

tour

ism

incl

ude

the

fund

ing

of h

otel

s an

d ga

me

lodg

es.

Thes

e in

clud

e in

vest

men

ts in

Tal

a G

ame

Res

erve

, Rhi

no L

odge

and

Jozi

ni C

ount

ry L

odge

.

The

follo

win

g tra

nsac

tion

wer

e un

derta

ken

in a

n ef

fort

to a

ddre

ss th

e im

pact

of

grow

th a

nd s

usta

inab

le e

mpl

oym

ent i

n th

e to

uris

m s

ecto

r

TA

LA

Pri

vate

Gam

e R

eser

ve (

R14

.1 m

illio

n in

vest

ed)

TALA

Priv

ate

Gam

e R

eser

ve is

a w

ildlif

e co

nser

vanc

y hi

dden

in th

e hi

lls o

f a

quie

t fa

rmin

g co

mm

unity

not

far

fro

m D

urba

n in

Kw

aZul

u -N

atal

. T

ALA

is

situ

ated

bet

wee

n D

urba

n an

d Pi

eter

mar

itzbu

rg, c

onve

nien

tly a

cces

sibl

e of

f the

N3

thro

ugh

the

Cam

per -

dow

ns o

ff-ra

mp

on t

he R

603.

Spa

nnin

g ov

er 2

092

hect

ares

and

inco

rpor

atin

g m

any

dive

rse

natu

ral

envi

ronm

ents

, th

e re

serv

e

feat

ures

wel

l ove

r 38

0 bi

rd s

peci

es,

with

gam

e su

ch a

s rh

ino,

kud

u, h

ippo

,

gira

ffe a

nd th

e ra

re s

able

ant

elop

e. S

ever

al d

istin

ctiv

e an

d re

mar

kabl

e pl

ant

spec

ies

are

also

to b

e fo

und

on T

ALA.

The

gam

e re

serv

e is

ow

ned

100%

by

the

Nku

mbu

leni

Com

mun

ity T

rust

.

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

3

7

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

Am

azin

Ho

tel (

R45

.8 m

illio

n in

vest

ed)

� Am

azin

Hot

el i

s a

3 st

ar P

ark

Inn

in P

olok

wan

e, L

impo

po.

Am

eniti

es

incl

ude

a re

stau

rant

, co

nfer

ence

fac

ility,

spa

and

oth

er r

elat

ed f

acilit

ies

typi

cal o

f a 4

sta

r up-

scal

ing

hote

l exp

erie

nce.

� Th

e ho

tel i

s w

ell l

ocat

ed n

ext t

o a

golf

cour

se a

nd P

eter

Mok

aba

stad

ium

;

with

in w

alki

ng d

ista

nce

to m

any

prof

essi

onal

firm

s an

d en

terta

inm

ent a

nd

betw

een

3 an

d 6

kilo

met

res

from

the

CBD

and

the

airp

ort.

� O

pera

tions

sta

rted

in F

ebru

ary

2017

, ach

ievi

ng o

ccup

ancy

rate

of o

ver 4

0%

agai

nst a

pro

ject

ed ra

te o

f 30%

.

� 50

8 jo

b op

portu

nitie

s w

ere

crea

ted

thro

ugh

this

pro

ject

, 90%

of w

hich

wer

e

for w

omen

.

Rh

ino

Lo

dg

e K

ZN

(R

23.7

mill

ion

inve

sted

)

The

proj

ect e

ntai

ls th

e es

tabl

ishm

ent o

f a 4

4 be

d Sa

fari

Lodg

e lo

cate

d in

the

Mpe

mbe

ni G

ame

Res

erve

. The

man

agem

ent o

f the

lodg

e ha

s be

en c

ontra

cted

to T

ourv

est a

nd th

ey w

ill o

ffer

Big

5 ga

me

driv

es a

nd w

alks

, bird

ing

and

spa

treat

men

t. Th

e M

pem

beni

C

omm

unity

Tr

ust

repr

esen

ts

the

inte

rest

s of

appr

oxim

atel

y 60

0 ho

useh

olds

who

fal

l un

der

the

Trib

al A

utho

rity

of i

Nko

si

Hla

bisa

and

the

Empe

mbe

ni T

ribal

Cou

ncil.

The

pro

ject

has

bee

n en

dors

ed b

y

the

Ezem

velo

KZN

Wild

life,

KZN

Tou

rism

Aut

horit

y an

d th

e of

fice

of th

e M

EC

of E

cono

mic

Dev

elop

men

t and

Tou

rism

.

Pro

vid

e co

ach

ing

incu

bat

ion

, in

ten

sive

sup

po

rt a

nd

fin

anci

ng

to

gro

w t

he

smal

l bu

sin

ess

and

co

op

erat

ive

sect

or

% o

f g

row

th in

th

e

nu

mb

er o

f sm

all

bu

sin

ess

and

coo

per

ativ

es.

The

Entre

pren

euria

l D

evel

opm

ent

Stra

tegy

int

ends

to

enha

nce

the

NEF

’s

impa

ct in

dev

elop

ing

entre

pren

eurs

hip

in S

outh

Afri

ca, m

ore

broa

dly

with

focu

s

on F

inan

cial

and

non

-Fin

anci

al S

uppo

rt as

wel

l as

adv

ocac

y on

iss

ues

perta

inin

g to

ent

repr

eneu

rshi

p. W

e fu

rther

see

k to

incr

ease

the

parti

cipa

tion

by

wom

en a

nd y

outh

in th

e m

ain

stre

am e

cono

my

thro

ugh

entre

pren

eurs

hip.

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

3

8

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

tow

ard

s a

mo

re in

clu

sive

eco

no

my.

% o

f sm

all b

usi

nes

s

and

co

op

erat

ives

that

are

su

pp

ort

ed

and

th

at a

re s

till

op

erat

ing

on

e ye

ar.

afte

r su

pp

ort

pro

vid

ed.

The

follo

win

g in

itiat

ives

hav

e al

read

y be

en im

plem

ente

d as

par

t of t

he 3

-yea

r

impl

emen

tatio

n pl

an:

� Bu

sine

ss T

rain

ing

� In

cuba

tion

� G

over

nanc

e Tr

aini

ng

� M

ento

rshi

p (P

re a

nd P

ost I

nves

tmen

t)

� Th

e Bu

sine

ss P

lann

er to

ol is

on

an o

nlin

e so

ftwar

e to

ol, i

nten

ded

to a

ssis

t

entre

pren

eurs

to d

evel

op th

eir o

wn

busi

ness

pla

n an

d fin

anci

al p

roje

ctio

ns.

The

tool

is

acce

ssib

le f

ree

of c

harg

e to

all

entre

pren

eurs

(no

t on

ly

entre

pren

eurs

wan

ting

to a

pply

for

fun

ding

fro

m N

EF)

to d

evel

op t

heir

busi

ness

pla

ns in

an

easy

and

use

r fri

endl

y m

anne

r. T

o da

te, m

ore

than

19,0

00 e

ntre

pren

eurs

hav

e ac

cess

ed th

e Bu

sine

ss P

lann

er T

ool.

� Bu

sine

ss t

rain

ing

is p

rovi

ded

prim

arily

to

entre

pren

eurs

ope

ratin

g in

outly

ing

area

s, in

clud

ing

NEF

bro

ad b

ased

inve

stee

gro

ups.

Thi

s is

mad

e

up o

f 4-

day

sim

ulat

ed t

rain

ing

sess

ions

int

ende

d to

del

iver

lea

rnin

g

expe

rienc

es o

n bu

sine

ss m

anag

emen

t prin

cipl

es a

nd b

asic

kno

wle

dge

and

unde

rsta

ndin

g on

fina

ncia

l sys

tem

s, re

porti

ng a

nd c

ontro

ls.

A m

inim

um o

f

18 tr

aini

ng s

essi

ons

are

targ

eted

to b

e pr

ovid

ed p

.a.,

90%

of t

hese

in ru

ral

area

s an

d m

ore

than

70%

of t

he d

eleg

ates

are

wom

en.

� Ac

cess

to

busi

ness

inc

ubat

ion

is f

acilit

ated

for

sta

rt-up

and

exi

stin

g

ente

rpris

es.

Key

exit

outc

omes

inco

rpor

ate

finan

cial

gro

wth

, jo

b cr

eatio

n

and

full

com

plia

nce

with

lega

l and

reg

ulat

ory

requ

irem

ents

. Th

e N

EF is

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

3

9

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

targ

etin

g 75

ent

erpr

ises

to b

e re

ferre

d fo

r inc

ubat

ion;

and

15

entre

pren

eurs

in th

e fin

al s

tage

of i

ncub

atio

ns in

201

7/18

and

in th

e en

suin

g ye

ars.

� Tr

aini

ng o

n co

rpor

ate

gove

rnan

ce a

nd a

ssis

tanc

e w

ith th

e im

plem

enta

tion

ther

eof

is

prov

ided

to

th

e N

EF’s

br

oad-

base

d in

vest

ee

grou

ps

and

bene

ficia

ries.

Tra

inin

g is

pro

vide

d to

all

qual

ifyin

g in

vest

ee g

roup

s w

ithin

6-

mon

ths

of p

roje

ct im

plem

enta

tion

and

com

plia

nce

to c

orpo

rate

gov

erna

nce

requ

irem

ents

in 1

2-m

onth

s.

� Th

e N

EF e

stab

lishe

d a

men

tors

hip

pane

l co

mpr

isin

g m

ore

than

110

indu

stry

an

d te

chni

cal

expe

rts

loca

ted

thro

ugho

ut

the

coun

try.

Key

obje

ctiv

es o

f th

e m

ento

rshi

p pr

ogra

mm

e in

clud

e th

e de

velo

pmen

t an

d

mai

nten

ance

of s

usta

inab

le b

usin

esse

s w

hich

will

in tu

rn c

ontri

bute

to th

e

sust

aina

ble

grow

th

of

the

econ

omy,

as

sist

w

ith

the

turn

arou

nd

man

agem

ent

of

dist

ress

ed

com

pani

es

and

busi

ness

co

achi

ng.

A m

inim

um 3

- mon

th m

ento

rshi

p is

pro

vide

d to

all

smal

l bu

sine

ss a

nd

coop

erat

ives

fund

ed to

ass

ist p

rimar

ily w

ith th

e im

plem

enta

tion

of a

dequ

ate

finan

cial

sys

tem

s an

d co

ntro

ls.

This

is p

rovi

ded

is a

dditi

on to

oth

er re

leva

nt

pre-

and

pos

t-fun

ding

non

-fina

ncia

l sup

port.

Jo

b d

rive

rs o

n

sup

po

rtin

g t

he

inve

stm

ent

in t

he

gre

en

eco

no

my,

th

e so

cial

eco

no

my

and

pu

blic

serv

ices

as

wel

l as

Afr

ican

reg

ion

al

Sec

tor

and

cro

ss-

cutt

ing

inte

rven

tio

ns

tow

ard

s g

row

th,

emp

loym

ent

crea

tio

n a

nd

hig

her

inco

mes

fo

r p

oo

r

ho

use

ho

lds

The

NEF

act

ivel

y se

eks

to s

uppo

rt pr

ojec

ts w

ith h

igh

job-

crea

tion

oppo

rtuni

ties,

espe

cial

ly th

roug

h its

SPF

. A

few

pro

ject

s in

the

rene

wab

le e

nerg

y se

ctor

with

job

crea

tion

pote

ntia

l are

out

lined

bel

ow.

Sal

amax

166

0

� Th

e pr

ojec

t offe

rs a

n op

portu

nity

to in

vest

in a

prio

rity

indu

stry

acc

ordi

ng to

dti's

IPA

P w

here

dev

elop

men

t an

d co

mm

erci

aliz

atio

n of

Sou

th A

frica

n

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

4

0

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

dev

elo

pm

ent

to b

e

imp

lem

ente

d a

nd

revi

ewed

reg

ula

rly

in

term

s o

f im

pac

t o

n

gro

wth

, in

vest

men

t,

ou

tpu

t, e

xpo

rts

and

Afr

ican

reg

ion

al

dev

elo

pm

ent.

un

der

way

in

spec

ifie

d jo

bs

dri

vers

.

inte

llect

ual

prop

erty

is

su

ppor

ted

and

parti

cipa

tion

in

proj

ects

th

at

cont

ribut

e to

the

gree

n en

ergy

quo

ta is

enc

oura

ged.

� Sa

lam

ax 1

660

has

deve

lope

d a

seco

nd g

ener

atio

n bi

ofue

l pro

cess

tha

t

uses

gra

ss a

nd/o

r lea

ves

to p

rodu

ce b

ioet

hano

l and

ow

n el

ectri

city

, thr

ough

a lo

cally

dev

elop

ed te

chno

logy

inve

nted

by

the

proj

ect s

pons

or.

� Th

e pr

oces

s of

fers

sig

nific

ant a

dvan

tage

s ov

er c

onve

ntio

nal m

etho

ds th

at

are

curre

ntly

in u

se, b

y be

ing

cost

effe

ctiv

e.

This

cos

t effe

ctiv

enes

s m

ay

mak

e th

e pr

ojec

t via

ble

with

out r

equi

ring

gove

rnm

ent s

ubsi

dies

.

� Th

is p

roje

ct is

als

o al

igne

d to

key

prio

ritie

s of

the

ND

P of

job

crea

tion

thro

ugh

its p

oten

tial t

o cr

eate

sig

nific

ant q

ualit

y jo

bs a

t fin

anci

al c

lose

, and

cont

ribut

ing

to S

A’s

expo

rts a

s a

siza

ble

porti

on o

f pr

oduc

tion

will

be

expo

rted

to n

eigh

bour

ing

SAD

C c

ount

ries.

The

NEF

has

com

mitt

ed R

7 m

illion

tow

ards

the

cons

truct

ion

of a

pilo

t pla

nt a

t th

e N

orth

Wes

t Uni

vers

ity, P

otch

efst

room

Cam

pus;

in p

artn

ersh

ip w

ith th

e dt

i’s

Supp

ort P

rogr

amm

e fo

r Ind

ustri

al In

nova

tion

whe

re a

gra

nt o

f R4.

9 m

illion

was

secu

red.

The

pro

ject

will

proc

eed

to fu

ll sc

ale

com

mer

cial

izat

ion

upon

suc

cess

of th

e pi

lot p

l ant

.

P

acka

ge

sup

po

rt f

or

sup

plie

r d

evel

op

men

t

esp

ecia

lly s

tate

pro

cure

men

t.

Pro

gre

ssiv

ely

risi

ng

loca

l co

nte

nt

leve

ls

in t

ota

l sta

te

pro

cure

men

t.

The

Proc

urem

ent f

inan

ce p

rodu

ct p

rovi

des

fund

ing

for e

quip

men

t and

wor

king

capi

tal t

o as

sist

SM

Es w

ith th

e im

plem

enta

tion

of th

e co

ntra

cts

awar

ded

by b

oth

priv

ate

and

publ

ic s

ecto

r ent

ities

, inc

ludi

ng s

tate

-ow

ned

entit

ies.

The

NEF

als

o

prov

ides

sho

rt -te

rm r

evol

ving

faci

litie

s to

ass

ist S

MEs

to fu

lfil o

nce-

off o

rder

s

from

the

sam

e en

titie

s.

The

NEF

is

in t

he p

roce

ss o

f fo

rgin

g di

rect

rel

atio

ns w

ith s

tate

-ow

ned

ente

rpris

es a

nd g

over

nmen

t dep

artm

ents

to in

crea

se v

olum

es a

nd s

uppo

rt fo

r

proc

urem

ent s

et a

side

s, e

.g. T

rans

net.

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

4

1

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

To d

ate:

Ove

r R

1.9

6 bi

llion

of

inve

stm

ents

wer

e ap

prov

ed in

544

SM

E’s

to a

cces

s

fund

ing

from

the

NEF

sin

ce 2

005

� R

1.45

billi

on m

illion

has

bee

n di

sbur

sed

to d

ate

in 4

00 S

MEs

sin

ce 2

005

� 47

% in

Gau

teng

Pro

vinc

e an

d 53

% s

prea

d ac

ross

Sou

th A

frica

� At

leas

t 25%

in v

alue

of i

nves

tmen

t are

in S

MEs

ow

ned

and

man

aged

by

Blac

k w

omen

The

targ

et fo

r Pro

cure

men

t Fin

ance

form

s pa

rt of

the

broa

der t

arge

t to

“Pro

vide

finan

ce to

bus

ines

s ve

ntur

es e

stab

lishe

d an

d m

anag

ed b

y B

lack

peo

ple.

”

3.

E

limin

atio

n o

f

un

nec

essa

ry r

egu

lato

ry

bu

rden

s an

d lo

wer

pri

ce

incr

ease

s fo

r ke

y in

pu

ts

fost

ers

inve

stm

ent

and

eco

no

mic

gro

wth

.

Not

app

licab

le

4.

Wor

kers

’ edu

catio

n an

d sk

ills

incr

easi

ng

ly m

eet

eco

no

mic

nee

ds.

Not

app

licab

le

5.

Exp

and

ed e

mp

loym

ent

in a

gri

cult

ure

.

Dev

elo

pm

ent

of

smal

lho

lder

pro

du

ctio

n

in c

on

text

of

imp

rove

d

dis

tric

t p

lan

nin

g a

nd

lin

k

to la

nd

ref

orm

,

Pla

n t

o s

up

po

rt

smal

lho

lder

s

dev

elo

ped

an

d

inco

rpo

rate

d in

Dev

elop

men

t of s

mal

lhol

der p

rodu

ctio

n:

Thro

ugh

the

prov

isio

n of

fu

ndin

g w

e ex

pect

to

ac

cele

rate

gr

owth

an

d

trans

form

atio

n th

e ru

ral

econ

omy,

to

crea

te d

ecen

t w

ork

and

sust

aina

ble

livel

ihoo

ds, a

nd fu

rther

con

tribu

te to

bui

ldin

g ec

onom

ic a

nd s

ocia

l infra

stru

ctur

e.

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

4

2

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

exte

nsi

on

, mar

keti

ng

an

d

oth

er s

yste

ms.

AP

AP

, wit

h c

lear

ann

ual

tar

get

s.

This

for

ms

part

of t

he r

ural

dev

elop

men

t st

rate

gy t

hat

is li

nked

to

land

and

agra

rian

refo

rm, f

ood

secu

rity,

and

tour

ism

.

� To

dat

e w

e ha

ve in

vest

ed R

165

milli

on in

the

Agric

ultu

ral s

ecto

r, eq

uatin

g

to R

79k

per j

ob. A

vera

ge w

omen

em

pow

erm

ent a

chie

ved

is a

bout

60%

and

abou

t 90%

of t

he in

vest

ed p

ortfo

lio is

loca

ted

in m

argi

nalis

ed P

rovi

nces

.

Ber

lin B

eef

(R27

mill

ion

inve

sted

)_

The

busi

ness

invo

lves

the

esta

blis

hmen

t of a

feed

lot i

n Be

rlin,

Eas

tern

Cap

e fo

r

the

supp

ly o

f a h

igh

thro

ugh-

put a

batto

ir in

Eas

t Lon

don

in te

rms

of a

10

year

off -t

ake

agre

emen

t, in

clud

ing

upst

ream

inve

stm

ent i

n th

e ca

ttle

supp

ly r

egio

n

for

impr

oved

bre

edin

g of

cat

tle s

uppl

ied

to th

e Be

rlin

Beef

feed

lot.

The

beef

oper

atio

n cu

rrent

ly h

as a

one

-tim

e st

andi

ng c

apac

ity o

f 7

000

head

on

back

grou

ndin

g an

d 3

000

head

on

feed

lot,

this

cap

acity

has

mor

e th

an d

oubl

ed

in t

he f

irst

year

of

oper

atio

ns.

The

proj

ect

has

adop

ted

and

com

plie

s w

ith

requ

irem

ents

of I

SO 1

4001

, a g

loba

lly r

ecog

nise

d st

anda

rd s

peci

ficat

ion

that

stru

ctur

es th

e im

plem

enta

tion

of a

n ef

fect

ive

envi

ronm

enta

l man

agem

ent.

The

curre

nt lo

cal c

lient

ele

incl

udes

Fam

ous

Bran

ds,

Shop

rite

and

Pick

and

Pay

.

Inte

rnat

iona

l mar

kets

incl

u de

Hon

g Ko

ng, T

haila

nd a

nd V

ietn

am.

Par

tner

ship

wit

h t

he

Dep

artm

ent

of

Ru

ral D

evel

op

men

t an

d L

and

Ref

orm

(DR

DL

R)

The

NEF

est

ablis

hed

a pa

rtner

ship

with

the

DR

DLR

afte

r th

e H

on.

Min

iste

r

Gug

ile N

kwin

ti in

vite

d th

e N

EF to

bec

ome

a pa

rtner

in th

e pi

lot i

mpl

emen

tatio

n

of t

he p

rogr

amm

e ca

lled

STR

ENG

THEN

ING

OF

REL

ATIV

E R

IGH

TS O

F PE

OPL

E W

OR

KIN

G T

HE

LAN

D,

also

kno

wn

as t

he 5

0 –

50 p

roje

ct.

The

obje

ctiv

es o

f th

e pi

lot

proj

ect

are

at t

he h

eart

of t

he e

xist

ence

of

the

NEF

,

beca

use

they

see

k to

em

pow

er f

arm

wor

kers

to

beco

me

entre

pren

eurs

thu

s

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

4

3

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

redr

essi

ng th

e in

just

ices

of t

he p

ast i

n th

e ar

eas

that

wer

e de

vast

ated

mor

e

seve

rely

by

apar

thei

d.

Thro

ugh

the

partn

ersh

ip, t

he N

EF a

ssis

ted

in th

e fa

cilit

atio

n of

app

rovi

ng a

nd

final

isin

g le

gal a

gree

men

ts w

orth

R66

9 m

illion

.

6.

Mac

ro-e

con

om

ic

con

dit

ion

s su

pp

ort

emp

loym

ent-

crea

tin

g

gro

wth

.

Incr

ease

in in

du

stri

al

fin

ance

ava

ilab

le.

Incr

ease

in

ind

ust

rial

fin

ance

avai

lab

le.

� SP

F, th

e ve

ntur

e ca

pita

l fun

d of

the

Nat

iona

l Em

pow

erm

ent F

und

(NEF

),

curre

ntly

has

27

proj

ects

und

er d

evel

opm

ent,

in w

hich

it h

olds

equ

ity th

at

is w

areh

ouse

d fo

r fut

ure

dist

ribut

ion

to B

-BBE

E en

titie

s.

� Th

e im

plem

enta

tion

of th

e af

orem

entio

ned

proj

ects

requ

ires

circ

a R

28

billio

n in

cap

ital,

of w

hich

circ

a R

4 bi

llion

is d

ue b

y th

e N

EF, i

n re

spec

t of

its e

quity

inte

rest

s he

ld in

the

proj

ects

.

7.

R

edu

ced

wo

rkp

lace

con

flic

t an

d im

pro

ved

colla

bo

rati

on

bet

wee

n

go

vern

men

t, o

rgan

ised

bu

sin

ess

and

org

anis

ed

lab

ou

r.

Dev

elo

pm

ent

of

pro

gra

mm

es t

o a

dd

ress

wo

rkp

lace

co

nfl

ict

thro

ug

h (

a) im

pro

ved

com

mu

nic

atio

n, c

aree

r

mo

bili

ty, s

kills

dev

elo

pm

ent

and

fair

nes

s in

wo

rkp

lace

s,

and

(b

) st

ron

ger

lab

ou

r

rela

tio

ns

syst

ems.

Nu

mb

er o

f

wo

rkp

lace

dis

pu

tes

dec

lare

d.

The

NEF

bel

ieve

s in

bui

ldin

g th

e re

quire

d hu

man

res

ourc

e ca

paci

ty t

hrou

gh

appr

opria

te

mec

hani

sms

that

w

ill en

sure

th

e tra

inin

g an

d de

velo

pmen

t,

upgr

adin

g sk

ills, k

now

ledg

e, c

ompe

tenc

e an

d at

titud

e th

at w

ill co

ntrib

ute

to th

e

achi

evem

ent o

f the

NEF

’s g

oals

and

obj

ectiv

es.

The

NEF

’s o

vera

ll tra

inin

g an

d de

velo

pmen

t obj

ectiv

es a

re to

enc

oura

ge a

nd

supp

ort e

mpl

oyee

s to

atta

in th

eir m

axim

um p

oten

tial t

here

by c

ontri

butin

g to

the

achi

evem

ent o

f the

NEF

’s g

oals

and

obj

ectiv

es.

8.

Exp

and

ed e

con

om

ic

op

po

rtu

nit

ies

for

his

tori

cally

exc

lud

ed

and

vu

lner

able

gro

up

s.

Pro

gra

mm

es t

o e

nsu

re

incr

ease

d a

cces

s to

emp

loym

ent

and

entr

epre

neu

rsh

ip f

or

Sh

are

of

you

th

emp

loym

ent

or

edu

cati

on

.

The

NEF

has

est

ablis

hed

the

Wom

en E

mpo

wer

men

t Fun

d (W

EF) t

hat w

ill fo

cus

on o

nly

supp

ortin

g w

omen

in tr

ansa

ctio

ns. A

n am

ount

of R

238

milli

on w

as b

een

allo

cate

d to

the

fund

in th

e 20

17/1

8 fin

anci

al y

ear.

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

4

4

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

wo

men

an

d y

ou

th in

th

e

con

text

of

stro

ng

er

sup

po

rt f

or

emer

gin

g

and

sm

alle

r en

terp

rise

s

ove

rall.

Sh

are

of

wo

men

in

form

al e

mp

loym

ent.

The

NEF

has

pre

viou

sly

allo

cate

d R

1 m

illion

to th

e Ka

belo

Sei

tshi

ro B

ursa

ry

Sche

me

whi

ch fo

cuse

d on

fund

ing

univ

ersi

ty s

tudi

es fo

r you

th a

nd s

uppo

rting

them

to q

ualif

y as

Cha

rtere

d Ac

coun

tant

s.

Dur

ing

the

2015

/16

finan

cial

yea

r, th

e N

EF e

stab

lishe

d a

R2

milli

on b

ursa

ry fu

nd

to fu

nd d

eser

ving

lear

ners

acr

oss

the

coun

try, t

o fu

rther

thei

r stu

dies

in o

btai

ning

qual

ifica

tions

that

are

iden

tifie

d as

crit

ical

in th

e de

velo

pmen

t of t

he c

ount

ry.

In

its y

ear

of in

cept

ion,

the

NEF

bur

sary

fun

d ad

vanc

ed R

1.6

milli

on to

fun

d 31

lear

ners

from

pre

viou

sly

disa

dvan

tage

d ba

ckgr

ound

s. 6

1% o

f the

se le

arne

rs a

re

fem

ale.

90%

of t

hese

stu

dent

s pa

ssed

and

are

bei

ng a

ssis

ted

to s

tudy

furth

er.

A

furth

er n

ew in

take

of 1

3 le

arne

rs w

as m

ade

in th

e 20

17/1

8 fin

anci

al y

ear a

nd R

2

milli

on a

lloca

ted

to th

is fu

nd. I

n th

e 20

18/1

9 fin

anci

al p

erio

d th

e N

EF s

uppo

rted

a fu

rther

29

stud

ents

, of w

hich

23

pass

ed, 2

gra

duat

ed a

nd 4

faile

d.

As p

art o

f its

inte

rnsh

ip p

rogr

amm

e, th

e N

EF ta

rget

s gr

adua

tes

from

diff

eren

t

terti

ary

inst

itutio

ns a

nd p

rovi

des

them

on

the

job

train

ing

for a

yea

r with

the

hope

of a

bsor

bing

them

in th

e sy

stem

bas

ed o

n th

eir p

erfo

rman

ce. T

he N

EF c

urre

ntly

empl

oys

abou

t 25

such

gra

duat

es.

The

NEF

has

pre

viou

sly

man

aged

and

pro

vide

d ad

ditio

nal f

inan

cial

sup

port

to

the

JIPS

A/AF

D J

unio

r M

anag

emen

t D

evel

opm

ent

Prog

ram

me,

whi

ch i

s an

exch

ange

pro

gram

me

for

juni

or S

outh

Afri

can

man

ager

s to

gai

n va

luab

le

busi

ness

sch

ool t

rain

ing

and

prac

tical

wor

k ex

perie

nce

in F

ranc

e. 3

4 ju

nior

man

ager

s pa

rtici

pate

d in

the

firs

t in

take

, w

hich

was

fol

low

ed b

y 58

in

the

follo

win

g ye

ar.

The

NEF

is c

urre

ntly

look

ing

at d

evel

opin

g ot

her p

artn

ersh

ips

with

the

BRIC

s an

d EU

cou

ntrie

s fo

r sim

ilar p

rogr

amm

es.

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

4

5

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

We

have

set

our

selv

es a

targ

et o

f ens

urin

g th

at B

lack

wom

en p

artic

ipat

e in

and

hold

eco

nom

ic b

enef

it of

a c

erta

in p

erce

ntag

e of

the

tot

al d

isbu

rsem

ents

inve

sted

ann

ually

. An

nual

targ

ets

for t

his

are

40%

in 2

017/

18 a

nd th

erea

fter.

The

NEF

mus

t in

crea

se t

he n

umbe

r of

bus

ines

ses

owne

d an

d m

anag

ed b

y

Blac

k pe

ople

in S

outh

Afri

ca b

y pr

ovid

ing

fund

ing

to s

uch

ente

rpris

es.

We

aim

to a

ppro

ve n

ew t

rans

actio

ns w

orth

R4.

9 bi

llion

by 2

021,

and

dis

burs

e R

4.4

billio

n m

ore

into

the

econ

omy

durin

g th

e st

rate

gic

plan

ning

per

iod.

The

NEF

als

o ai

ms

to p

rom

ote

econ

omic

par

ticip

atio

n of

peo

ple

hist

oric

ally

excl

uded

fro

m m

ains

tream

eco

nom

y by

incr

easi

ng t

rans

actio

ns in

pro

vinc

es

with

low

act

ivity

and

in r

ural

are

as.

Thi

s w

ill be

ach

ieve

d by

incr

easi

ng t

he

over

all v

alue

of p

ortfo

lio in

und

er-re

pres

ente

d pr

ovin

ces

by e

nsur

ing

that

25%

of

annu

al

disb

urse

men

ts

is

inve

sted

in

th

e un

derre

pres

ente

d pr

ovin

ces

(nam

ely,

Nor

ther

n C

ape,

Eas

tern

Cap

e, L

impo

po,

Mpu

mal

anga

, N

orth

Wes

t

and

the

Free

Sta

te).

9.

Pu

blic

em

plo

ymen

t

sch

emes

pro

vid

e sh

ort

-

term

rel

ief

for

the

un

emp

loye

d a

nd

bu

ild

com

mu

nit

y so

lidar

ity

and

ag

ency

.

Not

app

licab

le

10. I

nve

stm

ent

in r

esea

rch

,

dev

elo

pm

ent

and

inn

ova

tio

n s

up

po

rts

gro

wth

by

enh

anci

ng

pro

du

ctiv

ity

of

exis

tin

g

Not

app

licab

le

Nat

iona

l Em

pow

erm

ent F

und

Stra

tegi

c Pl

an fo

r the

yea

rs 2

019/

20 -

22

4

6

Su

b-O

utc

om

e A

ctio

ns

Ind

icat

ors

N

EF

Tar

get

& A

ctio

ns

and

em

erg

ing

ente

rpri

ses

and

imp

rovi

ng

livi

ng

con

dit

ion

s o

f th

e p

oo

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Strategic Plan for the years 2019/20-22 47

8. Financial Plan

The NEF’s strategic objectives are detailed in section 5 of this Plan, and detailed Financial

Projections are provided in Appendix A.

8.1. Projections of revenue, expenditure and borrowings

The NEF is currently engaged in a recapitalisation exercise with its Shareholder Ministry,

Government and other relevant stakeholders. The projections in this section and in the

appendices are dependent on the NEF’s recapitalisation being realised in the 2019 financial

year.

Revenue projections include interest on loans and investments, interest on cash in bank,

dividend income from listed and unlisted equity investments, raising / origination fees and

enterprise and supplier development contributions received. The interest on loans is projected

at rates based on the pricing policies of each fund and the interest rate projections over the

entire investment portfolio. Most of the NEF’s loan instruments are priced against the prime

lending rate. Fees are projected at 1% of a third of funds disbursed each year.

Interest on cash in the bank is projected at an average rate of 6.5%, which are the projected

rates achieved on money invested with the South African Reserve Bank.

Dividend income is particularly difficult to predict / project as these are linked to different

dividend policies of the NEF’s investee companies. The NEF has a portfolio of listed and

unlisted investments, the majority of which relates to the MTN shares allocated to the NEF by

Government. The dividend projections included in the overall revenue is therefore based on

our best estimate of what the NEF could receive each year.

The Net Asset Value of the NEF has increased from R2.1 billion in 2005/06 to about

R4.7 billion as at financial year end 2017/18. This overall increase over the period has largely

been a factor of retained earnings over the years.

Total Expenditure (i.e. including funding for non-financial services offered by the NEF) has

increased in line with increased activities and targets. Operational expenditure includes

general & administration and employee costs, and apart from office rental and salaries, are all

budgeted for from a zero base. The overall methodology applied when budgeting for



operational expenditure is largely linked to the organizational targets and activities. The NEF

has continued with a targeted critical role recruitment drive since the lifting of the funding

moratorium.

The NEF also embarked on various mandate related projects (i.e. non-financial services) for

which specific budget allocations are required. To this end a further average of R15m per

annum has been budgeted for over the next three years. Some of the projects that the NEF is

and will be involved in are Investor Education road shows and non-financial support to NEF

investees (mentorship, entrepreneurship development as well as governance training).

Over the strategic period, the efficiency ratio (based on total costs) is forecasted to breach the

intended long term range of 54%-58%. This is mainly as a result of reducing income from

both investments and dividend receipts over the period. In addition, non-financial support activities are not subsidised. In the event that the NEF gets transfers from the dti to fully fund

the non-financial services we currently undertake, the efficiency ratio could be brought down

from an average of 64% and maintained around 61% over the course of the strategic period.

The current and required capitalisation of the NEF will allow it to move forward and make a

meaningful contribution in achieving its mandate, with its investment approvals projected to

reach the R12 billion milestone by the end of the strategic period.

8.2. Asset and liability management

The NEF, as a Schedule 3A entity under the PFMA, is required to operate fully on the basis

of not budgeting for a deficit. Investment activity is funded out of cash balances and thus all

liabilities will at all times be off-set by cash balances.

Excess cash is managed through a cash management process where short term cash is

invested in call accounts of three approved banks to meet short term cash requirements and

excess cash with the South African Reserve Bank in terms of the requirements of the PFMA.

8.3. Cash flow projections

Please refer to Appendix A.



8.4. Capital expenditure projects

Annual capital expenditure allocation is mostly related to replenishment of existing capital

expenditure items such as computers, furniture and office equipment. The NEF further plans

to enhance its IT environment and platforms over the medium period. The average budget

allocation for capital expenditure over the three year period is R5.8 million.

8.5. Infrastructure plans

The NEF does not directly fund infrastructure for itself or the country as part of its mandate

though there may be an element of infrastructure funding provided through projects funded by

the Strategic Projects Fund that is a specific requirement of that project and in line with national

targeted strategic sectors. In addition, the NEF is involved in assisting with funding and/or

planning phases for the PRASA and AREVA infrastructure development initiatives.

8.6. Dividend policies

The NEF does not have a dividend policy with respect to any surplus reported. Surpluses are

retained following a section 53(3) application to the National Treasury each year in order to

meet further capitalisation needs of the NEF since it is not currently on the MTEF.



9. Risk Management and Fraud Prevention Plan

9.1. Risk Management Process

Risk Management Framework

The NEF’s Risk Management Framework is based on COSO, Institute of Risk Management

Standards of South Africa (IRMSA) Code of Practice and PFMA & Treasury regulations.

The ERM (Enterprise-wide risk management) methodology of the NEF consists of the

following interrelated components: internal environment, objective setting, risk identification,

risk assessment, risk control and response, risk monitoring and reporting, and risk

performance measurement. These components are derived from best practice with respect to

ERM governance.

The Framework is continuously benchmarked against best practice such as the International

standard on Risk Management (ISO 31000) and KING IV; and where required, relevant

changes are made to the Framework. The Framework has recently been benchmarked

against the updated COSO Framework that was issued during September 2017. The NEF

Risk Management Framework has been updated and approved by Board during October

2018.

The Risk assessment process results in the output of the risk universe, allowing key risks to

be identified. The Risk assessment exercise is completed on an annual basis and divisional

risk registers are updated on a bi-annual basis to identify any emerging risks and track

progress.

Risk Strategy (Risk Register)

The realisation of the strategic objectives presented by the NEF may be affected by the

following key risks: 1. Recapitalisation Risk: The risk that the NEF will not be able to raise sufficient

capital to fund the NEF’s short to medium-term investment and operating

activities.

Without an injection of new capital in the next few months, the NEF will run out of capital to

finance new transactions going forward. The lack of adequate capital will also negatively



impact on the NEF’s ability to follow through on participation interest or equity options for

transactions within the NEF’s Strategic Projects Fund. This will have a negative impact on the

achievement of the NEF’s mandate and the ability to transform the economy.

The NEF has obtained approval by the shareholder ministry to become an Arms-length

subsidiary of the IDC. The implementation of the business combination process has

commenced with work being done in various areas. IDC has also approved interim funding of

R500. Certain approvals are however required from the Ministers of dti, Economic

Development and Finance as well as Cabinet before funds may be released by the IDC. The

delay in receiving interim funding will however negatively impact on the NEF funding new

transaction. Various initiatives are underway regarding resolving the issue relating to the

recapitalisation of the NEF. Engagements are being held with stakeholder. NEF is also

undertaking fundraising initiatives for the Strategic Projects Fund transactions.

2. People Risk

The risk that the NEF does not have adequate capacity and skills to deliver on its mandate.

There is a risk of loss of key personnel due to the uncertainty regarding the delay in

implementation of recapitalisation process. There has recently been an increase in

resignations at management and professional level.

Management and the Board are however currently limited on implementing viable retention

strategies due to lack of certainty regarding future funding. Various non-monetary options are

currently being explored as retention strategies.

3. Business/Market Risk: The risk that changes in external market conditions have

a negative impact on the viability of funded transactions

The investment portfolio of the NEF consists of businesses in the commercial environment

that are susceptible to normal business risks in an economic environment, fluctuations in

commodity prices and foreign exchange rates amongst other variables. The current volatile

local and international economic environment has led to significantly lower GDP growth rates.

In addition household personal finances are under financial strain due to an increase in living

costs. This is negatively impacting on business conditions and has placed strain on some of

the clients in the portfolio.



The NEF portfolio is arguably more susceptible to these variations given the nature of the

businesses being supported i.e. early stage business, inexperienced entrepreneurs, geared

balance sheets and hence not as able to absorb the impact of these fluctuations as well as

more established businesses.

In evaluating transactions, market conditions are considered, due diligence investigations,

modelling and structuring of transactions by the deal teams. In addition, a regular micro and

macro economy sensitivity is undertaken by our Post Investment Unit and NEF appointed

mentors are used to promptly advise NEF investees on appropriate course of action.

4. Failure of third party relationships such as DRDLR, Department of Arts & Culture

& Department of Tourism

The NEF has entered into strategic partnerships with various National Departments to assist

them with implementation of their mandates as it relates to transformation. If the NEF does

not clearly understand third party relationships prior to entering into them, stakeholder

expectations may not be met and this will have a negative impact on the reputation of the NEF.

As some of the areas being looked at by the NEF such as Agricultural projects and movies

require specialist skills, there is a risk that the relevant skills may not be available to the NEF

resulting in financial losses and negative impact on the reputation of the NEF. The NEF has

implemented the following steps to mitigate the identified risks:

� Regular meetings with stakeholders to understand requirements and

expectations

� Entering into MOU’s with stakeholders

� Developing Frameworks that guide how transactions will be implemented

� Establishing joint steering committees to monitor implementation

� Ensuring that we have the relevant skills within the NEF to execute on

transactions.

� Where skills are not available within the NEF, we ensure that staff receive the

relevant training

� Where projects are not achieving intended objectives, these projects are not

continued



5. Changes in Key stakeholders

Changes in leadership at stakeholders due to recent political events impacting on the ability

to execute on projects i.e. changes resulting in the role of the NEF and NEF initiatives having

to be re-explained to stakeholders resulting in delays in implementation of mandate. Various

engagements are held with stakeholders to ensure they understand the mandate of the NEF

and its role.

6. Credit Risk: The risk of exposure to high credit risk investments and poor quality

of the invested portfolio

The NEF is mandated to intervene in the economy through the provision of funding to black-

owned enterprises which, due to past economic imbalances, may be of a higher credit risk.

This risk is exacerbated by the current tough economic climate that may impact on funded

businesses and their cash flows leading to the inability to honour loan repayments and

possible defaults on loans to the NEF.

Internally, the risk that the assessment processes of the NEF may not be able to inform

appropriate investment decisions does exist, as does the risk of not collecting on amounts due

and not being able to timeously identify distressed investments which may be able to be

rescued. The risk of funding the wrong “jockey’s” impacting on the performance of investments

and the portfolio also exists.

Inadequate controls mitigating this risk may negatively impact on the performance and quality

of the portfolio.

The controls introduced to attempt to mitigate this risk include:

� Appointment of skilled fund management teams.

� Due diligence investigation processes which include background checks.

� Adequately constituted and efficient approval structures.

� Portfolio management, monitoring and reporting processes.

� Use of pricing models according to a pricing policy which compels consideration of

credit risk.

� An independent credit risk assessment process by the Risk Division.

� Credit collection process managed by collaboration between the Post Investment Unit

and the Finance Division.

� Adequate turnaround workout and restructuring process.



A Credit Risk policy has recently been finalised and approved by the Board to enhance the

Credit vetting process at the NEF.

Fraud Prevention Plan

The Fraud Prevention Plan is the responsibility of all staff and management at the NEF. This

plan is a dynamic document and is updated regularly to reflect changes in the business

operations and circumstances of the NEF. The plan has been reviewed by management,

updated and approved by Board during October 2018.

The NEF has developed and implemented a Fraud Prevention Strategy and Fraud Prevention

Plan to guide behaviour and to combat any fraudulent activities. Key aspects of the Fraud

Prevention Strategy and Plan are listed below.

Anti-Fraud Policy Statement

As a first step towards implementing an anti-fraud strategy, the NEF adopts and

publishes an Anti-Fraud Policy statement along the following lines:

The NEF recognises the possibility of fraud and corruption occurring in its operations. As such it is the policy and mission of the NEF to strive for the protection of its employees and its other stakeholders (such as applicants, investees, suppliers etc.) through the implementation of an effective and efficient Fraud Prevention Strategy. We believe that there is only one effective way of fighting fraud and other corrupt practices and that is by instilling the reality amongst employees and other stakeholders, (such as clients (investees), suppliers of goods and services, public,) that fraud and corruption do not pay and will be detected and dealt with severely. Therefore, the NEF’s view on fraud and corruption is one of zero tolerance, and as such the

NEF is committed to: � Aggressively detecting incidents of fraud and corruption;

� The investigation of all allegations of misconduct by employees, clients and suppliers, said to be occasioned by fraud and corruption; and

� The prosecution of all offenders criminally and, where necessary, the institution of civil and disciplinary action against them.



Anti-Fraud Charter

In implementing the Fraud Prevention Policy of the NEF has adopted the following principles:

� We have a zero-tolerance attitude to fraud

� We understand and manage our risks

� We are proactive in defending our assets

� We react swiftly when a crime is uncovered

Fraud Risk Management strategy

The key objectives of the NEF’s Fraud Risk Management Strategy are:

� To establish the necessary preventative, control and monitoring mechanisms/ systems

to minimise the defrauding of the NEF funds, resources, assets and services by any

persons/organizations.

� To ensure that adequate measure are in place to protect the NEF from internal as well

as external fraud (i.e. supplier, potential applicants, clients, syndicates targeting NEF

i.e. false applications etc.).

� To ensure that adequate measures are in place to report fraud (whistle blowing policy

and hotline).

� To ensure that all reported matters are investigated.

� To account to the Board, via the Audit Committee on all fraudulent activity within the

NEF.

� To take the necessary action against all parties involved in fraudulent activities against

the NEF and to punish and deter any fraudulent actions from continuing or recurring.

The focus of such a strategy is the formalisation and implementation within the NEF of a

culture of zero tolerance for fraud and corruption, a high level of fraud awareness, and a

management and control environment that makes it as difficult as reasonably possible to

misappropriate assets or to succumb to corruption.

From the perspective of the NEF, good governance as it pertains to fraud prevention includes:

� Continuing the present focus on governance

� A robust control environment

� A strong and independent Internal Audit function



� A relevant and well-communicated Code of Conduct

� A whistleblowing policy and mechanism (fraud hotline) to report suspected fraud or

corruption

From a fraud prevention point of view it is important that:

� When management considers the strategy and direction that the organisation

is taking, they take into account the environmental factors relating to fraud and

that they insist that a suitably comprehensive fraud prevention strategy be put

in place to address such risks, this is done via the organisational risk

assessment process.

� Each manager brings his or her specialised industry knowledge or technical

background to bear when considering how fraud risks are to be avoided.

� Regular monitoring of performance against pre-set objectives should take

place.

� Individual operational units are held accountable for their actions.

� Constant pressure for improvement is exercised as this has a powerful impact

on reducing fraudulent activity. This is done via the implementation of internal

and external auditor’s recommendation, which is tracked.

� The management team’s awareness of the possibility of fraud is monitored, as

this is also an active manner in which managers can encourage defensive

strategies.

� Regular monitoring of the internal control environment takes place to ensure

that it remains of sufficiently high standard.

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17 7

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(365

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137

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(210

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(571

859

122

)

(7

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(978

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Cas

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f th

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ar1

344

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1

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801

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60

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(6

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at

end

of

year

1 13

3 80

1 78

2

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(667

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0

Per

son

nel

info

rmat

ion



Personnel numbers have decreased from a staff complement of 171 at the beginning of

2013/14 to 160 as at 31 December 2018. The staff complement is projected to grow to over

195 in the long term. The financial projection over this strategic period however project a staff

complement of 175. The staff complement is mainly made up of professionals. Attrition levels

increased to 14% during 2013/14 as a result of uncertainties regarding the recapitalisation and

job security, however there has been a significant fluctuation of attrition levels since, which

currently stand at 10% as at 31 December 2018. Personnel cost as a percentage of total

operating expenses, averages around 68%, which is an acceptable norm in Development

Finance Institute/Private Equity environments, where there is a high dependence on

professional staff. The ratio of support staff to line staff is 1: 2.

STOP Fraud, Corruption and Theft Contact Tip-Offs Anonymous on 0800 212 705 or email [email protected]

National Empowerment Fund Trust (established by Act 105 of 1998) IT: 10145/00www.nefcorp.co.za | www.nefbusinessplanner.co.za

How To Reach The National Empowerment Fund

Gauteng ProvinceHead OfficeWest Block, 187 Rivonia Road, Morningside 2057, PO Box 31, Melrose Arch, Melrose North 2076 Tel: +27 (11) 305 8000 | Fax: +27 (11) 305 8001 | Call Centre: 0861 843 633 | 0861 (THE NEF) [email protected] (Funding) | [email protected] (General Enquiries)

Eastern Cape Province7b Derby Road, Berea, East London 5241 | Tel: (043) 783 4200 | 0861 NEF ECP (0861 633 327) Fax: 0861 ECP NEF (0861 327 633) | [email protected]

Free State Province34 Fountain Towers, Corner Zastron and Markgraaf Street, Westdene, Bloemfontein, 9300 Tel: (051) 407 6360 | 0861 NEF FSP (0861 633 377) | Fax: 0861 FSP NEF (0861 377 633) [email protected]

KwaZulu-Natal Province4th Floor (South Side), Grindrod Bank Building (Old KPMG Building), 5 Arundel Close, Kingsmead Office Park, Durban | Tel: (031) 301 1960 | 0861 NEF KZN (0861 633 596) Fax: 0861 KZN NEF (0861 596 633) | [email protected]

Limpopo ProvinceSuite 8, Biccard Park, 43 Biccard Street, Polokwane 0699 | Tel: (015) 294 9200 | 0861 NEF LIM (0861 633 546) Fax: 0861 LIM NEF (0861 546 633) | [email protected]

Mpumalanga Province13 Ferreira Street, Maxsa Building, 2nd floor, Nelspruit | Tel: (013) 754 9860 | 0861 NEF MPU (0861 633 678) Fax: 0861 MPU NEF (0861 678 633) | [email protected]

Northern Cape ProvinceBlock Three, Ground Floor, The Montrio Corporate Park, 10 Oliver Road, Monument Heights, Kimberley Tel: 0861 NEF NCP (0861 633 627) | Fax: 0861 NCP NEF (0861 627 633) | [email protected]

North West Province 32B Heystek Street, Sunetco Office Park, Ground Floor, Rustenburg, 0299 Tel: (014) 523 9220 | 0861 NEF NWP (0861 633 697) Fax: 0861 NWP NEF (0861 697 633) [email protected]

Western Cape ProvinceSuite 2815, 28th Floor, ABSA Centre, 2 Riebeek Street, Cape Town 8001Tel: (021) 431 4760 | 0861 NEF WCP (0861 633 927) Fax: 0861 WCP NEF (0861 927 633) [email protected]

Northern Cape

KwaZulu-NatalFree State

Gauteng

Western Cape

Eastern Cape

Limpopo

Mpumalanga

North West

STRATEGIC PLAN 2019/20 – 22 · Fund Management, which comprises: The Venture Capital & Corporate...

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