About the NEF · PDF file1 About the NEF 3 2 StrategicPlanning ... • Strengthening...
Transcript of About the NEF · PDF file1 About the NEF 3 2 StrategicPlanning ... • Strengthening...
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BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2017/18
Presentation to the Select Committee on Trade & International Relations
Ms Philisiwe Mthethwa21 June 2017
Contents
Section Slide
1 About the NEF 3
2 Strategic Planning Framework & Objectives 5
3 Provincial Dynamics 14
4 NEF Annual Performance Plan 2017/18 24
5 Life to Date Performance Milestones 36
6 Key Priorities 38
7 Empowering Farmworkers to Become Entrepreneurs
49
8 Organisational Structure 59
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About the NEF
3
NEF Mandate…Established by the
National Empowerment FundAct No. 105of 1998, the NEF is a driver and
a thought-leader in promoting andfacilitating black economic participation through the provision of financial and
non-financial support to black owned and managed businesses, as well as by promotinga culture of savings and investment
among black people.
The NEF is an agency of the dti and is the only DFI exclusively mandated to grow
B-BBEE
4
Broad Based Black Economic EmpowermentThe Codes of Good Practice
55
The Strategic Planning Framework…
NEF
Act
:O
bjec
tives
The
dti
Obj
ectiv
es Government Priorities:
1) Acceleration of economic growth and transformation, creating decent work and sustainable livelihoods;
2) Infrastructure development to achieve social and economic goals and rural development;
3) Skills and human resource development;4) Build a developmental state and improve public
service.
SectorsNEF• Tourism; Biofuels; Construction;
Agri-processing; Transport; ICT & Media;
Mining services; FranchisingIndustrial Policy Action Plan:• Automotives, components, medium
andheavy commercial vehicles
• Plastics, pharmaceuticals and chemicals
• Biofuels• Strengthening linkages between
culturalindustries and tourism
• Business process servicing
NEF Sectors in line with national industrial objectives
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NEF MandateGrow black economic participation
Fund Management
1. Fund black-empowered businesses
2. Business plan toolkit
3. Mentorship support
4. Early-stage investments
5. TWR services
Asset Management
1. Investor Education
2. Public Share Offers
3. Enterprise Development
4. BEE Repository
Unpacking the NEF Mandate …
Culture of savings & investmentFinancial & non-financial support
7
Challenges/ Market FailuresMARKET FAILURES NEF SOLUTIONS
Limited own capitalFunding of between R250 000 and R75 million for start-up, expansion and equity transformation purposes as well as use of concessionaryfacilities. Non-descriptive on % of own contribution.
Limited management skills, including financial, marketing and technical expertise
Entrepreneurship Development tools and dedicated mentorship support.
Access to affordable capitalCompetitive cost of finance with a higher risk appetite as well as requirement for operational involvement (sweat-capital) reduces the need for collateral payment.
Lack of accurate and reliable financial information
Dedicated pre-investment mentorship support and technical assistance with our partners.
Poor Quality Business Plans Collaboration with other Government agencies like seda, incubation, entrepreneurial training and general pre-investment support and NEF Online Business Plan-Tool Kit.
Lower bargaining and strong competition power from established businesses with entrenched market dominance
Linkages and emphasis on the implementation of the codes of good practice (B-BBEE).
Wholesale Franchisor Facilities (Engen, Nandos, etc.)Lack of access to local and international markets
Linkages with off-takers. Relationships with franchisors and corporates for access to markets.
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8
SEDA to provide NFS to co-opsLand Bank – Agri focused
Sefa – Overlap R250k to R5milOther DFI’s & banks as above
SETAs
As aboveDepartment of Labour
IDC – Higher value thresholdSefa – Lower value thresholdDBSA – Infrastructure focusedLand Bank – Agri focusedBanks – Security focused
OTHER DFI’s & BANKS
Rural & Community Development Funding- “Contribution Beneficiaries”
Start up and Expansion Capital: Procurement Contracts FundingStart up and Expansion Capital establishes “Beneficiary Entity”
Indirect: All products via approval process
Acquisition FinanceIndirect: Capital Markets; Start up; Expansion Capital
Acquisition FinanceCapital Markets FundLiquidity and Warehousing FundStrategic Projects FundIndirect: Start up; Expansion Capital
NEF FUNDING PRODUCT
Socio-Economic Dev.Weighting 5 points
Enterprise & Supplier DevelopmentWeighting 40 points
Skills DevelopmentWeighting 20 points
Management ControlWeighting 15 points
OwnershipWeighting 25 points
CODE OF GOOD PRACTICE
NEF Positioning as a B-BBEE Funder…“The NEF provides the funding solutions for the implementation of the B-BBEE Codes of Good Practice.”
Funding Across the Economic Spectrum
5specialist
funds
9
Fund Focus Threshold
1 iMbewu Fund (SMEs)
SME Fund providing Entrepreneurship, Procurement & Franchise Finance
R250 000 –R15 million
2 Women Empowerment
Fund (WEF)
Achieve minimum 40% of enterprises owned and managed by black women
R250 000 –R75 million
3 Rural & Community
Development Fund
Supporting rural economic development through New Ventures,Acquisition, Expansion & Greenfields Finance
R1 million –R50 million
4 uMnotho Fund Funding of New Ventures, Acquisition, Project Finance, Expansion, Capital Markets, Liquidity & Warehousing
R2 million –R75 million
5 Strategic Projects Fund
Early-stage investment inindustrial / manufacturingtransactions
Up to R75 million
Non-Financial SupportPre-investmentAs the first-point-of-contact the unit provides product advisory services, manages the online business-plan solution, manages the administration of applications, incubation and entrepreneurial training.
Socio Economic DevelopmentEmpower black people in existing NEF transactions and other broad based groups through various social development interventions such as social facilitation, entrepreneurial training, investor education, corporate governance training and market access for the acceleration of meaningful participation.
Post-investment supportMonitor investments, provide ongoing portfolio management, manage mentorship support and collections as well as legal compliance
Turnarounds, Workouts and RestructuringRehabilitate distressed transactions and reduce impairments Through a combination of measures including balance sheet restructuring, equity and /or working capital injection, operational restructuring, introduction of a strategic equity partner and / or turnaround specialist and business rescue.
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Key Strategic Objectives…
• Promote and support business ventures established and managed by black people;
• Promote the understanding of equity ownership among black people;
• Provide black people with direct and indirect opportunities to acquire share interests in State Owned and private business enterprises;
• Encourage and promote investments, savings and meaningful economic participation among black people.
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1. To 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.
The NEF’s strategic outcome oriented goals are to:
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“The Empowerment Dividend”
• Broad Based Black Economic Empowerment
• Ownership, management control, employment equity etc.
• Black Women Empowerment
• Job Creation
• Growth Sectors
• Geographic Spread
• Investment Return
The assessment of impact is not driven only by financial returns but by measurement in terms of “The Empowerment Dividend”
made up as follows:
NEF’s Performance and Investment Criteria…
Provincial Dynamics Striving for growth across all provinces
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Invested growth across all provinces
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1. As a national Development Finance institution (DFI) the NEF is committed to ensuring that its products and services reach the entire nation.
2. Since the launch of the NEF Asonge Share Scheme in July 2007 the NEF has implemented various measures and interventions to strive towards an even, representative and equitable distribution of its services across the country.
3. As a result, the NEF’s invested presence in Gauteng has come down from above 60% of total disbursed funds in 2006, to 44% by March 2017.
4. This is not as a result of a reduction of funding in Gauteng, but is a direct consequence of planned, targeted and increased funding in the other 8 provinces because they are integral to South Africa's economy, comprising 76% of the population.
Reasons for growth across all provinces
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Year Intervention Outcome
1 2006 -2017
Local community & stakeholder workshops
Every year present & exhibit in a growing number of local community workshops hosted by national, provincial and municipal governments, as well as various business and civic stakeholders.
2 2007 –2017 Investor Education
Reached over 30 000 participants through 138 community seminars on how to save and invest, personal financial discipline, shares, dividends, bonds, the property and money markets, in villages, townships and cities countrywide.
3 2007 NEF Asonge Share Scheme
Attracted 87 000 investors (47% in GP, 16% in KZN, 9% in WC, 7% in LP, 6% each in NW & MPu, 4% each in EC & FS, and 1% in NC).
4 2007 –2017
Strategic Projects Fund
Venture capital fund responsible for driving the NEF’s contribution to industrialisation by increasing participation of black people in early-stage projects, especially in poverty nodes.
5 2008 –2017
Rural & Community Development Fund
Establishment of the Fund with the aim of unlocking the economic value that resides in our Rural Communities, through the provision of Funding to identified rural and community entrepreneurs, arranged as co-operatives..
6 2007 -2017
Advertising & media coverage Placement of adverts and stories in local, regional and national media countrywide.
7 2009 Business Plan & Mentorship launch
Workshops in every province raising awareness on the online solution for developing own business plans with financial projections. Over 24 000 registered users have accessed the tool.
8 2009 –2010
Eyethu Sonke Le BEE!
4 destinations in each province promoting understanding of B-BBEE, funding & access to government & private-sector procurement & enterprise development opportunities.
9 2009 -2017 Regional offices Opened regional offices in all provinces.
10 2011 –2017
Incubation &entrepreneurial training
Business skills training provided to over 2 898 beneficiaries who attended 109seminars to date, countrywide.
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Geographic spread of investments
GDP Source: Statistics South Africa; Gross Domestic Product, Fourth quarter 2016.
EC8%
FS2%
GP44%
KZN16%
LP6%
MP5%
NC2%
NW4% WC
13%
NEF Invested Portfolio by region by value since inception - 31 March 2017
WC
NW
NC
MP
LP
KZN
GP
FS
EC 7.8
5.1
34.1
16.0
7.2
7.5
2.1
6.5
13.6
GDP Contribution by Province - 2015
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Geographic spread of Rural & Community Development Fund (RCDF)
Widely represented in all the Provinces, though still low in FS and NC, but evenly concentrated in other provinces, with EC, KZN and MP predominantly sharing a significant % of businesses funded, principally because of tourism in KZN, with agro-processing (dairy & feedlot) and shopping complexes. The rest of the investment is spread across other Provinces but very low.
Limpopo4% Mpumalanga
5% Gauteng15%
North West11%
KwaZulu-Natal38%
Free State5%
Northern Cape1%
Eastern Cape19%
Western Cape3%
Geographical Spread of Investment by RCDF to date
Province % No of deals R000sLimpopo 3.72% 2 24 800
Mpumalanga 5.06% 4 33 703Gauteng 14.63% 7 97 542
North West 11.03% 5 73 500
KwaZulu-Natal 38.02% 13 253 469
Free State 5.42% 4 36 150
Northern Cape 0.54% 1 3 612Eastern Cape 19.04% 8 126 913
Western Cape 2.54% 2 16 900Total 100% 46 666 589
RCDF Investment Spread by Province
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Geographic spread of Strategic Projects Fund (SPF)
The SPF portfolio by value is spread almost evenly in KZN, WC, FS and GP. The NEF is making progress in increasing funding in other provinces with more projects as indicated by the portfolio by number in Mpumalanga. Regional offices are working extensively in increasing participation in other provinces.
SPF Investment Spread by Province
Province No of deals R000s %
Limpopo 2 12 000 1%
Mpumalanga 4 90 800 10%
Gauteng 7 78 336 9%
North West 3 52 216 6%
KwaZulu-Natal 4 242 900 28%
Free State 1 162 357 18%
Eastern Cape 2 131 957 15%
Western Cape 4 108 000 12%
Total 27 878 566 100%
Limpopo1%
Mpumalanga
10%Gauteng
9%
North West6%
KwaZulu-Natal28%
Free State18%
Eastern Cape15%
Western Cape12%
Geographic Spread of Investment by SPF
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iMbewu Investment Spread by Province
Province No of deals R000s %
Limpopo 24 143 665 10%Mpumalanga 27 113 191 8%
Gauteng 197 678 858 47%North West 13 41 420 3%
KwaZulu-Natal 40 168 205 12%Free State 22 32 802 2%
Northern Cape 1 8 750 1%Eastern Cape 24 120 072 8%Western Cape 51 142 607 10%
Total 399 1 449 570 100%
Geographic spread of iMbewu
Limpopo10% Mpumalanga
8%
Gauteng47%North
West3%
KwaZulu-Natal12%
Free State2%
Northern Cape1%
Eastern Cape8%
Western Cape10%
Geographic Spread of Investment by iMbewu
The iMbewu Fund portfolio by value is spread almost evenly in the EC, WC, LP and MP with GP being dominant. The NEF is making progress in increasing funding in other provinces with Gauteng at less than 50%. Regional offices are working extensively in increasing participation in other provinces.
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uMnotho Investment Spread by Province
Province No of deals R000s %
Limpopo 6 167 983 6%Mpumalanga 7 73 346 3%
Gauteng 87 1 678 448 59%North West 2 110 402 4%
KwaZulu-Natal 23 312 275 11%Free State 1 20 704 1%
Northern Cape 3 95 237 3%Eastern Cape 11 199 215 7%Western Cape 12 171 369 6%
Total 152 2 828 979 100%
Geographic spread of uMnotho
Limpopo6%
Mpumalanga3%
Gauteng59%
North West4%
KwaZulu-Natal11%
Free State1%
Northern Cape3%
Eastern Cape7%
Western Cape6%
Geographic Spread of Investment by uMnotho
uMnotho’s strategic intent is to drive black participation in medium to large enterprises, the majority of which are domiciled in Gauteng, which is reflected in this slide with the province comprising 59% of the Fund’s portfolio.
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Regional Offices1. The NEF has regional office presence in all
provinces. In the last financial year, approximately 65% of the number of approved transactions emanated from the regional offices and Pre-Investment Unit
2. This national presence ensures that the NEF reaches every area of the country including the remotest rural areas, where the poorest of the poor mostly reside.
3. The NEF always takes part in national (the dti, DED & DSBD), provincial and local government roadshows, as well as various other stakeholder events, to take its message to the people.
4. It is as a result of this that the NEF has successfully funded business ventures through its Rural and Community Development Fund, whose objective is to unlock value in rural and township communities.
Geographic Spread – Investor Education
Investor Education campaign has been rolled out in the Eastern Cape, Northern Cape, Free State, Limpopo, Western Cape,
North West, KZN, Mpumalanga and Gauteng with 4 seminars per province. Attendees: over 30 000 participants.
z
NORTHERN CAPE
FREE STATE
LIMPOPO
KZN
EASTERN CAPE
MPUMALANGA
NORTH WEST
GP
WESTERN CAPE
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Mahikeng, Lichtenburg, Rustenburg,
Hammanskraal, Vryburg, Taung
Klerksdorp, Potchefstroom,
Vuselela
Kimberley, Prieska,Kakamas, Keimoes,Upinton,
Kathu, Barkley West, Kuruman
Saldanha, Langa, Bellville Nyanga, Mannenburg / Gugulethu, Worcester, Caledon, Cornville –
George, Kwanonqaba-Mossel Bay, Kraaifontein, Saldanha, Malmesbury,
Paarl (Wellington)
Port Elizabeth, East London, King Williams Town, Mount Frere, Butterworth, Umtata,
Fort Beaufort, Grahamstown
Bloemfontein, Botshabelo, Welkom, Thaba Nchu, Qwaqwa,
Kroonstad, Ladybrand, Bethlehem
Seshego, Lebowakgomo, Lephalale, Bela-Bela, Thohoyandou, Giyani, Phalaborwa, Tzaneen,
Madzivhandila Agricultural College
Newcastle, Dundee, Ladysmith, Estcourt,
Pietermaritzburg, Port Shepstone, Newlands
East, Chatsworth, Umlazi. Kwa Mashu, Ulundi, Richards Bay,
Umfolozi
Springs, AlexanderSoweto, Diepsloot Ext 2, Soshanguve, Mamelodi
West, Krugersdorp Kagiso2, Sebokeng, Ekurhuleni,
Bronkhorstspruit, Tsakane, Katlehong,
Tembisa
Delmas Botleng,Secunda,
Ermelo, Piet RetiefEmalahleni, Middleburg,
Mbombela, Hazyview, MRTT Hotel Academy
NEF booklet on how to save and invest
NEF Annual Performance Plan
2017/18
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NEF Strategic Plan 2017/2018
Growing Black
Economic Participation
Advance B-BBEEApproval Targets:
2017/18 = R0.950bn2018/19 = R1.046bn2019/20 = R1.331bn Maximise Empowerment
DividendNew & existing jobs to be
supported:2017/18 = 4 0642018/19 = 5 6292019/20 = 7 170
Fund a Woman, Fund a Nation
40% of funding to be disbursed each year to women led enterprisesPromote a Culture of
Savings & Investment Host 32 Investor
Education seminars per year countrywide, in
villages & townships, on shares, dividends,
bonds, property & money markets etc
Creating Black Industrialists
Commercialise strategic projects geared to support
over 85 000 jobs
Financial Efficiency & Sustainability
Impairment Provisions 18%ROI between 9% – 10%
Collections ratio up to 80%
Other ImperativesObjective Outcome
1 GeographicSpread Grow investments across all provinces
2SustainableBlack Businesses
Provide ongoing business-planning & mentorship support, business & corporate governance training & incubation support
3 Reputation management
Entrench commitment to integrity among staff, investees and suppliers 25
Strategic Objective 1:
Provide finance to business ventures established and managed by black people
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Approvals & Disbursements
27
Targets over strategic Period in RmYear Approvals Commitments Disbursements
2017/18 950 745 6602018/19 1,046 839 9152019/20 1,331 1,065 1,165
Moratorum
749 749
1162
1332
418
895
1248
1067
0
200
400
600
800
1000
1200
1400
NEF Approvals by Value (R million)
424377
597
704636
562
819
699
0
100
200
300
400
500
600
700
800
900
NEF Disbursements by Value (R million)
28
Strategic Objective 2: Invest in black empowered businesses that have high employment creating opportunities.
Maximizing the Empowerment Dividend
28
Job-Creation since inception
29
31 March 2011
25 500 jobs
31 March 2012
28 624 jobs
31 March 2013
44 179jobs
31 March 2014
47 800 jobs
31 March 2015
81 618 jobs
Targeted number of jobs expected to be created or supportedYear No. of jobs
2017/18 Support 4 064 new or existing job opportunities2018/19 Support 5 629 new or existing job opportunities
2019/20 Support 7 170 new or existing job opportunities
31 March 2016
86 859jobs
31 March2017
92 189jobs
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Strategic Objective 3: Support the participation of black women in the economy
Maximizing the Empowerment Dividend
Targeted women ownershipYear Percentage of (Annual)
Portfolio Disbursed2017/18 40%
2018/19 40%
2019/20 40%
2016/17Performance
34% of portfolio disbursed is owned
by women
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Strategic Objective 4: Facilitate investment across all provinces in South Africa
Maximizing the Empowerment Dividend
Targeted Disbursements in under-represented provinces (NC, NW, FS,
LP, MP &EC)Year Percentage of Annual
Disbursements2017/18 25%2018/19 25%2019/20 25%
EC8%
FS2%
GP44%
KZN16%
LP6%
MP5%
NC2%
NW4%
WC13%
NEF Invested Portfolio by region by value since inception - 31 March 2017
32
Strategic Objective 5: Encourage & promote savings, investment & meaningful economic participation by black people
Optimising Non-Financial Support
Targeted number of investor education seminars held across the country
Year No. of Seminars per year2017/18 322018/19 322019/20 32
2016/17 Performance
48 investor education seminars were held
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Strategic Objective 6: Black economic empowerment is advanced through commercially sustainable enterprises
Optimising Non-Financial Support
Indicators 2016/17 Performance
2017/18 2018/19 2019/20
6.1 Number of Business Today Training Sessions provided
21 18 18 18
6.2 Number of entrepreneurs who successfully complete business incubation
30 15 15 15
6.3 Number of Social Facilitation sessions for NEF investees
42 18 18 18
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Strategic Objective 7: Establish the NEF in the South African economy as a credible and meaningful DFI
Optimising Non-Financial Support
Targeted brand awareness levels (*biennial survey)
Year Brand awareness levels2017/18 N/A*2018/19 75%2019/20 N/A*
2014/15 Performance
81% Brand awareness2016/17 Performance
Target = 70%86% Brand awareness
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Strategic Objective 8: Establish the NEF as a sustainable DFI.
Financial Efficiency And Sustainability
Indicators 2016/17 Performance
2017/18 2018/19 2019/20
8.1 Percentage of Portfolio Impaired
17.60% 18% 18% 18%
8.2 Targeted ROI 8.03% 9%-10% 9%-10% 9%-10%8.3 Collections Ratios
101.79% 80% 80% 80%
Life to Date Performance MilestonesOutput Achievements
1 Approvals Benefited black entrepreneurs through approval of 852 transactions worthmore than R8.6 billion across the country.
2 Disbursement Approximately R5.8 billion has been disbursed to these companies since inception.
3 Integrity Secured unqualified external audit opinions for 11 years running.
4 Supporting jobs To date the NEF has supported in excess of 92 189 jobs (new jobs 63 989 ).
5 Industrialisation 27 strategic and industrial projects worth R28.67 billion, with the potential to support over 85 000 jobs.
6 A culture of savings & investment
In a transaction worth over R1 billion the NEF Asonge Share Scheme madeavailable more than 12 million MTN shares to over 87 000 investorscomprising black individuals and groups. 49% of investors were women.
7 Investor educationReached over 30 000 people in villages and townships through 138community seminars on how to save and invest, personal financial discipline,shares, dividends, bonds, the property and money markets.
8 Entrepreneurship training / incubation
Business skills training provided over 2 898 potential entrepreneurs who attended 109 seminars from 2012 to date.
9 National footprintRegional offices in all provinces. Approximately 65% of the number ofapproved transactions emanated from the regional offices and Pre-InvestmentUnit, year to date as at 31 March 2017.
10 Collections Over R2.3 billion has been repaid by investees.36
Cash Collected
37
Over R2.3 billion collected cumulatively from loans disbursed across the country, in black-owned and managed businesses across virtually all sectors of the economy.
Portfolio Receipts (Rm)
Key Priorities
38
1. RECAPITALISATION:• IDC
o The business combination process with the IDC has been approved by the
Minister of Trade & Industry and the Minister of Economic Development. The
process is now moving through the requisite legal and regulatory processes.
o As part of the business combination process, the Ministers have recommended
that the IDC grants the NEF a bridging facility effective 1 April 2017 to continue
its operations pending finalisation of the business combination process. The IDC
has since granted a facility of R500 million. However the terms of the facility are
still being negotiated.
• PIC
o An application for a PIC facility of R1 billion is currently in progress. The PIC has
concluded a due diligence process and the application is going through to its
relevant approval structures.
• UIF
o The NEF has applied for subsidies for non-financial support. An application for
R50 million has been submitted to UIF’s Labour Activation Programme which
promotes programmes that create/preserve jobs.
Projected unencumbered cash position
39
Notes:
• Actual cash at 31 March R1.35 billion
• R369 million uncommitted cash at hand
• To discharge 2017/18 strategy, at least R500 million would be required as cash injection
Key Priorities (cont…)
2. CREDIT RISK:
• Due to the high-risk mandate of the NEF, credit risk is considered a
critical-to-high exposure area.
• The tough economic conditions and low growth rates have negatively
impacted on businesses supported by the NEF, subsequently resulted in
an increasing number/value of transactions in distress. The recent
downgrade in credit ratings could aggravate economic conditions
• Initiatives to ensure the sustainability of the portfolio include:
o Enhanced screening, due diligence and credit risk assessment
processes.
o Increased focus on distressed clients through closer Post-Investment
monitoring and portfolio management.
o Improved credit collection processes.
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Key Priorities (cont…)
3. CONTINUED ALIGNMENT TO NATIONAL PRIORITIES:
• Harnessing economic growth potential & job creation – Explore growth
sectors and identify possible opportunities for the NEF.
• Black Industrialists Programme – to continue the development of black
industrialists through the Strategic Projects Fund.
• A lack of funding will negatively impact on the successful implementation of the
mandate.
4. PEOPLE RISK:
• The NEF could lose key personnel and specialist skills due to uncertainty
regarding the impact of the business combination processes.
• Interventions may be required in order to quell uncertainty and stabilise attrition
levels.
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5. Advocacy:
Alignment with government objectives – support is required to
promulgate legislation to effect new industries, allowing us to invest in
strategic sectors in support of key government initiatives and job
opportunities creation (See Mabele and Kenako Medical Case
Studies)
Key Priorities (cont…)
43
Alignment with government Objectives –Mabele Fuels Case Study:
Location Bothaville, Free State
Project Development Stage Pre-Financial Close
NEF Investment to date R62.35 million
NEF Equity 20.22%
Project Promoter Mabele Fuels Pty Ltd
Projected Financial Close Requirement R2.2 billion
Jobs 16 700
• The project intends to develop a circa 154 million litre per annum fuelgrade bioethanol plant in Bothaville, in the Free State Province.
• The plant feedstock is grain sorghum and the production methodologyinvolves a process utilising grain milling through starch conversion tosucrose as well as fermentation and drying that ultimately culminates inthe production of saleable bioethanol.
Mabele Fuels Case Study /cont…
Development impact of the project:• A high job creator with an estimated cost per job relatively low at
approximately R149,700;• Use of agricultural outputs in project creates opportunities for
community ownership through community trusts and/oremployee ownership schemes;
• Opportunity for rural socio-economic development;• A green environmentally friendly alternative to the conventional
use of fossil fuels;• Provides for greater fuel security in countries such as South
Africa with no oil reserves.
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Mabele Fuels Case Study /cont…
Support needed for the project:
• Financial close was reached in late 2012 with the expectation for fund
drawdown in 2013; plant should have been operational by October 2015.
• A key Condition Precedent to fund drawdown post Financial Close was the
finalisation of the Government’s Biofuels sector subsidy mechanism, which
unfortunately currently remains oustanding.
• The project is therefore still on hold pending a response from the
Department of Energy regarding the subsidy mechanism to be adopted for
the Biofuels Industry.
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Kenako Medical Case Study
Location Coega IDZ, Eastern Cape
Project Development Stage Financial Close
NEF Investment to date R75 million
NEF Equity 70%
Project Promoter Kenako Medical Pty Ltd
Projected Financial Close Requirement R180 million
Jobs 108
• Kenako intends to develop the sole manufacturing plant of normal and safety syringesin the SADC region.
• The plant will initially produce a total of 250 million syringes and 200 millionhypodermic needles per annum.
• The NEF commenced with a R7.2 million feasibility study funding in 2013 and gave ahands on approach in assisting the Black Industrialist in bringing the project tobankability.
• Earlier this year the NEF made a further commitment towards the construction of theplant bringing the NEF’s total investment to R75million.
Kenako Medical (cont…)
47
Development impact of Project
Specialised skills transfer for the operation and maintenance toKenako staff;
Import Replacement: Kenako will be the sole manufacture ofsyringes and needles in South Africa replacing 20% of imports intothe South African and SADC syringe markets;
NEF’s equity to be warehoused for the future benefit of B-BBEEentities; Kenako is currently 100% black owned;
Strategic Sector Alignment with IPAP2, NGP etc. Furthermorethe investment will be supporting a capable black industrialist;
Geographic Diversification: The project will be based at theCoega IDZ in the Eastern Cape, increasing investment in thiseconomically depressed region.
Support needed for the Project
• Partial Designation of government procurement of syringes by Department of health in order to secure sales for Kenako;
• Allow for exceptions to the generic requirements for designation by ITAC in projects of strategic nature such as Kenako;
• Expedite SAHPRA Regulation for medical devices in particular syringes to lower influx of poor quality imports;
• Assistance in obtaining grant funding for international product certifications i.e. FDA, CE etc.
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Kenako Medical (cont…)
Empowering farm workers to become entrepreneurs
49
Background
• The NEF and DRDLR concluded an MOU in January 2016 to partner in
implementing some DRDLR programs.
• The Honourable Minister Nkwinti requested the NEF to pilot 10 projects
under the “Strengthening of Relative Rights” programme (“SRR”) to
benefit mainly farm workers and communities to acquire economic
interests in the agricultural land and businesses where they are
working and/or living.
• The SRR policy entails the farmer acquiring 50% of the business, farm
workers acquiring 50% (of which 5% will be allocated to NEF) to be
operated under NEWCO. The land is then acquired by the state and
leased back to the business for 30 years.
• The NEF and DRDLR concluded a Service Level Agreement in
February 2016 to implement the SRR Pilot projects, which pilot, as
outlined below, was successful.
• DRDLR handed 30 SRR projects to the NEF for implementation by 31
March 2017.
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Background Cont…
51
• The NEF scope of work is to:
o Undertake high level due diligence investigations after
receiving valuation reports from the Valuer General;
o Negotiate business and asset prices on behalf of DRDLR;
o Propose commercially sound transaction structures;
o Draft investment reports for submission to the Ministerial
Technical Task Team (MTTT) and the Ministerial Co-
ordinating Committee (MCM);
o Conclude legal agreements;
o Disburse committed funds;
o Facilitate the establishment of NEWCO’s and B-BBEE
structures;
o Act as an implementing agent for SRR on behalf of DRDLR;
o Provide social facilitation and Post Investment support.
Scope of NEF Work
• Due Diligence• Price negotiations• Transaction agreements
• Employee lists• Warehousing• Implementation
• Social facilitation• NEF 5% shareholder• Monitoring and mentorship
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Milestones to dateName of
FarmProvince Number of
beneficiariesAmount
ApprovedIndustry Status
Dubchick Limpopo 6 R21 000 000 Game Farming Partly Disbursed
KleinmondenRivier
Eastern Cape
40 R10 500 000 Pineapple farming & Processing
Fully Disbursed
Sun Orange Farms
Eastern Cape
58 R38 067 000 Citrus Farm Agreements to be signed
Solms Delta Eastern Cape
45 R65 000 000 Vineyards for wine production
Fully Disbursed
BirburyFarming
Eastern Cape
29 R5 320 903 Pineapples Fully Disbursed
Westcliffe Farm
KwaZulu-Natal
55 R33 000 000 Vegetables, sugar cane, Timber
Partly Disbursed
Hoogland Western Cape
18 permanent180 Seasonal
R 75 100 000 Table Grapes, vegetables slice &dice
PartlyDisbursed
Louie Meyer North West 10 R55 238 000 Cattle farming PartlyDisbursed
Marolien Gauteng 102 R30 433 000 Herb Farm Agreementssigned
Saamstaan Western Cape
56 R160 492 000 Wine Grape Farming Agreements to be signed
JurgensBoedery
Limpopo 42 R44 000 000 Game Farm Agreements to be signed
Gannahoek Free State
253 R52 444 310 Nuts, Sheep, Crop & game
Approved
Zuurefontein WC 12 employees R 59 296 935 Potatoes & Onions Approved
Total R649 892 148
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Milestones
Better prices negotiated
Going concern principle
Unlocking hidden value
30 farms worth over R1 bn
13 transactions approved R649 million
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Milestones cont…
Strict disbursement terms
Retention of IP, trademarks, markets & goodwill
Pioneering a new approach in land restitution
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Negotiations in progressName of
FarmProvince Beneficiaries Amount Industry
Bergstroom KZN 192 employees R 360 000 000 Maize, Cattle Farming
Bos Blanco FS 80 employees R 400 000 000 Game, cattle, grains
Masisweni EC 56 employees TBC Livestock, crop, processing
Morgenzon FS TBC TBC Cattle, sheep, game
Slagterskop NC 3 employees R 8 500 000 Sheep farming
Fremax Farms MP TBC R 410 000 000 Potato, maize, feedlot
Siyakhathamela KZN TBC TBC Sugar, Tannery, livestock
Thumamina KZN TBC TBC Sugar, Tannery, livestock
Seven Oaks KZN 100 employees TBC Sugar, timber, livestock
Mikon Farming MP 187 employees R 62 000 000 Poultry
Karsten Group NC TBC TBC Table grapes
TOTAL R 1 240 500 000
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Developmental Impact
Social cohesion
Revitalisingrural economy
Security of tenure
OneHousehold
One Hectare
Farmworkers are
entrepreneurs
57
Plan Going Forward• To ensure the sustainability and efficient operation of all these business by
actively monitoring progress.• To establish corporate governance structures.• To promote more similar transformation partnerships with other
interested farmers in all provinces.• To empower through skills development, and capacity building of the
workers for active participation in the operation and management ofthese business.
• To develop Social development & empowerment plans from spin offopportunities.
• To Link the businesses to more international markets and createmarket linkages amongst them.
• To ensure the land tenure rights are realised by the beneficiaries.• To ensure that proper housing structures are built for the beneficiaries.• Implement the one household one hectare programme for more
economic activities.• Create smaller businesses on the household hectares and link them to
market.
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Organizational Structure …
Executive (member of Exco)
Senior manager
Manager
STRATEGY & PLANNING
SYSTEMS & IT
CHIEF FINANCIAL OFFICER
FINANCE
SUPPLY CHAIN MANAGEMENT
COMPLIANCE & RISK
INTERNAL AUDIT
SECRETARIAT
CHAIRMAN
BOARD OF TRUSTEES
AUDIT COMMITTEE
RISK MANAGEMENT COMMITTEE
HUMAN CAPITAL & REMUNERATION COMMITTEE
BOARD INVESTMENT COMMITTEE
CHIEF EXECUTIVE OFFICERCHIEF EXECUTIVE OFFICER
LEGAL SERVICES
DIV EXECSMEs and Rural Development
iMBEWU FUND
PRE-INVESTMENT BUSINESSSUPPORT
EXEC CORPORATE SERVICES
HUMAN RESOURCES
FACILITIES MANAGEMENT
MARKETING & COMMS POST-INVESTMENT BUSINESSSUPPORTRURAL & COMMUNITY DEV.
STRATEGIC PROJECTS
FUND
UMNOTHO FUND
DIV EXEC :Venture Capital and
Corporate FinanceGENERAL COUNSEL
REGIONAL OFFICES
SOCIO-ECONOMICDEVELOPMENT UNIT
& ASSET MANAGEMENT
TURNAROUND, WORKOUTS &
RESTRUCTURE UNIT
SOCIAL AND ETHICS COMMITTEE
Headcount: 157Optimal/budgeted headcount: 195
59
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Thank youContact Details
www.nefcorp.co.za
WHERE TELEPHONE1 Head Office,
Johannesburg011 305 8000 or 0861843 633 / 0861 THE NEF
2 Eastern Cape 0861 633 327 / 0861 NEF ECP3 Free State 0861 633 377 / 0861 NEF FSP4 KwaZulu Natal 0861 633 596 / 0861 NEF KZN5 Limpopo 0861 633 546 / 0861 NEF LIM6 Mpumalanga 0861 633 678 / 0861 NEF MPU7 Western Cape 0861 633 927 / 0861 NEF WCP8 North West 0861 633 697 / 0861 NEF NWP9 Northern Cape 0861 633 627 / 0861 NEF NCP