NATIONAL EMPOWERMENT FUND

Presented by Mr Phakamile Madonsela Regional Manager: KZN

History of Organization

▪ Established through the National Empowerment

Fund Act No 105 of 1998

▪ Government Agency under the Department of Trade

Industry and Competition (dtic) exclusively

mandated to grow BBBEE

▪ Capitalised by government in 2005 with R2.4billion

▪ Is represented in All 9 Provinces (Gauteng, KZN,

EC, MP, NW, LP, WC, FS, NC)

▪ Large SME Funder in South Africa with more than

R10.1 billion worth of assets under management

1

NEF Mandate…

2

……..a driver and

a thought-leader in promoting and

facilitating black economic participation

through the provision of financial and

non-financial support to black empowered

businesses, as well as by promoting

a culture of savings and investment

among black people.

The NEF is an agency of the dti and is the

one of 4 DFIs exclusively mandated to

grow B-BBEE

2

3

COVID-19 BLACK BUSINESS

FUNDING SOLUTION

4

COVID-19 Black Business Fund

Background

• South Africa still needs vast quantities of Medical Supplies and Personal

Protective Equipment (PPE) for the country in particular the health sector

to deal with the expected load of COVID-19 cases.

• It is estimated that the country has 4 weeks’ worth of stock left for frontline

medical staff and other essential health workers.

• While the subsiding coronavirus crisis in China has freed up some of its

capacity to export, some 180 countries are all currently competing for the

same products.

• This has necessitated the South African Government and Its Agencies to

support local manufacturing to secure diminished stocks.

5

COVID-19 Black Business Fund

Funding Solution

• The Department of Trade, Industry and Competition (dtic) in partnership

with the National Empowerment Fund (NEF) call upon Black-Owned-

and- Controlled Businesses to come forward for funding geared at

supporting the manufacture and supply of various Medical Supplies and

Personal Protective Equipment

• R200 million has been set aside to be administered by the NEF under the

COVID-19 Black Business Funding Solution as a blended facility for

SMEs that manufacture and supply Identified Priority Products to

access concessionary loan funding.

• By supporting Black-Owned-and-Controlled businesses through the

COVID-19 Black Business Fund, the NEF is helping to fight the pandemic

while taking sustainable economic transformation forward,

6

COVID-19 Black Business Fund

Funding Solution

.

Salient Features of the Fund:

• Limited to R10 million per applicant for working capital,

machinery and equipment soft loan funding;

• Up to 12 months payment moratorium at 0% fixed interest

rate;

• After 12 months a fixed interest rate of 2,5% will apply;

• Maximum term is 60 months, including moratorium, and

• First drawdown must occur within 1 month from approval

date.

7

COVID-19 Black Business Fund

Funding Criteria

• Have greater than fifty percent (>50%) Black shareholding and

management control. Must be directly involved in the day-to-day running

of the operation and must have requisite expertise and experience in the

sector. Owned by Black South Africans as defined by the Broad- Based

Black Economic Empowerment (B-BBEE) Act.

• In line with the NEF’s transformation mandate, preference will be given to

applications that demonstrate meaningful black women ownership,

management and control.

• Have a project with a minimum of R500 000 and maximum R10 000 000

requirement in working capital, machinery and equipment.

• Must result in retaining or increasing direct jobs.

• Submission of all relevant documents for commercially viable applications.

8

COVID-19 Black Business Fund

Funding Criteria

• Be a registered legal entity in South Africa in terms of the Companies Act,

2008 (as amended); the Close Corporations Act, 1984 or the Co-

operatives Act, 2005.

• Be a taxpayer in good standing with a valid tax clearance certificate at

assessment as well as before the loan is disbursed.

• Be a current and registered supplier with retailers and other institutions in

good standing and/or have a purchase order/ contract/ letter of intent.

• Require Working Capital or funds to purchase Machinery and Equipment.

• The fund WILL NOT service any pre-existing debt or help settle monies

owed.

9

COVID-19 Black Business Fund

Key Documents• NEF application form (accessible on NEF website: www.nefcorp.co.za).

• Company Registration, Tax Compliance and FICA Documents

• Declaration on BEE status and size of business.

• Summary of production in the last 3 months.

• Copy of the historical financial statements (up to 3 years if any), latest

Management Accounts and/or Financial Projections and Assumptions

• Signed copy of the contract, purchase order, letter of intent or letter of

confirmation of retailer/wholesaler listing from the applicant’s client/s.

• Industry Body Accreditation of Products

• Additional information that would be necessary to enhance application

10

COVID-19 Black Business Fund

Products Supported

• Medical Gloves

• Approved Cloth and Polypropylene Face Masks

• Sanitizers and Soaps

• Disinfectants and Alcohol Based Wipes

• Corona Virus Test Kits,

• Medical Protective Clothing

• Hospital Linen and Clothing

• Detergents and Cleaning Products,

• Disposable Aprons and Cups

• Dispensers (Water, Sanitizers and Soap)

• Mattresses and Sponges

• Steel Hospital Beds

• Protective Respirators

• Toilet Paper

11

V-Care Medi

• Start-Up Distribution Company

• 100% Black-Youth-Owned

company with 50% black female

youth and 50% black male youth

participation

• Obtained order to supply 100

000 three-ply masks against

which company has an

irrevocable letter of guarantee of

R1.04 million from Impulse Care

Pharmacy, which is an existing

customer of V Care.

• on the successful completion of

this specific order, The client has

confirmed, consistent orders of

300 000 masks per month, even

post-Covid-19, from company

• 3 jobs maintained and 2 Jobs

Created

R950 500 Supply 3-Ply Masks

12

Green Logik

• Existing Business with 6 tears

experience in the Chemical

Industry

• Business is 100% Black-Owned

by Dawn and Barry

• Specialises in the production of

hand sanitizers which contain

essential oils such as lime,

lavender, spearmint, citronella,

tea tree and lime.

• The product is sold locally to

retailers, corporates and individual

clients.

• Received order of R5 million from

Pick n Pay for the supply of hand

sanitizers.

• Funding Required for additional

sachets and filling machines to

package units.

• 27 Jobs Maintained.

R6.1million to produce Hand Sanitizers

13

Afro-Zonke Chemicals

• Existing Business with 8years

experience in Chemical sector

• 100% Black-Owned-and Manged by

Mr Sthembiso Mkhize

• In 2019 the company won the Black

Industrialist of the year from 6th

Annual South African and Brand SA

KwaZulu Natal Investor Awards

• It specializes in the manufacture of

numerous industrial and household

chemical products

• Has existing contracts and orders in

excess of R50 million for

Disinfectants and Detergents.

• Obtained over R5million Orders for

Hand Sanitisers

• Required Equipment and Raw

Materials to extend its operations to

hand sanitizers,

• 14 Jobs Maintained and 8 Jobs

Created

R10million funding to produce hand

sanitisers, detergents and disinfectants

14

RISE UNIFORMS

• Existing Business with 5years

experience in clothing Industry

• 00% black woman-owned and

managed business led by Ms Ms

Ntobekhaya Nonxuba

• Specialises in manufacturing of

clothing for a wide range of items

such as corporate uniforms and

school wear.

• Obtained purchase order for the

manufacturing and supply of 7 million

disposable and reusable face masks,

• Funding required towards specialised

equipment and raw materials

• Manufacturing capacity of 55 000 face

masks per day.

• 43 Jobs Maintained and 20 new jobs

created

R10million funding to produce 7 million face masks

15

Tara Healthcare

• Excising Business with 4.5years in the

Medical Supplies Industry

• 100% Black-Owned-Business owned

by Nicholas Naidoo

• Specializes in the manufacturing of

medical and surgical supplies

• Opportunity to respond to increased

demand for personal protective

equipment and medical supplies such

as N95 face masks, hand

disinfectants, full bodysuits, isolation

gowns, infrared thermometers and

medical gloves.

• Customers include the Department of

Health, South African Police Services,

Transnet and pharmaceutical

companies

• Required working capital funding to

increase production, expand its

supplies and deal with the demand to

assist the country

• .15 Jobs Maintained

R10million to produce Medical Supplies

▪ Proactive Marketing

▪ Pre-Investment

basic evaluation

▪ Screened Report referred to Funds’ Due Diligence Committees

▪ Up to R5m approved by FM IC

▪ Loan Agreements drafted in-house

▪ Files handed to POIU– Allocated to Post IA

▪ Initial hand over site visit thereafter at least quarterly

▪ Regular risk ratings performed by POIA, minimum once a year.

▪ Mentorship provided

▪ Collection with Finance

▪ Monthly PMC Meetings

▪ Distressed investments transferred to TWR

▪ Investment

team networks

▪ Detailed screening by A’s

▪ DD performed based on nature of deal

▪ Above R5m recommended to EXCO IC

▪ Most equity agreements also drafted in-house

▪Referrals from external stakeholders (e.g. deal originators, business incubation centers & other government agencies

▪ NEF Operating Manual applied

▪ EXCO IC approves up to R15m

▪ Legal compliance by FM IC Management

▪ Walk-in Clients ▪ Final Investment Paper reviewed by FM IC

▪ Credit Risk Assessment Process

▪ Above R15m to R50m approved by Board IC

▪Funds disbursed

▪ Above R50m approved by Board of Trustees

15

Deal

OriginationScreening

Due

Diligence

Approval

Stage

Legal

Stage

Post

Investment

16

17

18

18

Telephone: 073 687 9962

(031) 301 1960(011) 305-8080

Address: 4th Floor

Grindrod Bank Building

5 Arundel Close

Kingsmead Office Park

Durban

Email: madonselap@nefcorp.co.zacovidfund@nefcorp.co.za

Web: www.nefcorp.co.za