Sefa’s Offerings and Current Programmes for Small

Businesses & Co-operatives

Mr Thakhani Makhuvha - CEO

24th August 2017

Presentation Outline

1. Overview of sefa

2. The Role of SMMEs & Co-operatives in addressing Policy Imperatives & financial inclusion

3. Sefa operations

4. Developmental impact

5. Case studies: Clients financed by sefa participating in the medical field

2

Overview of sefa

3

Introducing sefa

Established April 2012 (merged entity)

Corporate Type State-owned Company registered in terms of the Companies Act

Executive Authority Department of Small Business Development (DSBD)

(MoU between EDD & DSBD)

Shareholding 100% owned by the Industrial Development Corporation Limited (IDC)

Major Funding Sources SA Government & IDC

Mandate To be the leading catalyst for development of sustainable SMMEs

and Cooperatives through the provision of finance

Number of employees 239

Governance

Schedule 2 under the PFMA, similar to the shareholder’s, the IDC.

Follows normal company policies and procedures in compliance with the

PFMA & the Companies Act, amongst others

Unqualified audit opinion since establishment

4

Role of SMMEs and Co-operatives in addressing Policy Imperatives & financial inclusion

5

SMMEs - important policy instrument

1. National Development Plan (2012)

− NDP target to create 11 million jobs by 2030.

− SMMEs to create 90% of job opportunities.

− Public and private procurement to stimulate demand for SMMEs products

and services

2. Industrial Policy Action Plan (2015/16 – 2017/18)

− Prioritisation of labour intensive sectors with the view to increase job

opportunities; increasing their participation in global value chains and

broadening economic participation.

3. Nine Point Plan (2015)

− Unlock the potential of SMMEs and Cooperatives, township and rural

enterprises (Point 7).

Support to the informal sector

30% set-aside policy to support SMMEs and cooperatives.

4. 14-Point Economic Recovery Plan (2017)

– In an endeavor to promote an inclusive growth and achieve

NDP’s Vision 2030, the government proposed 14 interventions

across various economic sectors and more collaboration

between the state and the private sector.

Unemployment

Poverty

Inequality

…addressing

SMMEs policy implementation is

informed by the White Paper (1995),

National Small Business Act (1996) & the

Integrated Small Business Development

Strategy.

6

sefa objectives and SMME Challenges

Access to finance and credit

Poor physical infrastructure

Low levels of research &

development

Weak linkages between small and

larger firms

Onerous labour laws

Inadequate educated workforce

Ineffective government

bureaucracy

High level of crime

Lack of access to markets

Most local SMMEs seldom survive beyond their nascent phases, lasting for an average

of less than 3.5 years. 7

sefa was established to: Challenges faced by SMMEs

provide access to finance in an efficient and

sustainable manner to the local SMMEs,

issue wholesale lending to financial intermediaries &

direct lending SMMEs and Co-operatives,

provide credit guarantee(s) to financial institutions &

suppliers that issue funding to SMMEs and Co-

operatives,

facilitate, promote, guide & assist in the financing of:

• new & existing SMMEs,

• Schemes for the expansion, better organisation

& modernization of the more efficient

undertaking of operations in existing SMMEs &

Co-operatives,

stimulate economic empowerment of the historically

disadvantaged communities & persons,

encourage the creation and growth of new

knowledge-based SMMEs & Co-operatives.

sefa operations

8

Strategic & operational principles

Market Failure

Catalytic & unlocking latent potential

Transformative & inclusive

Partnership

Target most vulnerable

9

Strategic focus areas

Services (including retail, wholesale and tourism)

Manufacturing (including agro-processing)

Agriculture (especially land reform beneficiaries and contract-farming activities)

Construction (small construction contractors)

Mining (specifically small miners)

Green industries (renewable energy, waste and recycling management)

In the followings strategic sectors of the economy:

Targeted % of disbursements

• black entrepreneurs 70%

• women 45%

• Youth 30%

• people in rural communities and townships 45%

• people living with disabilities 2%

Targeted ownership groups:

10

High appetite for risk in exchange for high developmental impact

Provision of capital and/or interest moratorium up to 12 months (for term loans)

Financing SMMEs including start up businesses that are often perceived as high risk

Addressing the financing gap for loans below R500k

Provision of pre and post loan business support

Provision of funding to entrepreneurs with adverse credit records provided they

can demonstrate active remedy of their indebtedness

Lending not solely based on security backing

Specific focus on targeted groups

Own contribution dependent on entrepreneurs financial ability

Strategic differentiation

11

Lending model

12

Equity

Products & Services

13

Fund Management Services

In granting loan financing to qualifying businesses, the applicant must

be a South African citizen and permanent resident

be a legally registered* with fixed physical address

be within the required contractual capacity

be registered and operate in South Africa

have a written proposal or business plan that meets the

requirements of sefa’s loan application criteria

be a majority shareholder as the owner manager of the business

have provided personal and/or credit references (if available)

have a valid Tax Clearance Certificate

Loan criteria

* Referring to direct clients 14

Developmental Impact

15

Funding activities

2012/13 2013/14 2014/15 2015 /16

440

1,065 1,009

1,109

198

822

1,294

1,168

Approvals & Disbursements

(R’million)

Cumulative Approvals – R3,6 bn

Cumulative disbursements – R3,4 bn

16

Development impact

2012/13 2013/14 2014/15 2015 /16

Enterprises funded & Jobs facilitated

• Enterprises Funded – 193 320

• Jobs Facilitated – 202 876

28,362

46,407

68,724

54,833

19,853

46,402

60,169

75,670

17

Development impact (% of disbursements)

18

2013 2014 2015 2016

Youth-owned

enterprises 16% 21% 23% 24% R275m

Women-owned businesses

39% 49% 37% 41% R474m

Black-owned businesses 78% 81% 74% 79% R923m

Facilities less than R250K 45% 34% 21% 24% R281m

Enterprises owned by

People with Disabilities Not measured 0% 1%

R8.5m

Case Studies

19

Renal Care Team Inc

• Renal Care Team Inc. is a start up business situated in KwaMashu. The business caters for the medical needs in the area.

• The services offered are high quality haemodialysis treatment and patient care to chronic renal failure patients. Most patients undergo haemodialysis treatment thrice a week at the cost of about R2500 per visit. Each session takes 4 hours. (Bear in mind that kidneys work 24hrs a day).

• The applicants contacted sefa after searching the internet to access funding for start-up businesses.

• sefa funding is assisting a black youth and black female to get into business for the first time. Three new employment positions initially will be created, as the unit grows, more jobs will be created.

• The unit is a much needed service catering for the Inanda, KwaMashu and Ntuzuma area. It is the first , the renal unit in the area and is equipped with state of the art equipment.

• The unit will eventually have 8 dialysis machine which should suffice to cater for the community demand. Renal failure over the years has increased and there is currently a shortage of units especially at KwaMashu.

Key information

• Location: KwaMashu

KwaZulu Natal

• Job creation: 3 jobs

• Funding amount: R2 763 594

• Sector: Medical

20

Deline Investments

• The company is 100% owned by Maropeng Modiba

Family Trust

• The directors have extensive experience in the

management of retail pharmacy business and have been

in the industry for the past 18 years.

• The vision of this company is to become a leading retail

pharmacy group in Limpopo province, representing the

pride of young black entrepreneurs in the profession of

pharmacy

• The company intend to take pharmaceutical care where

it did not previously exist, in line with the government’s

intentions and objectives

21

Key information • Location: Polokwane

• Job creation: 15 jobs

• Funding amount: R900 000

• Sector: Pharmaceutical

Rite-Care Pharmacy T/A Parks-Med

• The business is 100% black owned by Aluwani

Mulingwe, who is a Pharmacist.

• Rite – Care Pharmacy was registered in 2012 for the

provision of prescription and non–prescription

medications to the members of the general public.

• The client is a repeat sefa client who had been

funded in 2013 for R496,790 to open up a Pharmacy

in Ladanna, Polokwane. This loan was repaid in

December 2014.

• The client approached sefa for a R498,913 loan to

.expand his business with a store in the Corner

Church and Marshall Streets in Polokwane.

• The business is one of the national Gazelles that has

been identified by DSBD

• No mentor was appointed for this client.

22

KEY INFORMATION • Location: Limpopo, Polokwane

• Jobs created and maintained: 8

• Funding amount: R498,913

• Sector: Pharmaceutical

TC Pharmacy (Pty) Ltd

• TC Pharmacy (Pty) Ltd is a private company formed in

2012. The company is owned by two brothers Messrs’

Tinyiko Gift Mangolele and Stanley Mangolele with 70%

and 30% shareholding respectively. Mr. Tinyiko Gift

Mangolele is the manager of the business. He is

knowledgeable and has pharmaceutical industry

experience.

• Business Description: Pharmaceutical

• The client heard about from seda.

• A loan amounting to R490 000.00 was approved to

establish a new retail community pharmacy business in

Malamulele Township. No mentor was recommended

for the client. .

• The company is owned by two black brothers and is

situated at Malamulele Township approximately 193 km

North - East of Polokwane. The project created 7

permanent jobs.

23

Key information • Location: Limpopo & Malamulele

• Job creation: 7 jobs

• Funding amount: R490 000

• Sector: Pharmaceuticals

Lethabo Radiology

• Lethabo Radiology (Pty) Ltd was registered in 2012 and been in

operation for the past year and 9 months

• The company is 100% black youth and woman owned by Ms

Ntsoaki Maria Molai. This is an existing business wanting to

expand. In the expansion plan the owner wants to procure two

additional equipment for a new practice that will be opening in

Belfast

• The current Practice is based in Middelburg in a township called

Mhluzi

• Lethabo Radiology (Pty) Ltd is currently providing X-ray and

Ultra Sound services and with this expansion, it will be providing

the same services in Belfast

• sefa has approved a loan to the tune of R1.5m to finance the

procurement of a set of X-Ray and Ultra Sound Equipment as

well as 3 months working capital

24

Key information • Location: Mpumalanga, Middelburg/

Mhluzi.

• Job creation: 2

• Funding amount: R 1 535 794.40

• Sector: X Ray and Ultra Sound Services.

Xolisa Menemene Radiographers (Pty) Ltd

• Xolisa Menemene Radiographers (Pty) Ltd is a new company

registered in 2015 and will provide x-ray images and report

services to doctors and patients in the township of Kwa-Dwesi

in Port Elizabeth.

• The company is 100% owned by Mr. Xolisa Menemene a

qualified Diagnostic radiographer with 7 years’ experience.

• The owner saw an opportunity of a lack of radiographers in the

townships of Port Elizabeth and established the x-ray imaging

business to be based in a township

• The owner resigned from his job at a government hospital to

put his financial resources into to business for renovating the

premises and to buy equipment.

• The funding from sefa was used to acquire the x-ray machines

and provide working capital

• Additional support from sefa came in form mentorship at no

cost to the client

Key information • Location: Kwa Dwesi Port Elizabeth

• Job creation: maintained 1 and

created 1

• Funding amount: R 778 000

• Sector: Health care &

Pharmaceuticals

• Youth owned

NP Xray Services (Pty) Ltd

• NP XRay Services is a 100% black female-youth -owned

business by Ms. Nqobile Mpinga. Ms Mpinga is a qualified

radiographer registered with the Health Professions

Council of South Africa.

• NP XRay Services started operating in October 2014

on a small scale. After a year of operating Ms Mpinga

saw an opportunity to grow the business as there was

demand for her services in the Matatiele area. She was

the only private x-ray practice in the area.

• Once she identified an opportunity to grow the

practice, she approached sefa for a loan of R 1 206 909

to start a private x-ray practice. She got financial

assistance from sefa and now she is the only female

youth radiographer in Matatiele and has created 3 jobs

so far.

26

Key information • Location: Matatiele

• Job creation: 3 jobs

• Funding amount: R 1 206 909

• Sector: medical services

Elukwatini Radiology (Pty) Ltd.

• A young man of 32 years of age has been passionate about

opening his own radiographer practice.

• He formally registered a business called Elukwatini Radiology

(Pty) LTD which is a 100% black youth owned.

• His passion for the business drove him to even resign from

his employment (Embuleni Hospital) to pursue the business

on full time basis.

• The client needed an investment partner who would believe

in his idea after having knocked with failure from few

commercial banks.

• Sefa has become an answer to the entrepreneur’s prayers by

approving a start-up loan of R909 728 to buy the X-Ray

machine and other equipment's, to finance working capital of

the business and also renovate the premises to accepted

standards of this type of business.

• Sefa’s investment will be instrumental in the development of

black owned businesses and also creation of 2 permanent

employment.

27

Key information • Location : Elukwatini

• Job creation : 2

• Funding amount: R 909 728

• Sector: Medical (Radiographer practice)

Dr L Booysen Medical Practioner

• Dr Booysen is a qualified female doctor who grew up

and completed her high school in Graaff-Reinet. After

matric she then went to University of Free State to

study Baccalaureus Scientiae (Biochemistry ) and did

Bachelors of medicine and surgery at University of

Pretoria.

• After completing her community services she went

back to Graaf Reinet to work at a Hospital as Grade 1

Medical Officer . She practiced for 3 years as a Medical

Officer.

• Due to the lack of private doctors in Graaff-Reinet , she

has identified an opportunity to serve Graaff-Reinet and

the surrounding areas. She approached sefa for a loan of

R797 945 to start a private medical general practitioner.

She got financial assistance from sefa and now she is

the first female youth doctor in Graaf Reinet and she

has created 4 jobs so far.

28

Key information • Location: GRAAF -REINET

• Job creation: 4 jobs

• Funding amount: R 797 945

• Sector: MEDICAL PRACTIONER

Thank you 29