Name of the presenter: Sabelo Mamba Regional Manager Overview and - - PowerPoint PPT Presentation

Business Opportunities in the Energy Sector Workshop - Mpumalanga Bundu Lodge 28th August 2014 Name of the presenter: Sabelo Mamba – Regional Manager

Overview and Background

Challenges that led to the establishment of sefa

• Limited success in fostering a strong and large SMME sector
• Weak small business performance
• Poor uptake of Khula and Samaf products
• Poor visibility among small businesses
• Duplication of services amongst government agencies
• High cost of delivering financial services to SMMEs

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Overview and Background (Cont)

Establishment of sefa

• Cabinet support for an integrated approach
• sefa was established on 1st April 2012 as a wholly owned subsidiary of IDC

(merger of Samaf, Khula and the small business activities of the IDC)

• Established in terms of IDC Act
• Shareholder compact between IDC and EDD incorporates sefa
• sefa’s Corporate Plan informed and guided by a number of Legislative and

Policy Prescripts (eg New Growth Path, Outcome 4 and other National Imperatives and legislation)

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Organisational Framework

4 Mission: to provide simple access to finance in an efficient and sustainable manner to survivalist, micro, small and medium enterprises throughout South Africa. Vision: To be the leading catalyst for the development of sustainable Survivalist, Micro, Small and Medium enterprises through the provision of finance.

Direct Lending Products

• Working Capital loan,
• Asset finance,
• Term loans,
• Revolving loan,
• Bridging loan,
• Short-term trade

finance Wholesale Financing

• Business Loans –

(RFIs/MFIs/FSCs/FIs),

• Joint Ventures/Equity

Funds,

• Credit Guarantee

Scheme,

• Land Reform

Empowerment Fund

sefa’s values: Kuyasheshwa, Passion for development, Integrity, Transparency, Innovation Enabling/Support Human Capital Management, IT Systems, Stakeholder Relations & Communications, Finance and Procurement Corporate Governance Board of Directors, sefa Management, Risk & Compliance, Credit Controls, Audit & fraud prevention and Legal Product Portfolio Distribution Channels sefa’s Regional Offices, RFIs, MFIs, FSCs, Commercial Banks, Specialised Funds, Provincial Development Corporations (PDCs), Post Office, & Post Bank Customers SMMEs and Co-operatives

R500 R5m Capacity Building Services

• (RFIs/MFIs/FSCs/FI’s)-

Institutional Strengthening,

• Pre Post loan

mentoring,

Mandate

Overarching Mandate To promote the establishment, survival and growth of SMMEs and thus contribute towards poverty alleviation and job creation. Legislative Mandate “To foster the development of Small and Medium Enterprises and Cooperatives;” as stipulated by the IDC Act s(3)(d).

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Target Market

sefa’s target market consists of small businesses that have been failed by the existing formal banking and finance sector. These include:

• Survivalists and microenterprises – those requiring loans of anything

between R500 and R50 000

• Small enterprises – loans between R50 000 and R1 000 000
• Medium enterprises – loan between R1 000 000 and R5 000 000

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Targeted Group Funding

• 30% of funding disbursed targeted towards youth-owned enterprises.
• 45% of funding disbursed targeted towards priority rural provinces.
• 40% of funding disbursed targeted towards women-owned businesses,

progressively increasing in subsequent years.

• 70% of funding disbursed targeted towards black-owned businesses.

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Overall Strategic Objectives

The strategic objectives of sefa are to: 1. Increase access and provision of finance to small businesses and thereby contribute towards job creation. 2. Develop and implement a national footprint for effective product and service delivery. 3. Build an effective and efficient sefa that is a sustainable performance driven organisation. 4. Build a learning organisation . 5. Build a sefa that meets all legislative, regulatory and good governance requirements. 6. Build a strong and effective sefa brand emphasizing accessibility to SMMEs

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Products & Services

• Wholesale Lending

Product Description Business Loans Partnership with Non Bank Financial Intermediaries for on-lending to SMMEs (eg sefa provides loan to SEF, who lends money to micro enterprises) Funds/ Joint Ventures Partnership with mainly private sector entities for

• n-lending to SMMEs (e.g. sefa’s partnership with

Anglo to provide finance to small mining contractors) Credit Indemnity Scheme sefa provides guarantees to banks, enabling loans to small businesses that do not otherwise have sufficient collateral/security to support facilities. Land Reform Empowerment Fund (LREF) Facility through which sefa lends money to commercial banks and other reputable agricultural lenders for on-lending to land reform beneficiaries

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Products & Services

• Direct Lending

Product Description Revolving/Bridging Loans To facilitate short term capital requirements or bridging finance for delivery of contracts or

• rders (eg a small business gets a contract to

supply stationery, but needs finance to buy the stock) Asset Finance For acquisition of fixed assets (eg a small business needs a new machine. sefa provides a loan, repayable over 5 years) Term Loans To finance longer term business expansion requirements and specific capital acquisitions (similar to asset finance, but not necessarily linked to a specific machine) Working Capital To finance purchase of stock, overheads, etc (eg sefa provides a shorter term loan (3 years) to a small shop to buy stock needed to expand)

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Products and Services

• Non Financial Services

Product Description Post-loan Business Support Programme This service is only provided to SMMEs that have benefitted from facilities provided by sefa and its financing partners as a risk mitigating intervention (e.g. sefa provides a mentor to a small business to assist with specific aspects of running the business) Institutional Strengthening Grants Aimed at providing institutional strengthening and technical assistance to Financial Intermediaries (eg grant funding provided to an intermediary to assist it in improving its systems)

Wholesale Lending Short Term Initiatives

• Partner with stronger financial intermediaries and recapitalise
• Sign agreements with financial institutions and increase utilization of the

Credit Indemnity Scheme

• Continue with the review of the wholesale lending portfolio, including

the consolidation of intermediaries

• Expand wholesale offering through partnerships targeting specific

sectors and/or markets

• Introduce new products that are aligned to intermediary needs that

meets sefa’s developmental objectives

• Influence interest rate charged by intermediaries to SMMEs to meet

sefa’s developmental objectives

• Institutional strengthening of intermediaries through targeted capacity

building grants and technical support

• Target specific co-operative markets
• Finalise the wholesale lending division’s structure and placements
• Review the financial modeling for the wholesale lending division

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Funding and pricing strategy

• sefa’s pricing strategy will be developmental in nature.
• The pricing will be affordable to small businesses, incorporating an

appropriate discount for developmental impact, whilst ensuring the sustainability of the institution.

• Continued support via grant funding is required to offer some of the

products (e.g. Credit Indemnity)

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Delivery Network

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Existing sefa

• ffices

Existing Retail Financial Intermediaries Existing Micro- finance intermediaries Planned sefa branch/ satellite

• ffices (branch
• ffice is a small

staffed office. Satellite office is a desk in eg. seda/Post Office, manned at specific times.) Cities/towns

THANK YOU

NELCITY BUILDING – OFFICE U5 (First Floor) Cnr Samora Machel Drive and Paul Kruger St - Nelspruit, Tel: 013 755 3923 / 013 755 2370 / 013 755 2648 Cell: +27 83 452 3439 sabelom@sefa.org.za www.sefa.org.za