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Overview of the Strategic Plan

Overview of the Strategic Plan. 2008 - 2011. Presentation to the Portfolio Committee on Trade and Industry 5 March 2008. 1. Presenters. Ms Philisiwe Buthelezi Chief Executive Officer ( Telephone +27 11 305 8000/ 8147 (Manager in the CEOs Office: Emma Riley) Mr. Andrew Wright

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Overview of the Strategic Plan

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  1. Overview of the Strategic Plan 2008 - 2011 Presentation to the Portfolio Committee on Trade and Industry 5 March 2008 1

  2. Presenters • Ms Philisiwe Buthelezi Chief Executive Officer (Telephone +27 11 305 8000/ 8147 (Manager in the CEOs Office: Emma Riley) • Mr. Andrew Wright Chief Operating Officer (COO) • Mr. Frencel Gillion Chief Investment Officer (CIO) • Mr. Moemise Motsepe Manager: Marketing & Communications • Ms Hlengiwe Makhatini Pre-Investment Manager 2

  3. Mission Statement “The National Empowerment Fund (NEF) is the catalyst of broad- based Black Economic Empowermentin South Africa. We enable, develop, promote and implement innovative investment andtransformation solutions to advance sustainable Black economic participation.” 3

  4. NEF Mandate Main objective To be a catalyst in facilitating economic equality and transformation Driven by • Current market needs • Broad-based empowerment charters • Government policy and sectoral charters (Industrial Policy) • Addressing past failures of BEE structures • Broad Based BEE Codes of Good Practice Development focus Maximise the empowerment dividend 4

  5. Key Objectives of the NEF • Promote and support business ventures pioneered and run 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. 5

  6. Key Objectives of the NEF Strategic Plan • To create a prudently and effectively managed fund with a time horizon of at least 10 years; • To ensure broad-based and sustainable empowerment; • To act as a catalyst to stimulating Broad Based BEE and hence economic growth; • To avoid duplicating existing offerings by other operating Development Finance Institutions (DFIs); • To work in partnership with both public and private sectors; • To maximise the empowerment dividend in lieu of the financial dividend; • To protect the capital base of the NEF and provide a real return. 6

  7. NEF’s Performance Criteria – “The Empowerment Dividend” The assessment of impact is not driven only by financial returns but by measurement in terms of “The Empowerment Dividend” made up as follows: • Broad Based Black Economic Empowerment Ownership, management control, employment equity, skills etc • Black Women Empowerment • Job Creation • Growth Sectors • Geographic Spread • Investment Return 7

  8. With effect from October 2007, NEF has launched Provincial Roundtables with stakeholders in the following provinces: • KZN • North West • Limpopo • The NEF has so far participated in Provincial Roundtables in Northern Cape (12 December 2007) and North West (7 March 2008) • Objective is to optimise regional invested portfolio through intensive local interaction and communication • Stakeholders include: • MECs for Finance & Economic Affairs, as well as MECs for Agriculture, to encourage rural and community development • Constituency Members of Parliament • Local Development Finance Institutions (DFIs) • Local entrepreneurs and co-operatives • Mass Media • Mpumalanga • Northern Cape • Free State Provincial Roundtables 8

  9. Strategic Initiatives NEF, in 2006/7, reached two significant and strategic milestones in its history since its establishment: On-going track record achieved in the Fund Management Division, with approvals to date now exceeding R600m; Asset Management Division was able to obtain the overall approval for the NEF’s first BEE Retail Product, Asonge, subsequently launched on 25 June 2007. 9

  10. NEW DEALS DISBURSED ENQUIRIES APPLICATIONS DUE DILIGENCE APPROVED ACCEPTED (INCL. UNDRAWN CAPITAL) Approx. 24 18 13 102 5,908 worth worth worth worth 28,664 R 344m R 404m R 245m R 631m NEF Invested Process Report 31 January 2008 NEF work in progress: 55 transactions worth R 993 million 10

  11. 400,000,000 R 363m 350,000,000 300,000,000 250,000,000 200,000,000 150,000,000 R 135m 100,000,000 50,000,000 0 Jul-07 Jun-07 Nov-07 Dec-07 Jan-08 Sep-07 Oct-07 May-07 Aug-07 Apr-07 Accumulative Value of Deals Approved Accumulative Value of Deals Disbursed NEF Approved & Disbursed Deals by Value 1 April 2007 - 31 January 2008 11

  12. 25 23 20 16 15 10 5 0 Jul-07 May-07 Jun-07 Oct-07 Nov-07 Dec-07 Jan-08 Sep-07 Apr-07 Aug-07 Accumulative Value of Deals Approved Accumulative Value of Deals Disbursed NEF Approved & Disbursed Deals by Number 1 April 2007 - 31 January 2008 12

  13. ICT & Media 14.3% Transportation 5.2% Textile Industry Manufacturing 1.8% 8.3% Services 3.1% Engineering 1.5% Food & Agro Mining Processing Services 12.9% 7.4% Other Motor 0.1% Industry 1.8% Financial Services Printing 1.1% Services 2.5% Tourism & Entertainment 7.4% Wood & Paper Industry Construction 2.0% Chemicals & 25.6% Pharmaceuticals 5.4% FMD Portfolio by Sector by Value 31 January 2008 13

  14. Asset Management Division 14

  15. Asset Management Division • Through its Asset Management Division, the NEF: • Promotes the understanding of equity ownership among black people • Provides black people with direct and indirect opportunities to acquire shares in State Owned and private business enterprises • Encourages and promote investments, savings and meaningful economic participation amongst black people It is specifically to address the above objectives that the NEF Asonge Share Scheme was conceived, designed, launched, implemented, subscribed for and now allocated to its beneficiaries. 15

  16. INVESTMENT TOTAL APPLICANTS %age TOTAL VALUE %age 2000 to 5000 55,085 64.57% R 150,717,069.00 16.95% 5001 to 10000 12,637 14.81% R 114,196,042.00 12.84% 10001 to 20000 6,297 7.38% R 111,795,894.00 12.57% 20001 to 30000 2,717 3.18% R 74,163,562.00 8.34% 30001 to 40000 998 1.17% R 38,256,743.00 4.30% 40001 to 50000 7,091 8.31% R 353,604,161.00 39.77% 60001 to 70000 16 0.02% R 1,102,484.00 0.12% 50001 to 60000 37 0.04% R 2,147,282.00 0.24% 70001 to 80000 21 0.02% R 1,641,220.00 0.18% 80001 to 90000 5 0.01% R 446,000.00 0.05% 90001 to 100000 410 0.48% R 40,988,400.00 4.61% 85,314 100% R 889,058,857.00 100% “The NEF Asonge Share Scheme” Subscriptions by Value 16

  17. Asset Management Division –Enabling Legislation • NEF Act (No.105 of 1998) – Objects of the NEF Trust • Policy Framework for an Accelerated Agenda for the Restructuring of State-owned Enterprises (August 2000) – requirement of the NEF to broaden empowerment with State Owned Commercial Enterprise (SOCE) allocations through individual & collective share ownership • Cabinet Memorandum No. 32 of 29 November 2000, which was adopted on 6 December 2000 – SOCE equity allocations nominated for transfer to NEF 17

  18. Asset Management Division – Designated State Allocated Investments Asset Shareholding % Status • MTN Group 1.5 received by NEF • Telkom 5 not yet received • SAA 5 not yet received • ACSA 10 not yet received • Connex Travel 10 received by NEF • Viamax 10 not yet received • Syncat 10 not yet received • Transwerk Perway 10 not yet received • Sentech 10 not yet received • Uthingo 5 received by NEF • SAFCOL 10 in discussion 18

  19. Key Strategic Interventions for NEF Asset Management • Ensure that new products are aimed at accessible subscription levels and structures so that lower income groups are not excluded • Address geographic access to product offerings through targeted communication campaigns, engagement with provincial government and existing Asonge share register • Capitalise on the Asonge share register with future offers allowing investors to diversify and extend the reach of future offers through this channel 19

  20. Fund Management Division On-going track record achieved in the Fund Management Division, with approvals to date now exceeding R600m. 20

  21. Fund Management Strategy – Strategic Drivers 21

  22. Fund Management Strategy – Strategic Drivers contd 22

  23. Later Stage 53.9% Early Stage R138m R103m R390m 21.9% 17.6% 61.8% Development Stage 55 29 16.2% 18 28.4% (R) Value % By Value By Number % By Number R631m 100% 102 100% FMD Portfolio by Stage of Investment 31 January 2008 23

  24. Budget 2008/9 24

  25. 2007/08 (actual) 2008/9 (MTEF) 2009/10 (MTEF) 2010/11 (MTEF) Operations Capital Operations Capital Operations Capital Operations Capital Budget Approved R 100m R 609m R 107m R 312m R 114m R 430m R 123m R 430m Actual/Budgeted Spending R 75m R 270m R107m   R 650m  R 114m  R 685m  R123m  R765m Surplus/ (Application of Surplus) R 25m R 339m (R 338m) (R 255m) (R 335m) Surplus brought forward R 290m R 1 631m Including proceeds of the Asonge Share Scheme R1 970m R1 632m R1 377m TOTAL SURPLUS R 315m R 1 970m R1 632m R 1 377m R1 042m Consolidated Budget for the years 2007 - 2011 25

  26. We thank you for your attention. www.nefcorp.co.za 26

  27. Appendices Fund Management Activity Reports for the year to date 2007/8 27

  28. NEW DEALS DISBURSED ENQUIRIES APPLICATIONS DUE DILIGENCE APPROVED ACCEPTED (INCL. UNDRAWN CAPITAL) Approx. 24 18 13 102 5,908 worth worth worth worth 28,664 R 344m R 404m R 245m R 631m NEF Invested Process Report 31 January 2008 NEF work in progress: 55 transactions worth R 993 million 28

  29. INFORMATION DISBURSED NEW DEALS DUE WORK IN APPROVED MANAGEMENT (INCLUDING UNDRAWN ACCEPTED DILIGENCE PROGRESS SYSTEM CAPITAL) 24 worth R344m 18 13 55 102 Since inception to 31 January 2008 worth worth worth worth R 404m R 245m R 993m R 631m iMbewu Fund iMbewu Fund - Work in Progress Disbursed 14 11 8 33 70 iMbewu Fund worth worth worth worth worth R 132m R 140m R 85m R 357m R 158.7m Corporate Fund Corporate Fund - Work in Progress Disbursed 10 7 5 22 32 Corporate Fund worth worth worth worth worth R 212m R 264m R 160m R 636m R 472.5m FMD Invested Process Report 31 January 2008 29

  30. 1,000,000,000 R 943m 900,000,000 800,000,000 700,000,000 R 631m 600,000,000 500,000,000 400,000,000 300,000,000 200,000,000 100,000,000 0 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Sep-03 Dec-03 Sep-04 Dec-04 Sep-05 Dec-05 Sep-06 Dec-06 Sep-07 Dec-07 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Accumulative Value of Deals Approved Accumulative Value of Deals Disbursed FMD Approved & Disbursed Deals by Value 31 January 2008 30

  31. Later Stage 53.9% Early Stage R138m R103m R390m 21.9% 17.6% 61.8% Development Stage 55 29 16.2% 18 28.4% (R) Value % By Value By Number % By Number R631m 100% 102 100% FMD Portfolio by Stage of Investment 31 January 2008 31

  32. Entrepreneurship Fund Expansion 14.1% Franchise Capital 3.9% 0.0% Capital Liquidity & Market Warehousing 10.2% 13.8% Rural & Community 3.3% Procurement 8.5% Project Finance Acquisition Funding 3.8% 42.4% FMD Portfolio by Product by Value 31 January 2008 32

  33. ICT & Media 14.3% Transportation 5.2% Textile Industry Manufacturing 1.8% 8.3% Services 3.1% Engineering 1.5% Food & Agro Mining Processing Services 12.9% 7.4% Other Motor 0.1% Industry 1.8% Financial Services Printing 1.1% Services 2.5% Tourism & Entertainment 7.4% Wood & Paper Industry Construction 2.0% Chemicals & 25.6% Pharmaceuticals 5.4% FMD Portfolio by Sector by Value 31 January 2008 33

  34. Western Cape Mpumalanga 22.7% 4.2% Limpopo Eastern Cape 0.5% 17.3% Kwa-Zulu Natal 9.0% Free State 0.0% Gauteng 46.6% FMD Portfolio by Region by Value 31 January 2008 34

  35. Mpumalanga Western Cape 2.0% Eastern Cape 15.7% Limpopo 8.8% 2.9% Free State Kwa-Zulu 1.0% Natal 10.3% Gauteng 59.8% FMD Portfolio by Region by Number 31 January 2008 35

  36. 947 Project Finance Procurement Liquidity & Warehousing Franchise Entrepreneurship Fund 2,210 1,402 88,774,575 808 Rural & Community 4,507 63 14,220 1,079 265 814 82,275 267,957,806 121,248 20,819,000 4,444 64,087,480 Capital Market 24,120,130 216 86,825 1,172 286 280 74,386 Acquisition Funding 265 682 70 56,585 892 53,586,432 891 274 87,180,000 617 27,071 807 0 807 24,832,020 TOTAL PORTFOLIO: 631,357,443 11,899 7,612 4,287 53,060 64% 36% Job Creation Statistics 31 December 2007 Rand Invested Number of Jobs Existing Jobs New Jobs Rand Per Job 36

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