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PRESENTATION TO LAND AND ENVIRONMENTAL AFFAIRS COMMITTEE 01 APRIL 2003

PRESENTATION TO LAND AND ENVIRONMENTAL AFFAIRS COMMITTEE 01 APRIL 2003. Moeketsi Mofokeng. Khula Enterprise Finance. Main shareholder is DTI Established in 1996 Independent board of directors; sub committees; internal and external auditors Wholesale financier not retailer

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PRESENTATION TO LAND AND ENVIRONMENTAL AFFAIRS COMMITTEE 01 APRIL 2003

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  1. PRESENTATION TO LAND AND ENVIRONMENTAL AFFAIRS COMMITTEE 01 APRIL 2003 Moeketsi Mofokeng

  2. Khula Enterprise Finance Main shareholder is DTI Established in 1996 Independent board of directors; sub committees; internal and external auditors Wholesale financier not retailer Facilitates access to finance

  3. Vision To become a financing partner of first choice in SME finance.

  4. Mission To facilitate sustainable access to finance, by engaging with the private and public sector, through innovative products in order to promote SME growth.

  5. General external objectives • Be responsive to the needs of clients and stakeholders • Facilitate mobilisation and flow of resources (public & private sector) for SMME development • Support the promotion of a conducive legislative environment for the SMME sector

  6. Key strategic objectives • To achieve a return on investment that ensures retention of the capital base • To offer sustainable credit and capital through a network of efficient network of distribution intermediaries • To acquire,retain and develop the Human resources to meet the short,medium and long term needs of Khula • To develop and implement an integrated business marketing strategy

  7. Khula offers assistance through • Credit Guarantees – Banks • Must be South African • Owner/ Manager • Business must be in SA • Must be economically viable • Technical skills essential • 10% own contribution recommended

  8. Khula assists through • Business Loans – RFI’s & MCO’s • Capacity Building grants • Low interest loans • Equity Funds • JV, Equity Stakes • Land Reform Credit Facility • Transfer of land PDIs • Significant shareholding • Transfer of skills

  9. Loans Representation in S.A. • Limpopo • 2 RFI’s; 2MCO’s • North West • 1 RFI; 1 MCO • Gauteng • 7 RFI’s; 1 MCO • Mpumalanga • 3 RFI’s; 5 MCO’s • Freestate • 1 RFI; 0 MCO’s • KwaZulu Natal • 3 RFI’s; 5 MCO’s • Northern Cape • 1 RFI; 0 MCO’s • Eastern Cape • 2 RFI’s; 4 MCO’s • Western Cape • 2 RFI’s; 0 MCO’s

  10. Mentorship • Mentorship – 8 Regional Offices • BUSINESS PLANS • Loans up to R300 000 Client Contribution 25% Khula 75% • Loans above R300 000 – R5 m Client Contribution 50% Khula 50% • Free mentorship for up to 3 months after loan is granted

  11. SEGMENTATION OF KHULA PORTFOLIO Small (upper end) – Equity Funds Small (lower end) – Credit Guarantees Very small-RFI’s / KhulaStarts/Portfolio Guarantees/ Sizabantu Micro-KhulaStarts/ RFI’s, Survivalist

  12. Image of Khula or its agentsUnisa Study, 2001

  13. HDE Awareness of organisationsUCT Study, 2002

  14. HDE Knowledge of assistanceUCT Study 2002

  15. Have been assistedUCT Study

  16. Problems Faced By Entrepreneurs • Education and training • Technology • Infrastructure and competition • Crime • Access to markets/ Lack of demand • Access to finance

  17. Obstacles to finance • Collateral • Refusal to use own collateral • Own contribution • Blacklisting • Financial records & Business Plans • High risk entrepreneurs

  18. Way Forward

  19. Growth Strategies • Mobilise banks for mass or scale delivery. • Training workshops with bankers and marketing • Mainstream and roll-out a credible mentorship • To stimulate the provision of venture [start-up] and small scale equity finance. • To research and package innovative products that can mobilise and attract the financial industry participation in Khula mandate. • Build on nation wide communication campaign

  20. Growth Strategies • Segment the market and design a suitable product mix and structure accordingly. • Emerging and matured markets • To support the distribution network in line with market needs. • capacitateand develop to serve the all market segments [from under-banked to bankable enterprises] • To improve outreach and efficiency of emerging market network • Improve market access through business linkage initiatives

  21. Growth Strategies • Continue to engage government on issues relating to the mandate of Khula • exploring the retail option

  22. Key Performance Indicators/Targets - Credit Guarantees

  23. Key Performance Indicators/Targets Regional Equity Funds

  24. Key Performance Indicators/Targets

  25. Thank You For Your Support

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