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South African Micro-finance Apex FundSouth African Micro-finance Apex Fund sasamafmaf
ANNUAL REPORTANNUAL REPORT
2010/112010/11
Presented by Mr. Loni MamatelaPresented by Mr. Loni Mamatela
Acting Chief Executive Officer Acting Chief Executive Officer
Date: 13/ 10/2011Date: 13/ 10/2011
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Presentation OutlinePresentation OutlineMandate, Vision, Mission, Values & Objectives
Operating Model
2010/2011 Performance Highlights
samaf National Footprint
2010/11 Financial Performance
Auditor General Report
Challenges
Way forward
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MandateMandatesamaf’s mandate is to create work opportunities and sustainable livelihoods through the facilitation and provision of affordable access to finance to micro, small and survivalist businesses for the purpose of growing their income and asset bases. It is also required to act as a catalyst in the development of a vibrant micro-finance industry in South Africa. The primary purpose is:
To facilitate the provision of affordable access to finance by micro and survivalist
businesses;
To extend financial and non-financial services to reach deeper and broader into the
rural areas, informal settlement and peri-urban settlement of South Africa;
To contribute towards the reduction of poverty and unemployment;
To build a strong, effective and efficient wholesale (Apex) Fund;
To contribute to better quality of life; and
To contribute towards a sustainable and vibrant micro financial industry in South
Africa.
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Vision & MissionVision & MissionMission
“To be a leader in developmental micro finance” (in South Africa)
To provide developmental finance and non-financial services to financial intermediaries through:
Mobilization of financial intermediaries
Wholesaling of funds
Development of institutional capacity
Lobbying and advocacy towards policy development
Development of valuable partnerships (between government , businesses and communities)
Vision
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Values & ObjectivesValues & Objectives1. Contribution to poverty alleviation goals through; Funding Intermediaries( Enterprise loans and poverty
alleviation loans) Capacitating Financial Intermediaries Regulation and Prudential Standards2. Exceed our stake holder expectation through;
Improving outreach through expanded satellite network / offices
Improving internal turnaround standards3. Improvement of processes to achieve service delivery
excellence through; Improving financial reporting and management Strengthening risk management Increased compliance of legal and other regulations
4. Leverage performance through capacity and people through;
Organisational Development Balance Scorecard & Performance Management Organisational Design & Change Management
5. Building sustainable Apex Fund Improved quality of lending portfolio and internal
control environment
ObjectivesValuesIntegrity: Dealing with staff and stakeholders in an
honest and ethical manner.
Transparency – ensuring compliance with best
practice on the dissemination and sharing of
information with all stakeholders and consulting
with them to ensure comprehensiveness and
buy-in to samaf activities.
Professionalism: adhere to specific defined
norms and setting standards of workmanship,
respect and communication.
Accountability: taking responsibility for the
decisions and actions, including allocation of
powers and duties.
High Performance: excellent performance and
satisfied customers that guarantee long term
sustainability of the South African Micro-Finance
Apex Fund.
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samaf Operating Model
IT
FIN
SC
HR
FI’s
SAMAF
Internal Audit
ExternalInternal
CB
EducationSelectionResearch
Primary / CoreSupport
MARKET
External
EDD
REG
PR & COMS
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Disbursements of R41m were made to FI’s in respect of loans and grants.
14 Micro Finance Institutions, 23 Financial Services Cooperatives and 24 stokvels were
supported.The total number of borrowers increased by 13.5% from 35 884 to 40 726.
80% of loans by the FI to end users were in rural communities and 95%
were micro-enterprise loans.
The number of end user savings increased by 20 % from 25 840 to 31 129
Installment repayments by FIs average 90%
272 individuals from 68 institutions nationally participated in capacity building
workshops.
samaf received an unqualified audit report
2010/11 Performance Highlights2010/11 Performance Highlights
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Approved Funding (Rm)Approved Funding (Rm)
An increase of 41% as compared to the previous financial year was achieved
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Total Disbursements (Rm)Total Disbursements (Rm)
Capacity building
increased by 192% as
compared to the
previous financial year
On lending funds
increased by 71% as
compared to the
previous financial year
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19.8
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On- lending per Province (R)On- lending per Province (R)
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Provinces On-lendingEC 3,000,000NC 0WC 5,000,000MP 2,637,500NW 0LP 6,845,000GP 4,800,000FS 0KZN 120,000
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Capacity Building per province (R)Capacity Building per province (R)
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Provinces Capacity buildingEC 2,169,000NC 378,000WC 3,325,000MP 1,904,500NW 400,000LP 4,266,579GP 4,460,000FS 797,500KZN 688,176
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samaf NATIONAL FOOTPRINTsamaf NATIONAL FOOTPRINT
M4/F4
M0/F4
M0/F3
M1/F=6
M0/F5
M0/F6
M3/F3
M2/F1M3/F5
1515
M= Micro Finance Institutions
F= Financial Services Co-operatives
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2010/11 Financial Performance2010/11 Financial PerformanceStatement of Comprehensive Income
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2010/11 Financial Performance2010/11 Financial Performance
Expenditure
2010/11 2009/10
Compensation 30,568,885 28,944,728
Goods & Services 17,085,896 19,727,128
Total Operating Expenditure 47,654,781 48,671,856
Grants paid 18,388,755 6,300,000
Loans written off 1,047,923 7,450,472
Less: Reversal of Impairment (8,727,675) (1,312,818)
Total Expenditure 58,363,784 61,109,510
Operating expenditure
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Auditor General ReportAuditor General ReportOPINION
An unqualified opinion was expressed, however issues were raised as part of emphasis
of matter.
EMPHASIS OF MATTER
Going concern
The Economic Development Department is re-organising its small lending business
institutions by merging samaf, Khula and small business activities of the Industrial
Development Corporation (IDC). samaf will not cease its operations.
Material losses to the amount of R1 047 923 were incurred as a result of the write off
of loans provided to financial intermediaries.
In addition, material impairments to the amount R 4 795 527 were incurred on loans
provided to Financial Intermediaries.18
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Auditor General Report (cont…)Auditor General Report (cont…)
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REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Usefulness of information
Predetermined objectives
The reported performance information was deficient in respect of the following criterion:
Measurability : Indicators are not well defined.
Reliability of information
The reported performance information was deficient in respect of the following criterion:
Accuracy: the amounts , numbers and other data relating to actual performance have
not been recorded and reported appropriately.
Completeness: All actual results and events that should have been recorded have not
been included in the reported performance information.
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Auditor General Report (cont…)Auditor General Report (cont…)
Compliance with laws and regulations
Procurement and contract management
A service with a transaction value between R10 000 – R500 000 was procured without
inviting at least 3 written price quotations from prospective suppliers as required by
Treasury regulations.
Expenditure management
The accounting officer did not take appropriate steps to prevent irregular expenditure, as per
the requirements of the section 38 (1)(c)(ii) of the PFMA. A payment of R107 333 was
made although the correct procurement process was not followed.
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Auditor General Report (cont…)Auditor General Report (cont…)
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INTERNAL CONTROLS
Leadership
The leadership did not exercise appropriate oversight in ensuring that the prior year
and current year annual financial statements complied with the reporting framework.
The entity did not have sufficient skilled resources. The Acting Chief Executive Officer is
filling the position of Chief Financial Officer.
Financial and performance management
Management did not have adequate controls to ensure the accuracy or completeness
of the financial statements and the report on performance information.
Management did not ensure that certain accounting policies were correctly adopted
Management’s internal control systems relating to IT were inadequate in providing
reasonable assurance that the IT high risk areas were properly managed and controlled.
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Lack of governance and administration skills within the FIs
General lack of micro-financial skills both internally and externally
Capacity constraints at the provincial offices
Vast distances travelled to the FI’s within the provinces
samaf did not have sufficient skilled resources particularly at executive level
Uncertainty and low staff morale due to the impending merger of samaf, Khula and IDC small business activities
ChallengesChallenges
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Revised business processes to reduce turnaround times
Implementation of the capacity building impact analysis tool
Implementation of change management to address the merger issues
Address audit findings by:
‐ Reviewing existing policies and developing new relevant policies and
procedures
‐ Tightening controls by communicating policies as well as punitive
measures that may be necessary in the event of transgressions.
Ensure that corporate and individual targets are aligned, clearly
defined and agreed upfront with all members of staff
Way forwardWay forward
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AcronymsAcronymsAcronym Definition
the dti The Department of Trade and Industry
EDD Economic Development Department
EXCO Executive Committee
FSC Financial Services Co-operatives
MFI Micro-finance Institution
RRSS Registration, Regulation, Supervision and Stabilisation
FI Financial Intermediary
GFIA Gobodo Forensic Investigation Accountants
PFMA Public Finance Management Act
PAR Portfolio at risk
samaf South African Micro-finance Apex Fund
SME Small Medium Enterprise
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