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sefa Corporate Plan 2016/17 – 2020/21Presentation to the Portfolio Committee on Small Business Development

16th March 2016

2

PRESENTATION OUTLINE

• INTRODUCTION

• ALIGNMENT WITH DSBD STRATEGIC GOALS

• sefa’S CORPORATE PERFORMANCE

• ORGANISATIONAL ANALYSIS

• sefa’S STRATEGIC OBJECTIVES

• STRATEGIC PROGRAMMES

• STRATEGIC OUTCOMES

• DEVELOPMENT IMPACT TO TARGET GROUPS

• BALANCED SCORECARD

• BUDGET

3

INTRODUCTION

The development of the Corporate Plan was shaped by an extensive consultation process

and organisational review that included:

Ongoing engagements and consultation with the Executive Authority, the Department of Small Business Development.

Regular reporting and feedback from sefa’s shareholder, the Industrial Development Corporation of South Africa Limited (IDC).

sefa’s quarterly reporting and engagement with the Portfolio Committee on Small Business Development (National Assembly) and Select Committee on Small Business Development (National Council of Provinces- NCOP).

sefa Divisional Corporate Planning – assessment of year-to-date divisional performance and the identification of divisional priorities and targets.

sefa’s Executive Committee strategic planning sessions.

sefa Board Corporate Planning session – review of organisational performance and the identification of key strategic priorities.

Government Economic Policy – NDP, NGP, IPAP and MTSF

SMME and Co-operative enterprise development and promotion:

represents an important economic intervention for sustainable economic growth, job creation and innovation

unlocks growth potential in South Africa and to address poverty and inequality.

4

INTRODUCTION (CONT.)

sefa support from the National budget is projected to decline by ±R200m per

annum for the MTEF period, therefore a cost and revenue management programme

will be aggressively implemented focussing on:

Cost Management

› Contain the salary bill at current expenditure levels with an allowance for annual cost

of living adjustments.

› Containment of operating expenses.

› Reduction of impairments.

› Aggressive collection and turnaround on the property portfolio.

Revenue Management

› Increased focus on loan repayments through the use of specialised collections and

post investment management.

Corporate plan has been aligned with the DSBD mandate and strategic plan.

5

ALIGNMENT WITH DEPARTMENT OF SMALL BUSINESS DEVELOPMENT

DSBD Strategic

outcome-oriented goals

sefa Strategic Objective sefa Programmes

An effective and

efficient administration

Build a financially sustainable and viable sefa

Improve Financial Ratios

Build efficient and effective process and systems

Adopt best practice governance

Build a high performance organisation

Build an efficient and effective sefa that

is performance driven and sustainable.

Governance, Risk and Compliance

An enabling

environment for

competitive small

businesses and

cooperatives

Expand access to credit and finance to informal and micro-

enterprise sector.

To consolidate the Direct Lending investment activities and

strive toward improved portfolio quality; and to redirect its

investment activities proactively in support of government

policy initiatives.

Facilitate a programme of Wholesale Lending through strategic

partnerships.

Increase the utilisation of guarantee indemnity scheme.

Access to finance for SMMEs and Co-

operatives

o Informal Sector and Micro-

Enterprises Finance

o Direct Lending

o Wholesale SME Lending

o Co-operative Enterprise Lending

o Khula Credit Guarantee

Marketing, communication and

stakeholder relations

6

ALIGNMENT WITH DEPARTMENT OF SMALL BUSINESS DEVELOPMENT (CONT.)

DSBD Strategic outcome-

oriented goals

sefa Strategic Objective sefa Programmes

Sustainable small business

and co-operatives in rural

and township

communities

Grow our customer base through

targeted support (Black-owned

enterprises, women-owned

enterprises, youth-owned

enterprises, enterprises owned by

people living with disabilities and

enterprises located in priority rural

provinces.

Access to finance for SMMEs and

Co-operatives

o Informal Sector and Micro-

Enterprises Finance

o Direct Lending

o Wholesale SME Lending

o Co-operative Enterprise Lending

o Khula Credit Guarantee

Post Investment Management

Property Management

7

sefa CORPORATE PERFORMANCE 2012 - 2015 Approvals - R2,5bn

Disbursements - R2.1bn

SMME and Co-ops - 115 131

Jobs -234 534

2013/14 2014/15 2015/16

Business Case (Enterprisesfinance)

22565 50258 101445

No of EnterprisesFinanced

28 364 46 407 68 724

Business Case (Jobsfacilitated)

29 313 58 645 108 835

No of Jobs facilitated 19 853 46 402 60 169

0

20000

40000

60000

80000

100000

120000

Enterprises Financed & Jobs

637

795

1075

440

10651009

544

738

955

198

822

1295

0

200

400

600

800

1000

1200

1400

2012/2013 2013/2014 2014/2015

Approvals and Disbursements - R'million

Approvals (Business Case) Loan Approvals

Disbursements (Business Case) Disbursements into the Economy

8

SMMEs and Co-operatives Number Amount

Informal & Micro Enterprises 113,052 R462m

Small & Medium Sized Enterprises 2,079 R1.6b

Black-owned 96,607 R1.5b

Youth-owned 26,710 R449m

Women-owned 110,970 R846m

Development

Impact

sefa’s CORPORATE PERFORMANCE 2012 - 2015

9

ORGANISATIONAL ANALYSISSTRENGTHS• The uniqueness and the relevance of sefa’s mandate.• Political & national consensus on importance of small business development as a key component for the

development of the SA economy• Availability of National Voted Funds to support operations of sefa in its development interventions.• National presence of sefa – Regional office network and its partner institutions.• Influence to convene and mobilise strategic partners and alliances in execution of the organisational strategic

objectives.• Adaptable in-house developed Loan Management system (sefaLAS). • Utilisation of internally developed Structured Finance Solutions to develop sustainable SMMEs & Co-operatives

and manage risk.• Established systems of internal control and credit assessment processes

WEAKNESSES• Huge demand for SMME financial and non-financial support that cannot be fulfilled by sefa alone. • Limited due diligence capacity especially in non-contract-based finance• Dependence on other government agencies for SMME & Co-operatives pre- investment support.• Limited talent management, promotion and career & development pathing resulting in loss of key staff and/or

top performers.• Undifferentiated approach towards different SMMEs, Co-operatives & economic sectors and types of

applications regardless of (size and type of facility required such as acquisition, bridging or start-up funding).• Financing instruments are not designed to address the needs of social enterprises such as co-operatives.• Capacity and financial sustainability of sefa’s intermediary institutions – (high end-user charges and limited

outreach)• Low levels of collections

SWOT

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ORGANISATIONAL ANALYSIS (CONT.)

OPPORTUNITIES• Ability to leverage public and private sector financial and non-financial resources

to reach markets that sefa will not be able to service with own resources.

• Expansion to sectors which have high propensity to promote growth and employment.

• Access to International experiences and best practice programming.

• Political and financial support to grow sefa’s loan book.

• Funding of social enterprises, such as co-operatives.

• Ability to leverage shareholder (IDC) experience and loan book to grow and build the institution.

• Utilising other institutions to facilitate deal origination & to provide value added services.

• Utilisation of internally developed Structured Finance Solutions to develop sustainable SMMEs manage risk

• Enhance sefaLAS to facilitate standardisation and exception reporting.

• Market the sefa brand to target market

• Building and entering into partnership with a new breed of intermediaries to facilitate and support in the

execution of the sefa mandate

THREATS

Inability to meet high key stakeholder expectations (IDC, EDD, DSBD & NT) can result in low financial support

sefa’s delivery model is not well understood, notably, the use of intermediaries and their pricing of loans to end

users.

Weak GDP growth negatively affects the SMME sector prospects and increases the rate of impairments.

Legal difficulty in enforcing and salvaging collateral in the event of SMME default.

Unstructured and uncoordinated SMMEs & Co-operatives interventions between sefa, government agencies and

other spheres of government.

Notion of entitlement to DFI funds

Limited funds available to capitalize sefa

SWOT

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STRATEGIC RISK

Business Units

Enterprise /

Operational

RiskCredit Risk

Risk Control

& Management

Risk Assurance

Risk

Governance &

Oversight

Internal Audit

Board and Board Committees

Risk Philosophy and Appetite

Compliance

On

go

ing

Co

mm

un

icatio

n a

nd

Rep

ortin

g

sefa ERM Framework

2nd

line of defence

1st

line of defence

3rd

line of defence

sefa’s Major Strategic Risk• Organisational Strategic Balance - The inherent tension between the developmental mandate and financial

sustainability objectives which may disrupt the organisational strategic focus and balance;• People- Insufficient levels of adequately skilled, motivated and performance driven human resources to execute

on the mandate of the organisation;• Financial (Collections) - High levels of impairments and losses; and• Customer - Inability to timeously, effectively and efficiently deliver products and services that respond to the

needs of the clients of sefa.

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sefa’s STRATEGIC OBJECTIVES

Expand access to credit and

finance to finance informal and

micro-enterprise sector

Consolidate the Direct Lending

activities, improve the portfolio

quality and redirect investment

activities to proactively support

government policy initiatives

Facilitate a programme of

Wholesale Lending through

strategic partnerships

Increase the utilisation of

guarantee indemnity scheme Grow the customer base

Build a financially sustainable

and viable sefa

Improve financial ratios

Build efficient and effective

processes and systemsAdopt best practice governance

Build a high performance

organisation

Build one sefa culture

BUILDING AND CONSOLIDATING FOR GROWTH ……

1

4

2

3

9

8

7

6

5

11

10

13

STRATEGIC PROGRAMMES

StrategicProgrammes

Management of thesefa Property

Portfolio

Client SustainabilityLoan RepaymentPost InvestmentSupportWorkout andRestructuring

Risk and CreditManagementComplianceManagementInternal AuditCorporate Secretariat

Build a strong andeffective sefa brandemphasizingaccessibility toSMMEs and Co-ops

Informal and Micro EnterpriseCreditDirect LendingIndirect Lending (partnership)Co-operative Enterprise LendingKhula Credit Guarantee

Financial ManagementHuman Resource ManagementInformation andCommunication TechnologyCorporate Planning andReporting

14

PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.1 INFORMAL AND MICRO ENTERPRISE CREDIT

Strategic Initiatives• Build and strengthen partnerships in

sectors where informal and micro enterprises operate

• Develop a dedicated focus on unserved and underserved priority provinces

• Support MFI growth and development, new product development and new partnerships

• Fast-track implementation of approved pilots and transactions and document lessons learned (Fresh Produce Market Initiative)

Strategic Objective

To increase the level of economic activity of

survivalist, informal and micro enterprises,

particularly those operating in rural and peri-urban

areas, through provision of access to credit, finance and

business support

15

ALTERNATIVE MICRO ENTERPRISE & INFORMAL SECTOR MODEL APPROVED

Fresh Produce Market based lending system

The objective is direct provision of affordable credit to informal/micro enterprises sourcing goods

from the Fresh Produce Markets across South Africa

Pilot project is underway at the Durban and Mangaung Fresh Produce Markets.

Strengthening the purchasing power of informal sector traders at the Fresh Produce Markets

Developing a technology based platform to assess and approve large numbers of

microenterprises for credit to procure supplies from Fresh Produce Markets

Empowering informal sector businesses that procure supplies from Fresh Produce Markets

through training and provision of pertinent market information that promotes informed decision

making.

• PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.1 INFORMAL AND MICRO ENTERPRISE CREDIT

16

ALTERNATIVE MICRO ENTERPRISE & INFORMAL SECTOR MODEL APPROVED CONT’D

Durban/Mangaung Fresh Produce Market Pilot Project

PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.1 INFORMAL AND MICRO ENTERPRISE CREDIT

Key information• Location: Durban and Mangaung• Jobs maintained: 11 900 over 3 years• Funding amount: R20m for loans and

R4.5m for establishment costs• Key Partners: Durban & Mangaung Fresh

Produce Markets, Traders Associations, Freshmark Systems

Project Description

sefa approved a R24.5m pilot project for the provision of affordable

credit to the informal traders of the Fresh Produce Markets (FPM) of

Durban and Mangaung.

The management of the two pilot markets agreed to assist sefa with

the implementation and facilitation of this project.

The project in essence entails the provision of affordable credit to the

informal traders.

• Weekly loans between R500 and R10 000 will be made

available to successful applicants.

• As long as the client repays the loan on the set date, that same

amount will be made available again on a revolving basis, for a

six-month period.

Traders/successful applicants will only be able to purchase fresh

produce with the loan from sefa, because the money will be disbursed

directly to the buyer’s market card. If repayments are not being

made, the buyer’s card will be blocked immediately, thus minimising

the risk of non-payments.

The project will also train the traders in entrepreneurship, financial

management, food packaging and storage and health and food safety.

After a successful pilot, informal sector operators will be enabled

access over R3 billion worth of turnover from the Fresh Produce

Markets around South Africa

17

P1.1 INFORMAL AND MICRO ENTERPRISE CREDIT – STRATEGIC OUTPUT

Strategic Indicator

Projected

2015/162016/17 2017/18 2018/19 2019/20 2020/21

Total –

Strat Plan

Approval (R’000)

97 000 97 000 106 700 117 370 129 107 142 018 592 195

Disbursements (R’000)

36 000 53 242 66 634 89 088 95 485 98 094 402 543

Enterprises Financed

42 000 46 200 50 820 55 902 61 492 67 641 282 056

Jobs Facilitated 63 000 69 300 76 230 83 853 92 238 101 462 423 083

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PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.2 DIRECT LENDING PROGRAMME

Strategic InitiativesConsolidation of the loan book• Review the Direct Lending Credit Policy and Investment

Guidelines• Improve the due diligence quality• Partnership with local chambers of commerce and

business associations

+Pro-active alignment to Government Policy• Develop and implement a differentiated product &

process - procurement set-aside across all spheres ofgovernment

• Be the preferred funder of the DSBD/seda NationalGazelles Initiative

• Targeted Scheme to support enterprises owned bypeople living with disabilities

• Facilitate the funding of market access linkages for theDFIs and SOEs localisation and value chain developmentinitiatives (IDC, Transnet, Eskom, etc).

• Develop innovative and differentiated product solutions& application process that respond the needs of SMMEsand Co-operatives

Strategic Objective

To align the Direct Lending Programme with

government policy objectives to ensure

maximum development impact through its funding

activities.

19

P1.2 DIRECT LENDING PROGRAMME– STRATEGIC OUTPUT

Strategic Indicator

Projected

2015/162016/17 2017/18 2018/19 2019/20 2020/21

Total –

Strat Plan

Approval (R’000)

536 387 229 295 288 781 421 348 494 976 603 517 2 037 917


496 655 212 310 267 390 390 137 458 311 558 812 1 886 960


382 163 206 300 353 430 1 452

Jobs Facilitated 1910 817 1 028 1 501 1 763 2 149 7 258

20

PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.3 WHOLESALE SME LENDING PROGRAMME

Strategic Initiatives• Introduce other financing instruments such

as (equity, quasi equity funding instruments)to improve the capital structure of strongRFIs

• Expand the Structured Finance Solution (SFS)Offering

• Transfer of Isivande Women’s Fund fromIndustrial Development Corporation (IDC) tosefa

• Increased funding towards the agriculturevalue chain with particular focus on GrainFarming, Poultry Farming and Green HouseFarming

• Establish an Enterprise and SupplierDevelopment (ESD) Fund

Strategic Objective

To build a diversified institutional base to

increase access to finance to SMEs and co-operatives.

21

P1.3 WHOLESALE SME LENDING PROGRAMME– STRATEGIC OUTPUT

Strategic Indicator

Projected

2015/162016/17 2017/18 2018/19 2019/20 2020/21

Total –

Strat Plan

Approval (R’000)

284 000 245 816 329 087 457 050 502 889 507 968 2 042 808


182 900 163 877 219 391 304 700 335 259 368 785 1 392 012


196 216 238 260 286 315 1 315

JobsFacilitated

980 1 080 1 190 1 300 1 430 1 573 6 573

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PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.4 CO-OPERATIVE ENTERPRISE LENDING PROGRAMME

Strategic Initiatives

• Invest and build Cooperative Financial Institutions (CFIs) and Stokvels to contribute to financial inclusion

• Support and invest in Enterprising

Cooperatives

Strategic Objective

To increase funding to co-operative enterprises to

increase economic participation, especially

amongst women, youth and rural communities

23

PRODUCT OFFERING FOR CO-OPERATIVES

Business Loans

Structured Finance

Solutions

An instrument

designed to provide

financial products and

services as well as

business support to co-

operatives and micro-

enterprises involved in

the value chain

(vertical and

horizontal)

CFI/ Secondary Co-

operatives On

Lending Loan

CFIs / Secondary Co-

operatives to on-lend to

individual members or

Primary Co-operatives for

enterprising activities

sefa Co-operative

Infrastructure

Programme

A co-funding co-operative facility which involves sefa, private sector and municipalities. sefa will

provide business loans and the municipality will

provide grant funding for business support and

training. Private sector partners will provide

technical support and market access through off

–take Agreements and other

support systems

sefa 80/ 20 Co-operatives

Upliftment Facility

A co-funding co-operative facility where sefa will partner with municipalities (local,

district, metro) to provide enterprise loans

and business support grants. sefa contributes

80% of the facility as enterprise loans and

20% is contributed by the municipality for

business support. Concessional lending rates will be charged

Inter- Agency

50/50 Co-

operative Facility

A partnership facility between sefa and

other state agencies whose mandate is to

provide funding to co-operatives. Each party will contribute 50% for on-lending plus 5% for

business support which will entail mentoring and

training, bookkeeping etc.


24

PRODUCTS OFFERING FOR CO-OPERATIVES – CONT.

Fun

ds Sector Focused/

Partnership Funds

• Specialised funds that will

focus on prioritised sectors

(Waste recycling

Agriculture Producing and

Service Sectors)

Gra

nts

Pre- Investment Support Grant – CFI

• Provides funding packages to

start up CFIs of maximum ofR500 k.

Pre Investment Support

• Partner with Seda, provincialagencies and not-for-profitcompanies to assist inproject development andscoping

Post Funding Support

• Technical support to beprovided by a TechnicalPartner in the sector

Equ

ity

Inst

rum

ents Quasi Equity

Instruments

• Fill the gap between debt

and equity. The instrument

will consist of

subordinated loans and

mezzanine debt.


25

CO-OPERATIVES VALUE CHAIN MODEL

The sefa and the Secondary Co-operative will enter into a loan

agreement which will cater for business loans and business support grant

The Secondary Co-operative will be responsible for the allocation of the

business loans to its member co-operatives and repayment of the loans

to sefa;

The Secondary Co-operative will be responsible for marketing member

products and services and negotiating off-take agreements with buyers

such as government and other buyers; and

The management of developed shared infrastructure such as distribution

centres for bulk buying will be the responsibility of the Secondary Co-

operative.


26

CO-OPERATIVES VALUE CHAIN MODEL (CONT’D)

Benefits

Bulk buying;

Value adding and processing;

Funds mobilisation;

Marketing of members’ products and arranging off-take agreements;

Business support e.g. bookkeeping etc.; and

Shared Infrastructure management, operation and maintenance.


27

TARGETED SECTORS

Waste Recycling Projects (Solid Waste)

Agriculture Production (Fresh Produce, Poultry, high value crop, ground nuts)

Services Sector (Bakeries, School Feeding Schemes, Retail stores, etc.)

Rationale

o Industry players (readily available off takers) support

o Huge employment opportunities

o Facilitate procurement set asides

o Providing solution to national problem (waste management and improving food

security)

o Facilitate rural development


28

Case Study: Dr Kenneth Kaunda District Municipality (Dr

KKDM) Waste Recycling Co-operatives

sefa has approved an amount of R25 million to eight waste

recycling co-operatives for acquisition of equipment for waste

recycling plant and working capital.

Dr. KKDM will provide a grant amounting to R6 224 400 to

finance the existing building renovations and extensions.

The eight co-operatives will form a secondary co-operative

which will own a waste recycling plant and they will jointly be

responsible to operate the plant.

Each co-operative will operate a waste collection centre and in

turn deliver the waste to the sorting and baling plant.

Once sorted and baled by the plant, the waste will be sold to

Neopak in terms of the off-take between the secondary co-

operative and Neopak.

Refurbishment of the existing building has commenced. Two

contractors have been appointed by the Municipality. Equipment

orders have been placed.

Key information• Location: 64 wards in Dr Kenneth Kaunda District

Municipality (Dr KKDM)• Jobs created: 320• Funding amount: R25 million for acquisition of

equipment for waste recycling plant and working capital

• Key Partners: Dr KKDM (infrastructure refurbishment cost of R6.2m and lease thereof); Neopak (technical support), 8 Primary Co-operatives


29

Case Study: Chris Hani Co-operative Development Centre (CDC)

Partnership.

sefa approved R9.6 million loans for 2 incubation sites involved

in cash crop production (Indalo & Lukhanji Secondary Co-

operatives to cover operational and capital expenditure

13 Primary Cooperatives are members of the 2 Secondary Co-

operatives

Incucop is a Technical Partner which also facilitates market

access for the Secondary Cooperatives and will be responsible

for the repayment of sefa loans from the proceeds of the

produce

An incubation entity called Incucop (Pty) Ltd (Incucop) is a CDC

together with Dicla strategic partnership that facilitates the

establishment of Agro Clustering Incubation Models in the CHDM

area in the Eastern Cape.

CDC is plays an oversight role for implementation of the project

and similar in CHDM

Key information• Location: Chris Hani District Municipality

(CHDM)• Jobs created: 32• Funding amount: R9.6 million • Key Partners: Chris Hani Co-operative

Development Centre; Incucop (technical support), 2 Secondary Co-operatives (Incubators) supporting 13 Primary Co-operatives, off-take by Pick n Pay and Spar


30

Case Study: Super Grand Partnership

sefa approved a R20 million loan to fund 4 Primary Co-

operatives that are involved in rearing broiler chickens in

Limpopo, Mpumalanga and Gauteng Provinces for

commercial purposes.

Super Grand is playing a role of a technical partner and

ensuring market access

5 Co-operatives (4 funded by sefa) provide the manpower

and broiler houses that currently accommodate 40 000

chickens per cycle ( 35 days).

Super Grand currently has an off take agreement with

Kroon’s abattoir to supply 500 000 broiler chickens every

35 days.

These cooperatives have been able to provide 240 000

broilers since October 2013 and this results in shortage

260 000 chickens, hence the request for funding for sefa

to increase the existing capacity by adding chicken houses

that can take 50 000 chickens.

Key information• Location: Gauteng,Mpumalanga &

Limpopo• Jobs created: 26• Funding amount: R20 million • Key Partners: DRDLR, DoA, 4 Primary Co-

operatives, Super Grand (technical support); Kroon’s Abattoir off-take,


31

Case Study: Ntirhisano Shared Services Centre Co-operative -

School Feeding Scheme Bulk Buying

Approved R15 million facility Ntirhisano Shared Service Cooperative

Ltd (Ntirhisano) is owned by 23 black women and was established

to provide business support and negotiate contract on behalf of co-

operatives participating in feeding scheme with the Gauteng

Department of Education.

sefa and Ntirhisano signed a Cooperation Agreement in terms of

which it will provide support and bulk buying services to enterprising

members with tenders from the Department of Education.

Signed funding agreements individual enterprising members

Funds for stock is disbursed directly to the suppliers upon written

request by Ntirhisano.

The stock is delivered to Ntirhisano warehouse where the members

collect and deliver to schools.

Repayments are done directly to sefa by the 13 enterprising

members through stop orders.

Key information• Location: Gauteng• Jobs maintained: 13• Funding amount: R15 million • Key Partners: Gauteng DoE School Feeding

Scheme


32

SUMMARY OF APPROVALS TO DATE (FY2015/16)

DR KKDM Waste Recycling Secondary Co-operative: R25 million for capital and

operating expenditure, 8 primary co-operatives funded. A total of 64 coops (320

members) will service 64 wards (R11.1m disbursed)

Chris Hani Co-operative Development Agency Partnership: Two Secondary Co-

operatives (Indalo & Lukhanji) involved in Cash Crop production funding of R9.6

million for capital and operating expenditure. A total of 13 primary co-operatives

(157 members) are involved in this project (R6.4m disbursed)

sefa Super Grand Joint Venture: R20 million for capital and operating expenditure

of 4 Primary Co-operatives (25 members) in broiler business in Mpumalanga and

Limpopo (R11.1m disbursed)

sefa ABSA Tshepo 10 000 Facility: R10 million for City of Tshwane contracted and

trained co-operatives, targeting youth owned co-operatives (at negotiation phase)


33

P1.4 CO-OPERATIVE LENDING PROGRAMME– STRATEGIC OUTPUT

Strategic Indicator

Projected

2015/162016/17 2017/18 2018/19 2019/20 2020/21

Total –

Strat Plan

ApprovalsCFIs (R’000)

1 000 2 500 5 000 7 000 8 000 10 000 33 500

ApprovalsCo-operatives(R’000)

96 000 50 000 61 750 82 250 87 250 94 775 375 025


47 500 33 500 41 500 54 500 56 500 61 850 247 350


86 95 105 116 127 140 583

JobsFacilitated

688 760 840 928 1 016 1 118 4 662

34

PROGRAMME 1 – ACCESS TO FINANCE TO SMMES & CO-OPERATIVES P1.5 KHULA CREDIT GUARANTEE PROGRAMME


• Extend coverage to include a wider range of financial institutions and commercial suppliers of inputs to SMMEs and Co-operatives

• Introduce flexibility of terms and conditions to increase attractiveness of products and services to the targeted SME financiers

• Develop, pilot and market new products and services

• Introduce risk based pricing

Strategic Objective

To expand the utilisation of the Credit Indemnity

Scheme by increasing the number of participating

institutions, introduction of new products and the

streamlining of business processes and systems.

35

P1.5 KHULA CREDIT GUARANTEE PROGRAMME– STRATEGIC OUTPUT

Strategic Indicator

Projected

2015/162016/17 2017/18 2018/19 2019/20 2020/21

Total –

Strat Plan

Approvals(R’000)

12 500 260 000 320 000 380 000 440 000 500 000 1 900 000


12 000 80 000 180 000 250 000 350 000 500 000 1 360 000


94 381 1 428 2 238 4 047 4 143 12 237

JobsFacilitated

470 1 905 7 140 11 190 20 235 20 712 61 182

36

PROGRAMME 2 – POST INVESTMENT MANAGEMENT


• Implement a pro-active approach in the identification of early warning signals for portfolio investments

• Enhance the functionality of the Investment Monitoring Committee (IMC

• Implement a differentiated approach towards the monitoring of different loan types

• Capacitate the Workout and Restructuring capacity

• Enhance the Mentorship Programme to develop client sustainability

• Establish partnerships to provide value added services to sefa clients.

• System enhancement and automation– dash board reporting, collateral management system

Strategic Objective

To reduce the level of impairments and the

establish of a developmental approach

towards client sustainability.

37

POST INVESTMENT MANAGEMENT PROGRAMME– STRATEGIC OUTPUT

Strategic Indicator

Projected

2015/162016/17 2017/18 2018/19 2019/20

Impairment

management40% 29% 23% 21% 19%

identification of

early warning signals

for portfolio

investments

Within one month

of the NPL status

Within one month

of the NPL status

Within one month

of the NPL status

Within one month

of the NPL status

Establishment of

workout and

restructuring

business

10% - success

rate for

turnaround

and

restructuring

interventions

15% - success rate

for turnaround

and restructuring

interventions

20% - success rate

for turnaround

and restructuring

interventions

25% - success rate

for turnaround

and restructuring

interventions

30% - success rate

for turnaround

and restructuring

interventions

Initiate value added

support service

partnerships for sefa

funded clients

- 1 Partnership 2 Partnerships 3 Partnerships 4 Partnerships

38

PROGRAMME 3 – BUILD AN EFFICIENT AND EFFECTIVE SEFA THAT IS PERFORMANCE DRIVEN AND SUSTAINABLE


• Financial Management• Contain costs and increase collections on loans and

disbursements• Design, develop and implement sefa’s sustainability• Efficient and effective management of sefa’s cash resources

• Human Capital Management• Focused initiatives on enhancement of sefa employee

skills base• Building sefa entrepreneurial culture and values

based system• Invest in organisational development & change

management programs• Improving Employee well-being, and harmonised

working environment• Provisioning of adequate, safe and secure employee

working environment

• INFORMATION AND COMMUNICATION TECHNOLOGY• Enhancement of sefa Loan Management System• Expansion and Enhancement of the sefa back-end

infrastructure

Strategic Objective

To develop and implement an effective and efficient

back-office support system.

39

PROGRAMME 4 – BUILD A STRONG AND EFFECTIVE SEFA BRAND EMPHASIZING ACCESSIBILITY TO SMMES


• To position sefa is a funder of choice amongst SMME’S and Cooperatives and grow the customer base

• Improve national accessibility through the roll-out of access points (through co-locations) in each municipal district of South Africa

• Specific outreach to township and rural economies

• Develop a culture of client excellence.

Strategic Objective

To position sefa as a funder of choice amongst SMME’S

and Co-operatives.

40

PROGRAMME 5 – PROPERTY MANAGEMENT


• The management of the external propertymanagement agency Improve financial sustainabilityof the property portfolio

• Implementation of a debt collection strategy

• Settlement agreement with tenants for longoutstanding debt and ownership disputes

• Finalise sale agreements and negotiations with the -GAPIPA and OWIPA tenant organisations

• Forge private and public strategic partnerships withkey stakeholders with a common interest in therevitalisation and modernisation of the sefa propertyportfolio and thereby mitigate compliance (healthand safety) and insurance risk

Strategic Objective

Ensure that the value of the sefa property portfolio is

preserved and maintained and strategically utilised to

provide affordable infrastructure to small and medium enterprises that is

aligned to the sefa organisational strategy

.

41

STRATEGIC OUTCOMES - APPROVALS AND DISBURSEMENTS

Projected2015/16

2016/17 2017/18 2018/19 2019/20 2020/21Total

over theStrat Plan

Value of Approval via all loan products(R'000)

1 069 387 884 610 1 111 318 1 465 018 1 662 221 1 858 277 6 981 445

Disbursements to SMMEs and Co-operatives (R'000)

883 555 704 155 977 817 1 360 689 1 589 010 1 859 683 6 491 354

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

7 000 000

8 000 000

42

STRATEGIC OUTCOMES -ENTERPRISES FINANCE AND JOBS FACILITATED

Projected2015/16

2016/17 2017/18 2018/19 2019/20 2020/21Total overthe Strat

Plan

No of SMMEs and Co-operatives finance 42 758 47 055 52 797 58 816 66 305 72 668 297 641

No of Jobs Facilitated 67 048 72 998 85 476 97 732 115 538 125 756 497 499

0

100 000

200 000

300 000

400 000

500 000

600 000

43

DEVELOPMENT IMPACT TO TARGETED GROUPS

Black-ownedEnterprises

(R'000)

Women-owned

Enterprises(R'000)

Youth-ownedEnterprises

(R'000)

Township-owned

Enterprises(R'000)

Enterprisesowned by

people livingwith Disability

(R'000)

Enterpriseslocated in

priorityprovinces

(R'000)

Disbursements to

enterprises -value less than

R500k

2020/21 1 322 876 850 420 566 947 416 809 37 796 811 857 883 629

2019/20 1 112 307 715 055 476 703 357 481 31 780 697 555 777 285

2018/19 952 482 612 310 408 207 306 880 27 214 599 810 681 933

2017/18 684 472 440 018 293 345 219 902 19 556 431 018 498 231

2016/17 492 909 316 870 211 247 159 640 14 083 312 870 369 436

Projected 2015/16 618 488 397 600 265 066 210 689 14 013 397 000 372 776

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

44

BALANCED SCORECARDPERSPECTIVE OBJECTIVE MEASURE TARGET/ INDICATOR

SUB-PERSPECTIVE -

WEIGHT

CUSTOMER

PERSPECTIVE

Access to

finance by

SMMEs and

development

Impact

Total Approvals R 884 610 6%

Total Disbursements to SMMEs and Co-operatives via

all loan product channels (R'000)R 704 155 15%

Approvals in terms of productive to industrial sectors

identified in IPAP and NGP (R'000)

40% of loan book

approvals2%

Number of SMMEs financed 47 000 2%

Number of Jobs facilitated 73 000 2%

Facilities disbursed must be youth-owned - 18-35

years oldR 211 000 3%

Facilities disbursed to enterprises in priority rural

provincesR 312 000 3%

Facilities disbursed must be women-owned

businessesR 317 000 3%

Facilities disbursed must be black-owned businesses R 493 000 2%

Disbursements to township-owned enterprises

(R'000)R 159 640 3%

Facilities less than R500K disbursed to end-users R 369 436 3%

Facilities to People Living with Disabilities R 57 461 3%

Level of Customer Satisfaction 60% 3%

Sub-Total 50%

45

BALANCED SCORECARD (CONT.)

Perspective Objective Measure Target/ IndicatorSub-Perspective -

Weight

FINANCIAL

PERSPECTIVE

Building sefa

financial

sustainability

Cost to income ratio (excluding

Impairments, finance charges &

government grants)

157% 10%

Accumulated Impairments provision as a

percentage of total loans and advances –29% 14%

Growth in interest and admin fees

generated from loans6% 3%

Sub-Total 27%

INTERNAL

BUSINESS

PROCESSES

Improve

turnaround times

for application

approvals

Number of days bridging loans 20 days 3%

Number of days for terms loans 30 days 3%

Number of days for wholesale application 45 days 3%

System

Development and

process

automation

Enhancement to the loan management

system and key organisational business

process automated.

40% automation of

key business process

automated (reduction

in the business

process cost and

process times)

5%

Sub-Total 12%

46

BALANCED SCORECARD (CONT.)

Perspective Objective Measure Target/ IndicatorSub-Perspective -

Weight

PEOPLE

LEARNING AND

GROWTH

Development,

optimisation

and motivation

of human

capital

Labour Turn Over Rate (LTO)

of critical/ strategic

positions

7.00% 2%

Improvement in Employee

Satisfaction Index70.00% 3%

Implemented IDP’s that

enhance prioritised

organisational core

competencies (as per 3E

Development Framework –

Due Diligence/Financial

Analysis/Project

Management/Coaching

Skills)

80.00% 6%

Sub-Total 11%

Total 100%

47

BU

DG

ET O

BJE

CTI

VES

Work within current funding available & maintain positive cash balances over the MTEF period.

Reduce losses over 5 year period and break-even by 2020/21 FY

Decrease impairments, especially in the Direct Lending operations to 24% by 2020/21 FY

Downscale Direct Lending operations in the short-term to enable collection strategies to be put in place

Head count freezes over 5 year period with an allowance for annual cost of living adjustments

Properties to break-even by 2021

SEFA 2017-2021 FINANCIAL POSITION

48

4949

50

51

Year on year, interest income is forecasted to increase at a slower rate due to decreased disbursements, high impairments & suspended interest.

REVENUE incl. government grantRevenue (incl. govt grant) is forecasted to decrease by 13% over the MTEF period (3 years), driven by decline in ECSP allocation of approx. +/- R200m pa.

REVENUE excl. government grantsefa aims to increase Revenue (excl. govt grant allocation) by 45% in 3 years time and 103% in 5 years time.

COST MANAGEMENT AND IMPAIRMENTS Overall expenses and impairments on loans remain high and will result in a net cumulative loss after tax (incl. govt grant) of R188 million over the MTEF period, but impairments ratio is forecasted to decrease from 33% in FY 2016 to 17% in FY 2021. Contain salary bill, and freeze HC

REVENUE GROWTH AND COST MANAGEMENT

52

CASH SOURCES

2021 2020 2019 2018 2017 2015 YTD Dec 2015

Total 1,295,469 934,170 1,099,013 725,850 647,421 552,343 539,273

Sub -total funding -External

440,341 250,000 607,347 253,780 213,124 304,798 283,845

MTEF 340,341 295 949 257,347 223,780 213,124 151,798 76,241

ECSP - - - - -153,000 207,604

IDC loan 100,000 250,000 350,000 30,000 -

Capitalisation - - - -

Sub-total Collections from clients

838,344 635,084 411,642 422,994 434,297 247,545 255,428

53

OPERATING EXPENSES

-

100 000

200 000

300 000

400 000

500 000

600 000

700 000

2016 2017 2018 2019 2020 2021

R'000

Investment property expenses

Movement on impairments

54

Thank

you

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