Download - About the NEF - PMG
1
BRIEFING ON THE NEF STRATEGY AND
ANNUAL PERFORMANCE PLAN 2017/18
Presentation to the Select Committee on
Trade & International Relations
Ms Philisiwe Mthethwa
21 June 2017
Contents
Section Slide
1 About the NEF 3
2 Strategic Planning Framework & Objectives 5
3 Provincial Dynamics 14
4 NEF Annual Performance Plan 2017/18 24
5 Life to Date Performance Milestones 36
6 Key Priorities 38
7 Empowering Farmworkers to
Become Entrepreneurs
49
8 Organisational Structure 59
2
About the NEF
3
NEF Mandate…
Established by the
National Empowerment FundAct No. 105
of 1998, the NEF is a driver and
a thought-leader in promoting and
facilitating black economic participation
through the provision of financial and
non-financial support to black owned and managed
businesses, as well as by promoting
a culture of savings and investment
among black people.
The NEF is an agency of the dti and is the
only DFI exclusively mandated to grow
B-BBEE
4
Broad Based Black Economic Empowerment
The Codes of Good Practice
55
The Strategic
Planning Framework…N
EF
Ac
t:
Ob
jec
tive
s
Th
e d
ti
Ob
jec
tive
s Government Priorities:
1) Acceleration of economic growth and transformation,
creating decent work and sustainable livelihoods;
2) Infrastructure development to achieve social and
economic goals and rural development;
3) Skills and human resource development;
4) Build a developmental state and improve public
service.
Sectors
NEF
• Tourism; Biofuels; Construction;
Agri-processing; Transport; ICT &
Media;
Mining services; Franchising
Industrial Policy Action Plan:
• Automotives, components, medium
and
heavy commercial vehicles
• Plastics, pharmaceuticals and
chemicals
• Biofuels
• Strengthening linkages between
cultural
industries and tourism
• Business process servicing
NEF Sectors in line with national industrial objectives
6
NEF MandateGrow black economic participation
Fund Management
1. Fund black-empowered businesses
2. Business plan toolkit
3. Mentorship support
4. Early-stage investments
5. TWR services
Asset Management
1. Investor Education
2. Public Share Offers
3. Enterprise Development
4. BEE Repository
Unpacking the NEF Mandate …
Culture of savings & investmentFinancial & non-financial support
7
Challenges/ Market FailuresMARKET FAILURES NEF SOLUTIONS
Limited own capital
Funding of between R250 000 and R75 million for start-up, expansion
and equity transformation purposes as well as use of concessionary
facilities. Non-descriptive on % of own contribution.
Limited management skills,
including financial, marketing
and technical expertise
Entrepreneurship Development tools and dedicated mentorship
support.
Access to affordable capital
Competitive cost of finance with a higher risk appetite as well as
requirement for operational involvement (sweat-capital) reduces the
need for collateral payment.
Lack of accurate and reliable
financial information
Dedicated pre-investment mentorship support and technical assistance
with our partners.
Poor Quality Business Plans Collaboration with other Government agencies like seda, incubation,
entrepreneurial training and general pre-investment support and NEF
Online Business Plan-Tool Kit.
Lower bargaining and strong
competition power from
established businesses with
entrenched market dominance
Linkages and emphasis on the implementation of the codes of good
practice (B-BBEE).
Wholesale Franchisor Facilities (Engen, Nandos, etc.)
Lack of access to local and
international markets
Linkages with off-takers. Relationships with franchisors and corporates
for access to markets.
8
8
SEDA to provide NFS to co-ops
Land Bank – Agri focused
Sefa – Overlap R250k to R5mil
Other DFI’s & banks as above
SETAs
As above
Department of Labour
IDC – Higher value threshold
Sefa – Lower value threshold
DBSA – Infrastructure focused
Land Bank – Agri focused
Banks – Security focused
OTHER DFI’s & BANKS
Rural & Community Development Funding
- “Contribution Beneficiaries”
Start up and Expansion Capital:
Procurement Contracts Funding
Start up and Expansion Capital establishes
“Beneficiary Entity”
Indirect: All products via approval process
Acquisition Finance
Indirect: Capital Markets; Start up;
Expansion Capital
Acquisition Finance
Capital Markets Fund
Liquidity and Warehousing Fund
Strategic Projects Fund
Indirect: Start up; Expansion Capital
NEF FUNDING PRODUCT
Socio-Economic Dev.
Weighting 5 points
Enterprise & Supplier
Development
Weighting 40 points
Skills Development
Weighting 20 points
Management Control
Weighting 15 points
Ownership
Weighting 25 points
CODE OF GOOD PRACTICE
NEF Positioning
as a B-BBEE Funder…“The NEF provides the funding solutions for the implementation of the B-BBEE Codes of Good Practice.”
Funding Across the Economic Spectrum
5
specialist
funds
9
Fund Focus Threshold
1 iMbewu Fund
(SMEs)
SME Fund providing
Entrepreneurship,
Procurement & Franchise
Finance
R250 000 –
R15 million
2 Women
Empowerment
Fund (WEF)
Achieve minimum 40% of
enterprises owned and
managed by black women
R250 000 –
R75 million
3 Rural &
Community
Development
Fund
Supporting rural economic
development through New
Ventures,Acquisition,
Expansion & Greenfields
Finance
R1 million –
R50 million
4 uMnotho Fund Funding of New Ventures,
Acquisition, Project Finance,
Expansion, Capital Markets,
Liquidity & Warehousing
R2 million –
R75 million
5 Strategic
Projects Fund
Early-stage investment in
industrial / manufacturing
transactions
Up to R75
million
Non-Financial SupportPre-investment
As the first-point-of-contact the unit provides product advisory services, manages the online business-plan solution, manages the administration of applications, incubation and entrepreneurial training.
Socio Economic Development
Empower black people in existing NEF transactions and other broad based groups through various social development interventions such as social facilitation, entrepreneurial training, investor education, corporate governance training and market access for the acceleration of meaningful participation.
Post-investment support
Monitor investments, provide ongoing portfolio management, manage mentorship support and collections as well as legal compliance
Turnarounds, Workouts and Restructuring
Rehabilitate distressed transactions and reduce impairments Through a combination of measures including balance sheet restructuring, equity and /or working capital injection, operational restructuring, introduction of a strategic equity partner and / or turnaround specialist and business rescue.
10
11
Key Strategic Objectives…
• Promote and support business ventures established and managed 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.
12
1. To provide finance to business ventures established and managed by black people.
2. Invest in black empowered businesses that have high employment creating opportunities
3. Support the participation of black women in the economy
4. Facilitate investment across all provinces in South Africa
5. Encourage and promote savings, investment and meaningful economic participation by black people
6. Advance black economic empowerment through commercially sustainable enterprises
7. Establish the NEF in the South African economy as a credible and meaningful DFI
8. Establish the NEF as a sustainable DFI.
The NEF’s strategic outcome
oriented goals are to:
13
“The Empowerment Dividend”
• Broad Based Black Economic Empowerment
• Ownership, management control, employment equity etc.
• Black Women Empowerment
• Job Creation
• Growth Sectors
• Geographic Spread
• Investment Return
The assessment of impact is not driven only by financial returns
but by measurement in terms of “The Empowerment Dividend”
made up as follows:
NEF’s Performance
and Investment Criteria…
Provincial Dynamics Striving for growth across all provinces
14
Invested growth across all provinces
15
1. As a national Development Finance institution (DFI) the NEF is
committed to ensuring that its products and services reach the
entire nation.
2. Since the launch of the NEF Asonge Share Scheme in July
2007 the NEF has implemented various measures and
interventions to strive towards an even, representative and
equitable distribution of its services across the country.
3. As a result, the NEF’s invested presence in Gauteng has come
down from above 60% of total disbursed funds in 2006, to 44%
by March 2017.
4. This is not as a result of a reduction of funding in Gauteng, but
is a direct consequence of planned, targeted and increased
funding in the other 8 provinces because they are integral to
South Africa's economy, comprising 76% of the population.
Reasons for growth across all provinces
16
Year Intervention Outcome
12006 -
2017
Local community &
stakeholder
workshops
Every year present & exhibit in a growing number of local community workshops
hosted by national, provincial and municipal governments, as well as various
business and civic stakeholders.
22007 –
2017Investor Education
Reached over 30 000 participants through 138 community seminars on how to save
and invest, personal financial discipline, shares, dividends, bonds, the property and
money markets, in villages, townships and cities countrywide.
3 2007 NEF Asonge Share
Scheme
Attracted 87 000 investors (47% in GP, 16% in KZN, 9% in WC, 7% in LP, 6% each
in NW & MPu, 4% each in EC & FS, and 1% in NC).
42007 –
2017
Strategic Projects
Fund
Venture capital fund responsible for driving the NEF’s contribution to
industrialisation by increasing participation of black people in early-stage projects,
especially in poverty nodes.
52008 –
2017
Rural & Community
Development Fund
Establishment of the Fund with the aim of unlocking the economic value that resides
in our Rural Communities, through the provision of Funding to identified rural and
community entrepreneurs, arranged as co-operatives..
62007 -
2017
Advertising & media
coverage Placement of adverts and stories in local, regional and national media countrywide.
7 2009 Business Plan &
Mentorship launch
Workshops in every province raising awareness on the online solution for
developing own business plans with financial projections. Over 24 000 registered
users have accessed the tool.
82009 –
2010
Eyethu Sonke Le
BEE!
4 destinations in each province promoting understanding of B-BBEE, funding &
access to government & private-sector procurement & enterprise development
opportunities.
92009 -
2017Regional offices Opened regional offices in all provinces.
102011 –
2017
Incubation &
entrepreneurial
training
Business skills training provided to over 2 898 beneficiaries who attended 109
seminars to date, countrywide.
17
Geographic spread of investments
GDP Source: Statistics South Africa; Gross Domestic Product, Fourth quarter
2016.
EC8%
FS2%
GP44%
KZN16%
LP6%
MP5%
NC2%
NW4% WC
13%
NEF Invested Portfolio by region by value
since inception - 31 March 2017
WC
NW
NC
MP
LP
KZN
GP
FS
EC 7.8
5.1
34.1
16.0
7.2
7.5
2.1
6.5
13.6
GDP Contribution by Province - 2015
18
Geographic spread of Rural &
Community Development Fund (RCDF)
Widely represented in all the Provinces, though still low in FS and NC, but evenly concentrated in
other provinces, with EC, KZN and MP predominantly sharing a significant % of businesses funded,
principally because of tourism in KZN, with agro-processing (dairy & feedlot) and shopping
complexes. The rest of the investment is spread across other Provinces but very low.
Limpopo4% Mpumalanga
5%Gauteng
15%
North West11%
KwaZulu-Natal38%
Free State5%
Northern Cape1%
Eastern Cape19%
Western Cape3%
Geographical Spread of Investment by RCDF to date
Province % No of deals R000s
Limpopo 3.72% 2 24 800
Mpumalanga 5.06% 4 33 703
Gauteng 14.63% 7 97 542
North West 11.03% 5 73 500
KwaZulu-Natal 38.02% 13 253 469
Free State 5.42% 4 36 150
Northern Cape 0.54% 1 3 612
Eastern Cape 19.04% 8 126 913
Western Cape 2.54% 2 16 900
Total 100% 46 666 589
RCDF Investment Spread by Province
19
Geographic spread of
Strategic Projects Fund (SPF)
The SPF portfolio by value is spread almost evenly in KZN, WC, FS and GP. The
NEF is making progress in increasing funding in other provinces with more
projects as indicated by the portfolio by number in Mpumalanga. Regional offices
are working extensively in increasing participation in other provinces.
SPF Investment Spread by Province
ProvinceNo of
dealsR000s %
Limpopo 2 12 000 1%
Mpumalanga 4 90 800 10%
Gauteng 7 78 336 9%
North West 3 52 216 6%
KwaZulu-Natal 4 242 900 28%
Free State 1 162 357 18%
Eastern Cape 2 131 957 15%
Western Cape 4 108 000 12%
Total 27 878 566 100%
Limpopo1%
Mpumalanga
10%Gauteng
9%
North West6%
KwaZulu-Natal28%
Free State18%
Eastern Cape15%
Western Cape12%
Geographic Spread of Investment by SPF
20
iMbewu Investment Spread by Province
ProvinceNo of
dealsR000s %
Limpopo 24 143 665 10%
Mpumalanga 27 113 191 8%
Gauteng 197 678 858 47%
North West 13 41 420 3%
KwaZulu-Natal 40 168 205 12%
Free State 22 32 802 2%
Northern Cape 1 8 750 1%
Eastern Cape 24 120 072 8%
Western Cape 51 142 607 10%
Total 399 1 449 570 100%
Geographic spread of iMbewu
Limpopo10% Mpumalanga
8%
Gauteng47%North
West3%
KwaZulu-Natal12%
Free State2%
Northern Cape1%
Eastern Cape8%
Western Cape10%
Geographic Spread of Investment by iMbewu
The iMbewu Fund portfolio by value is spread almost evenly in the EC, WC, LP and MP with
GP being dominant. The NEF is making progress in increasing funding in other provinces with
Gauteng at less than 50%. Regional offices are working extensively in increasing participation
in other provinces.
21
uMnotho Investment Spread by Province
ProvinceNo of
dealsR000s %
Limpopo 6 167 983 6%
Mpumalanga 7 73 346 3%
Gauteng 87 1 678 448 59%
North West 2 110 402 4%
KwaZulu-Natal 23 312 275 11%
Free State 1 20 704 1%
Northern Cape 3 95 237 3%
Eastern Cape 11 199 215 7%
Western Cape 12 171 369 6%
Total 152 2 828 979 100%
Geographic spread of uMnotho
Limpopo6%
Mpumalanga3%
Gauteng59%
North West4%
KwaZulu-Natal11%
Free State1%
Northern Cape3%
Eastern Cape7%
Western Cape6%
Geographic Spread of Investment by uMnotho
uMnotho’s strategic intent is to drive black participation in medium to large enterprises,
the majority of which are domiciled in Gauteng, which is reflected in this slide with the
province comprising 59% of the Fund’s portfolio.
22
Regional Offices
1. The NEF has regional office presence in all
provinces. In the last financial year,
approximately 65% of the number of
approved transactions emanated from the
regional offices and Pre-Investment Unit
2. This national presence ensures that the
NEF reaches every area of the country
including the remotest rural areas, where
the poorest of the poor mostly reside.
3. The NEF always takes part in national (the
dti, DED & DSBD), provincial and local
government roadshows, as well as various
other stakeholder events, to take its
message to the people.
4. It is as a result of this that the NEF has
successfully funded business ventures
through its Rural and Community
Development Fund, whose objective is to
unlock value in rural and township
communities.
Geographic Spread – Investor Education
Investor Education campaign has been rolled out in the Eastern Cape, Northern Cape, Free State, Limpopo, Western Cape,
North West, KZN, Mpumalanga and Gauteng with 4 seminars per province. Attendees: over 30 000 participants.
z
NORTHERN
CAPE
FREE STATE
LIMPOPO
KZN
EASTERN
CAPE
MPUMA
LANGA
NORTH
WEST
GP
WESTERN CAPE
23
Mahikeng,
Lichtenburg,
Rustenburg,
Hammanskraal,
Vryburg, Taung
Klerksdorp,
Potchefstroom,
Vuselela
Kimberley,
Prieska,Kakamas,
Keimoes,Upinton,
Kathu, Barkley West,
Kuruman
Saldanha, Langa, Bellville
Nyanga, Mannenburg /
Gugulethu, Worcester,
Caledon, Cornville –
George, Kwanonqaba-
Mossel Bay, Kraaifontein,
Saldanha, Malmesbury,
Paarl (Wellington)
Port Elizabeth, East London, King Williams
Town, Mount Frere, Butterworth, Umtata,
Fort Beaufort, Grahamstown
Bloemfontein, Botshabelo,
Welkom, Thaba Nchu, Qwaqwa,
Kroonstad, Ladybrand,
Bethlehem
Seshego, Lebowakgomo,
Lephalale, Bela-Bela,
Thohoyandou, Giyani,
Phalaborwa, Tzaneen,
Madzivhandila Agricultural
College
Newcastle, Dundee,
Ladysmith, Estcourt,
Pietermaritzburg, Port
Shepstone, Newlands
East, Chatsworth,
Umlazi. Kwa Mashu,
Ulundi, Richards Bay,
Umfolozi
Springs, Alexander
Soweto, Diepsloot Ext 2,
Soshanguve, Mamelodi
West, Krugersdorp Kagiso
2, Sebokeng, Ekurhuleni,
Bronkhorstspruit,
Tsakane, Katlehong,
Tembisa
Delmas Botleng,
Secunda,
Ermelo, Piet Retief
Emalahleni,
Middleburg,
Mbombela, Hazyview,
MRTT Hotel Academy
NEF booklet on how
to save and invest
NEF Annual
Performance Plan
2017/18
24
NEF Strategic Plan 2017/2018
Growing Black
Economic Participation
Advance B-BBEE
Approval Targets:
2017/18 = R0.950bn
2018/19 = R1.046bn
2019/20 = R1.331bn Maximise Empowerment Dividend
New & existing jobs to be supported:
2017/18 = 4 064
2018/19 = 5 629
2019/20 = 7 170
Fund a Woman,
Fund a Nation
40% of funding to be disbursed each year to women led enterprisesPromote a Culture of
Savings & Investment
Host 32 Investor Education seminars per
year countrywide, in villages & townships, on
shares, dividends, bonds, property & money
markets etc
Creating Black Industrialists
Commercialise strategic projects geared to support
over 85 000 jobs
Financial Efficiency & Sustainability
Impairment Provisions 18%
ROI between 9% – 10%
Collections ratio up to 80%
Other Imperatives
Objective Outcome
1Geographic
SpreadGrow investments across all provinces
2
Sustainable
Black
Businesses
Provide ongoing business-planning &
mentorship support, business &
corporate governance training &
incubation support
3Reputation
management
Entrench commitment to integrity among
staff, investees and suppliers 25
Strategic Objective 1:
Provide finance to business ventures established and managed by black people
26
Approvals & Disbursements
27
Targets over strategic Period in Rm
Year Approvals Commitments Disbursements
2017/18 950 745 660
2018/19 1,046 839 915
2019/20 1,331 1,065 1,165
Moratorum
749 749
1162
1332
418
895
1248
1067
0
200
400
600
800
1000
1200
1400
NEF Approvals by Value (R million)
424377
597
704636
562
819
699
0
100
200
300
400
500
600
700
800
900
NEF Disbursements by Value (R million)
28
Strategic Objective 2: Invest in black empowered businesses that have high employment creating opportunities.
Maximizing the
Empowerment Dividend
28
Job-Creation since inception
29
31 March
2011
25 500 jobs
31 March
2012
28 624
jobs
31 March
2013
44 179
jobs
31 March
2014
47 800
jobs
31 March
2015
81 618
jobs
Targeted number of jobs expected to be created or supported
Year No. of jobs
2017/18 Support 4 064 new or existing job opportunities
2018/19 Support 5 629 new or existing job opportunities
2019/20 Support 7 170 new or existing job opportunities
31 March
2016
86 859
jobs
31 March
2017
92 189
jobs
30
Strategic Objective 3: Support the participation of black women in the economy
Maximizing the
Empowerment Dividend
Targeted women ownership
Year Percentage of (Annual)
Portfolio Disbursed
2017/18 40%
2018/19 40%
2019/20 40%
2016/17
Performance
34% of portfolio
disbursed is owned
by women
31
Strategic Objective 4: Facilitate investment across all provinces in South Africa
Maximizing the Empowerment
Dividend
Targeted Disbursements in under-
represented provinces (NC, NW, FS,
LP, MP &EC)
Year Percentage of Annual
Disbursements
2017/18 25%
2018/19 25%
2019/20 25%
EC8%
FS2%
GP44%
KZN16%
LP6%
MP5%
NC2%
NW4%
WC13%
NEF Invested Portfolio by region by value
since inception - 31 March 2017
32
Strategic Objective 5: Encourage & promote savings, investment & meaningful economic participation by black people
Optimising Non-Financial
Support
Targeted number of investor education
seminars held across the country
Year No. of Seminars per year
2017/18 32
2018/19 32
2019/20 32
2016/17 Performance
48 investor education
seminars were held
33
Strategic Objective 6: Black economic empowerment is advanced through commercially sustainable enterprises
Optimising Non-Financial
Support
Indicators 2016/17
Performance
2017/18 2018/19 2019/20
6.1 Number of Business
Today Training Sessions
provided
21 18 18 18
6.2 Number of
entrepreneurs who
successfully complete
business incubation
30 15 15 15
6.3 Number of Social
Facilitation sessions for
NEF investees
42 18 18 18
34
Strategic Objective 7: Establish the NEF in the South African economy as a credible and meaningful DFI
Optimising Non-Financial
Support
Targeted brand awareness levels (*biennial survey)
Year Brand awareness levels
2017/18 N/A*
2018/19 75%
2019/20 N/A*
2014/15 Performance
81% Brand awareness
2016/17 Performance
Target = 70%
86% Brand awareness
35
Strategic Objective 8: Establish the NEF as a sustainable DFI.
Financial Efficiency And
Sustainability
Indicators 2016/17
Performance
2017/18 2018/19 2019/20
8.1 Percentage of
Portfolio Impaired
17.60% 18% 18% 18%
8.2 Targeted ROI 8.03% 9%-10% 9%-10% 9%-10%
8.3 Collections
Ratios
101.79% 80% 80% 80%
Life to Date Performance Milestones
Output Achievements
1 Approvals Benefited black entrepreneurs through approval of 852 transactions worth
more than R8.6 billion across the country.
2 DisbursementApproximately R5.8 billion has been disbursed to these companies since
inception.
3 Integrity Secured unqualified external audit opinions for 11 years running.
4 Supporting jobs To date the NEF has supported in excess of 92 189 jobs (new jobs 63 989 ).
5 Industrialisation 27 strategic and industrial projects worth R28.67 billion, with the potential to
support over 85 000 jobs.
6A culture of savings
& investment
In a transaction worth over R1 billion the NEF Asonge Share Scheme made
available more than 12 million MTN shares to over 87 000 investors
comprising black individuals and groups. 49% of investors were women.
7 Investor education
Reached over 30 000 people in villages and townships through 138
community seminars on how to save and invest, personal financial discipline,
shares, dividends, bonds, the property and money markets.
8Entrepreneurship
training / incubation
Business skills training provided over 2 898 potential entrepreneurs who
attended 109 seminars from 2012 to date.
9 National footprint
Regional offices in all provinces. Approximately 65% of the number of
approved transactions emanated from the regional offices and Pre-Investment
Unit, year to date as at 31 March 2017.
10 Collections Over R2.3 billion has been repaid by investees.
36
Cash Collected
37
Over R2.3 billion collected cumulatively from loans disbursed across
the country, in black-owned and managed businesses across virtually
all sectors of the economy.
Portfolio Receipts (Rm)
Key Priorities
38
1. RECAPITALISATION:
• IDC
o The business combination process with the IDC has been approved by the
Minister of Trade & Industry and the Minister of Economic Development. The
process is now moving through the requisite legal and regulatory processes.
o As part of the business combination process, the Ministers have recommended
that the IDC grants the NEF a bridging facility effective 1 April 2017 to continue
its operations pending finalisation of the business combination process. The IDC
has since granted a facility of R500 million. However the terms of the facility are
still being negotiated.
• PIC
o An application for a PIC facility of R1 billion is currently in progress. The PIC has
concluded a due diligence process and the application is going through to its
relevant approval structures.
• UIF
o The NEF has applied for subsidies for non-financial support. An application for
R50 million has been submitted to UIF’s Labour Activation Programme which
promotes programmes that create/preserve jobs.
Projected unencumbered cash position
39
Notes:
• Actual cash at 31
March R1.35 billion
• R369 million
uncommitted cash at
hand
• To discharge 2017/18
strategy, at least R500
million would be
required as cash
injection
Key Priorities (cont…)
2. CREDIT RISK:
• Due to the high-risk mandate of the NEF, credit risk is considered a
critical-to-high exposure area.
• The tough economic conditions and low growth rates have negatively
impacted on businesses supported by the NEF, subsequently resulted in
an increasing number/value of transactions in distress. The recent
downgrade in credit ratings could aggravate economic conditions
• Initiatives to ensure the sustainability of the portfolio include:
o Enhanced screening, due diligence and credit risk assessment
processes.
o Increased focus on distressed clients through closer Post-Investment
monitoring and portfolio management.
o Improved credit collection processes.
40
Key Priorities (cont…)
3. CONTINUED ALIGNMENT TO NATIONAL PRIORITIES:
• Harnessing economic growth potential & job creation – Explore growth
sectors and identify possible opportunities for the NEF.
• Black Industrialists Programme – to continue the development of black
industrialists through the Strategic Projects Fund.
• A lack of funding will negatively impact on the successful implementation of the
mandate.
4. PEOPLE RISK:
• The NEF could lose key personnel and specialist skills due to uncertainty
regarding the impact of the business combination processes.
• Interventions may be required in order to quell uncertainty and stabilise attrition
levels.
41
42
5. Advocacy:
Alignment with government objectives – support is required to
promulgate legislation to effect new industries, allowing us to invest in
strategic sectors in support of key government initiatives and job
opportunities creation (See Mabele and Kenako Medical Case
Studies)
Key Priorities (cont…)
43
Alignment with government Objectives –
Mabele Fuels Case Study:
Location Bothaville, Free State
Project Development Stage Pre-Financial Close
NEF Investment to date R62.35 million
NEF Equity 20.22%
Project Promoter Mabele Fuels Pty Ltd
Projected Financial Close Requirement R2.2 billion
Jobs 16 700
• The project intends to develop a circa 154 million litre per annum fuel
grade bioethanol plant in Bothaville, in the Free State Province.
• The plant feedstock is grain sorghum and the production methodology
involves a process utilising grain milling through starch conversion to
sucrose as well as fermentation and drying that ultimately culminates in
the production of saleable bioethanol.
Mabele Fuels Case Study /cont…
Development impact of the project:
• A high job creator with an estimated cost per job relatively low at
approximately R149,700;
• Use of agricultural outputs in project creates opportunities for
community ownership through community trusts and/or
employee ownership schemes;
• Opportunity for rural socio-economic development;
• A green environmentally friendly alternative to the conventional
use of fossil fuels;
• Provides for greater fuel security in countries such as South
Africa with no oil reserves.
44
44
Mabele Fuels Case Study /cont…
Support needed for the project:
• Financial close was reached in late 2012 with the expectation for fund
drawdown in 2013; plant should have been operational by October 2015.
• A key Condition Precedent to fund drawdown post Financial Close was the
finalisation of the Government’s Biofuels sector subsidy mechanism, which
unfortunately currently remains oustanding.
• The project is therefore still on hold pending a response from the
Department of Energy regarding the subsidy mechanism to be adopted for
the Biofuels Industry.
45
46
Kenako Medical Case Study
Location Coega IDZ, Eastern Cape
Project Development Stage Financial Close
NEF Investment to date R75 million
NEF Equity 70%
Project Promoter Kenako Medical Pty Ltd
Projected Financial Close Requirement R180 million
Jobs 108
• Kenako intends to develop the sole manufacturing plant of normal and safety syringes
in the SADC region.
• The plant will initially produce a total of 250 million syringes and 200 million
hypodermic needles per annum.
• The NEF commenced with a R7.2 million feasibility study funding in 2013 and gave a
hands on approach in assisting the Black Industrialist in bringing the project to
bankability.
• Earlier this year the NEF made a further commitment towards the construction of the
plant bringing the NEF’s total investment to R75million.
Kenako Medical (cont…)
47
Development impact of Project
Specialised skills transfer for the operation and maintenance to
Kenako staff;
Import Replacement: Kenako will be the sole manufacture of
syringes and needles in South Africa replacing 20% of imports into
the South African and SADC syringe markets;
NEF’s equity to be warehoused for the future benefit of B-BBEE
entities; Kenako is currently 100% black owned;
Strategic Sector Alignment with IPAP2, NGP etc. Furthermore
the investment will be supporting a capable black industrialist;
Geographic Diversification: The project will be based at the
Coega IDZ in the Eastern Cape, increasing investment in this
economically depressed region.
Support needed for the Project
• Partial Designation of government procurement of syringes by
Department of health in order to secure sales for Kenako;
• Allow for exceptions to the generic requirements for designation by
ITAC in projects of strategic nature such as Kenako;
• Expedite SAHPRA Regulation for medical devices in particular
syringes to lower influx of poor quality imports;
• Assistance in obtaining grant funding for international product
certifications i.e. FDA, CE etc.
48
Kenako Medical (cont…)
Empowering farm workers
to become entrepreneurs
49
Background
• The NEF and DRDLR concluded an MOU in January 2016 to partner in
implementing some DRDLR programs.
• The Honourable Minister Nkwinti requested the NEF to pilot 10 projects
under the “Strengthening of Relative Rights” programme (“SRR”) to
benefit mainly farm workers and communities to acquire economic
interests in the agricultural land and businesses where they are
working and/or living.
• The SRR policy entails the farmer acquiring 50% of the business, farm
workers acquiring 50% (of which 5% will be allocated to NEF) to be
operated under NEWCO. The land is then acquired by the state and
leased back to the business for 30 years.
• The NEF and DRDLR concluded a Service Level Agreement in
February 2016 to implement the SRR Pilot projects, which pilot, as
outlined below, was successful.
• DRDLR handed 30 SRR projects to the NEF for implementation by 31
March 2017.
50
Background Cont…
51
• The NEF scope of work is to:
o Undertake high level due diligence investigations after
receiving valuation reports from the Valuer General;
o Negotiate business and asset prices on behalf of DRDLR;
o Propose commercially sound transaction structures;
o Draft investment reports for submission to the Ministerial
Technical Task Team (MTTT) and the Ministerial Co-
ordinating Committee (MCM);
o Conclude legal agreements;
o Disburse committed funds;
o Facilitate the establishment of NEWCO’s and B-BBEE
structures;
o Act as an implementing agent for SRR on behalf of DRDLR;
o Provide social facilitation and Post Investment support.
Scope of NEF Work
• Due Diligence
• Price negotiations
• Transaction agreements
• Employee lists
• Warehousing
• Implementation
• Social facilitation
• NEF 5% shareholder
• Monitoring and mentorship
52
Milestones to dateName of
FarmProvince Number of
beneficiariesAmount
ApprovedIndustry Status
Dubchick Limpopo 6 R21 000 000 Game Farming Partly Disbursed
Kleinmonden
Rivier
Eastern Cape
40 R10 500 000 Pineapple farming & Processing
Fully Disbursed
Sun Orange Farms
Eastern Cape
58 R38 067 000 Citrus Farm Agreements to be signed
Solms Delta Eastern Cape
45 R65 000 000 Vineyards for wine production
Fully Disbursed
Birbury
Farming
Eastern
Cape
29 R5 320 903 Pineapples Fully Disbursed
Westcliffe Farm
KwaZulu-Natal
55 R33 000 000 Vegetables, sugar cane, Timber
Partly
Disbursed
Hoogland Western Cape
18 permanent180 Seasonal
R 75 100 000 Table Grapes, vegetables slice &dice
PartlyDisbursed
Louie Meyer North West 10 R55 238 000 Cattle farming PartlyDisbursed
Marolien Gauteng 102 R30 433 000 Herb Farm Agreementssigned
Saamstaan Western Cape
56 R160 492 000 Wine Grape Farming Agreements to be signed
Jurgens
Boedery
Limpopo 42 R44 000 000 Game Farm Agreements to be signed
Gannahoek Free State
253 R52 444 310 Nuts, Sheep, Crop &
game
Approved
Zuurefontein WC 12 employees R 59 296 935 Potatoes & Onions Approved
Total R649 892 148
53
Milestones
Better prices negotiated
Going concern principle
Unlocking hidden value
30 farms worth over R1 bn
13 transactions approved R649 million
54
Milestones cont…
Strict disbursement terms
Retention of IP, trademarks, markets & goodwill
Pioneering a new approach in land restitution
55
Negotiations in progressName of
FarmProvince Beneficiaries Amount Industry
Bergstroom KZN 192 employees R 360 000 000 Maize, Cattle Farming
Bos Blanco FS 80 employees R 400 000 000 Game, cattle, grains
Masisweni EC 56 employees TBC Livestock, crop, processing
Morgenzon FS TBC TBC Cattle, sheep, game
Slagterskop NC 3 employees R 8 500 000 Sheep farming
Fremax Farms MP TBC R 410 000 000 Potato, maize, feedlot
Siyakhathamela KZN TBC TBC Sugar, Tannery, livestock
Thumamina KZN TBC TBC Sugar, Tannery, livestock
Seven Oaks KZN 100 employees TBC Sugar, timber, livestock
Mikon Farming MP 187 employees R 62 000 000 Poultry
Karsten Group NC TBC TBC Table grapes
TOTAL R 1 240 500 000
56
Developmental Impact
Social cohesion
Revitalisingrural economy
Security of tenure
OneHousehold
One Hectare
Farmworkers are
entrepreneurs
57
Plan Going Forward• To ensure the sustainability and efficient operation of all these business by
actively monitoring progress.
• To establish corporate governance structures.
• To promote more similar transformation partnerships with other
interested farmers in all provinces.
• To empower through skills development, and capacity building of the
workers for active participation in the operation and management of
these business.
• To develop Social development & empowerment plans from spin off
opportunities.
• To Link the businesses to more international markets and create
market linkages amongst them.
• To ensure the land tenure rights are realised by the beneficiaries.
• To ensure that proper housing structures are built for the beneficiaries.
• Implement the one household one hectare programme for more
economic activities.
• Create smaller businesses on the household hectares and link them to
market.
58
Organizational Structure …
Executive (member of Exco)
Senior manager
Manager
STRATEGY & PLANNING
SYSTEMS & IT
CHIEF FINANCIAL OFFICER
FINANCE
SUPPLY CHAIN MANAGEMENT
COMPLIANCE & RISK
INTERNAL AUDIT
SECRETARIAT
CHAIRMAN
BOARD OF TRUSTEES
AUDIT COMMITTEE
RISK MANAGEMENT COMMITTEE
HUMAN CAPITAL & REMUNERATION COMMITTEE
BOARD INVESTMENT COMMITTEE
CHIEF EXECUTIVE OFFICERCHIEF EXECUTIVE OFFICER
LEGAL SERVICES
DIV EXECSMEs and Rural Development
iMBEWU FUND
PRE-INVESTMENT BUSINESSSUPPORT
EXEC CORPORATE SERVICES
HUMAN RESOURCES
FACILITIES MANAGEMENT
MARKETING & COMMS POST-INVESTMENT BUSINESSSUPPORTRURAL & COMMUNITY DEV.
STRATEGIC PROJECTS
FUND
UMNOTHO FUND
DIV EXEC :Venture Capital and
Corporate FinanceGENERAL COUNSEL
REGIONAL OFFICES
SOCIO-ECONOMICDEVELOPMENT UNIT
& ASSET MANAGEMENT
TURNAROUND, WORKOUTS &
RESTRUCTURE UNIT
SOCIAL AND ETHICS COMMITTEE
Headcount: 157
Optimal/budgeted headcount: 195
59
60
Thank youContact Details
www.nefcorp.co.za
WHERE TELEPHONE
1 Head Office,
Johannesburg
011 305 8000 or 0861843 633 /
0861 THE NEF
2 Eastern Cape 0861 633 327 / 0861 NEF ECP
3 Free State 0861 633 377 / 0861 NEF FSP
4 KwaZulu Natal 0861 633 596 / 0861 NEF KZN
5 Limpopo 0861 633 546 / 0861 NEF LIM
6 Mpumalanga 0861 633 678 / 0861 NEF MPU
7 Western Cape 0861 633 927 / 0861 NEF WCP
8 North West 0861 633 697 / 0861 NEF NWP
9 Northern Cape 0861 633 627 / 0861 NEF NCP