Introduction to the National Empowerment Fund

1. Introduction to the National Empowerment Fund 1

2. Presenter Mr Phakamile Madonsela Regional Manager KwaZulu-Natal 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 and transformation solutions to advance sustainableBlack economic participation.” 3

4. 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 • BB BEE Codes of Good Practice Development focus Maximise the empowerment dividend NEF Mandate 4

5. NEF Mandate 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. NEF Restructured into Focused Funds The NEF iMbewu Fund provides debt finance from R250 000 to R10million (in exceptional cases up to R20 million for procurement contracts) The NEF Umnotho Fund provides complex investment debt and equity solutions from R5m to R75m for all products except project finance transactions. Rural And Comm. Dev Fund: Provides funds to groups in rural and urban communities through different legal entities.R250 000- R50m 6

7. FMD Structure Divisional Executive • NEF iMBEWU FUND • Retail Solutions • Rapid loan Solutions • Growth Capital Solutions • Equity & Structured Solutions • Wholesale Solutions • NEF Rural Development Fund • New Venture Finance • Greenfields / Start-ups • Acquisition Finance • Community Liquidity Warehousing • NEF UMNOTHO FUND • New Venture Finance (Formerly Project Finance) • Acquisition Finance • Expansion Capital • Liquidity & Warehousing • Pre-Investment Management • Product Advisory Services • Applications Management • Basic Screening / Assessments • Business Development • Post-Investment Management • Active Portfolio • Management • Collections • Management • Mentorship • Programme • Knowledge • Management • Legal Services • Legal transaction • Support • Post Investment • Support • Disbursement • Compliance • Knowledge Centre / harvesting

8. Support Units • Pre investment • Product Advisory • Business Plan Portal • Collection and Pre-Assessment of Applications • Post investment • Mentoring and Coaching • Collection of Financial Reports • On-going advice and mentoring of Investments

9. Support Units • Regional Offices • Initiating, packaging and co-ordinating Regional marketing interventions aimed at implementing High Impact Projects ensuring empowerment and job creation opportunities for communities • Business Development and Sourcing of Business Applications • The assessing and processing of business loan applications • Initiating and Maintaining Stakeholder Relationships • Post Investment Monitoring of Regional Projects

10. Products to Facilitate Business Growth 10

11. iMbewu Fund Product Offering . 11

12. Umnotho Fund Products 12

13. RCDF Product Offering

14. NEF Investment Criteria • Commercial Viability • Compliance with all relevant laws • Black management and operational involvement • Risk sharing by entrepreneur • Black women empowerment • Community involvement • Black ownership must comply with NEF product criteria • Return on investment • Job creation • Geographic location of business 14

15. NEF Investment Criteria 15

16. NEF Investment Instruments • Debt • Mezzanine Finance • Equity

17. 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 • 2. Black Women Empowerment • Job Creation • Growth Sectors • Geographic Spread • Investment Return • Transactions concluded 17

18. NEF Portfolio by Value NEF Invested portfolio by Sector By Value Since Inception – 31 December 2010

19. NEF Approved and Disbursed Deals by value

20. NEF Approved and Disbursed Deals by number

21. Key Developments • Roll our of Regional Offices • Provincial Enterprise Development Fund • Provincial Equity Fund • Co-funding and Co-ordination with Other Regional Stakeholders on High Impact Projects in KZN e.g. • Greytown Mall • Umtshezi Private Hospital • Harding Shopping Centres • Makhathini Flats Agriculture Project (Umjindi Irrigation Scheme) • Sisonkhe Texas Valley Agriculture Project • District Municipality Agri-Parks • Ilembe Cut Flower Project

22. Key Relationships Active Relationships: Other DFIs • KwaZulu-Natal Growth Fund (Infrastructure Projects) • Ithala Development Finance Co-operation (Agriculture Projects) • Khula Development Agency (Debt Surety) • National Youth Development Agency (Women and Youth Projects) Active Relationships: Government Departments • Dept. of Agriculture; • Dept. of Transport; • Dept. of Economic Development and Tourism; • Office of the Premier; (Inclusing spousal office, woman; house of traditional leaders, Youth ) • Department of Public Works

23. Private Sector Relationships Tongaat-Hullet RBM SAPPI Beier Industries Crossley Holdings Engen, Sasol, BP Food Franchise (Nando’s, Primi, Capello, Spur) Retail Chains (Pick n’ Pay, Checkers, Spar) Key Relationships (cont’)

24. Key Relationships (cont’) Active Relationships: Municipalities • Amajuba District Municipality • Sisonkhe District Muncipality • Ethekwini District Municipality • Umgungundlovu Municipality • Ilembe Municipality

25. Key Relationships (cont’) Public Owned Enterprises • Trade and Investment KZN • Richards Bay IDZ • Transnet Port Terminals • Transnet Rail • KZN Wildlife • Tourism Kwa-Zulu Natal

26. Challenges • Need for Municipalities Driving Investment Projects • Bureaucracy in Decision Making • Provision of Basic Infrastructure in particular in Rural Areas • Technical Partners • Community Structures

27. APPENDIX: CASE STUDIES 27

28. CCT NEF IDC TECHNICAL PARTNER CR R14,8m R19,4m AMAJUBA R37m • 60 HA raspberry farm in Amajuba district, KZN • Farm established on land secured through restitution process • Community beneficiaries with CCT governed by 11 trustees • Project taps into 482 000ha worldwide market • SA production only 100 ha currently • Project will be leading local supplier at full capacity • Supply local and export markets (70% of production) • Tap into growing popularity of raspberries A Sweet Deal! 28

29. Compliance with R&CD product criteria Broad based community ownership Sustainable projects with strong social benefits Strong technical partners Skills transfer Poverty alleviation Strong empowerment dividend Broad based economic ownership (1100 beneficiaries) Job creation (795 jobs including 91 permanent) Women empowerment ( 60% of workforce) Project location – rural KZN area Local Economic benefits Contribution of R9.8 m pa in salaries to local economy Electrification of houses Provision of land for new houses Partnership with IDC Leveraging IDC sector knowledge Contributing NEF know-how in financing rural communities 29

30. Turning Villagers into Shareholders The community owns this 4-Star hotel! • This is a R50 million project • The NEF invested R28,3 million • The Trust represents 22000 beneficiaries in the Jozini area (Northern Kwa-Zulu Natal) • Overlooks the third largest lake in South Africa • The hotel has 60 rooms • Accommodates 144 guests 30

31. Contact Details Telephone: (031) 301 1960 Address: Smart Xchange Building Ground Floor 5Walnut Road Durban Email: madonselap@nefcorp.co.za mazibukop@nefcorp.co.za Web: www.nefcorp.co.za 31