SAMAF Medium-Term Strategic Framework 2010-2013

1. samaf Medium Term Strategic Framework2010 – 2013 Presentation to the Portfolio Committee on Economic Development07 September 2010

2. Contents • Mandate • Vision , Mission & Values • Products and Services • Alignment to EDD Institutional Drivers • Key priorities for 2010/11 • Performance Targets • Risk Assessment • Budget • 2010/11 Quarter 1 Performance • Challenges

3. Mandate • Contribute to Government’s poverty reduction goals by acting as a catalyst for the development of an effective micro-finance sector through: • Support for the establishment of sustainable micro-finance institutions that can reach deeper and broader to the enterprising poor; • Facilitating the establishment of an enabling environment for effective financial intermediation and facilitation of working markets for the enterprising poor; and • Building a strong, effective and efficient Apex Fund.

4. Vision samaf envisions a country in which a network of sustainable micro-finance institutions broadens and deepens access to affordable financial services by the enterprising poor. This is achieved when: • Active participation of enterprising poor in economic activities is robust and bears fruit; • Reduction of financial troughs for a better livelihood; • Sustainable Financial Intermediaries (FI’s); • Adoption of best practise models; • Competent employees; • Utilisation of systems in delivery of services; and • A financially sustainable samaf

5. Mission • Provide developmental financial and non-financial services to FI’s (MFI’s & FSC’s) through: • The effective mobilisation and wholesaling of capital for micro-finance institutions with proven potential; • The development of human capital in the economic environment through capacity building and institutional development; • Contribute to policy development with respect to micro-finance to inform and support samaf staff, its partners, and stakeholders; & • The development of valuable partnerships between business, Government and the community.

6. Values • The following values will underscore samaf’s behaviour as it strives towards the achievement of its mandate, vision and mission: • Integrity - Dealing with stakeholders in an honest and ethical manner; • Transparency - Ensuring compliance to best practice on the dissemination and sharing of information with all stakeholders and consult 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; and • High Performance - Excellent performance and satisfied customers that guarantee long term sustainability of the South African Micro-Finance Apex Fund.

7. Products and Services samaf offers three main products and services namely Financial Services,Technical Support and FSC Supervision. • Loans -samaf provides loans to a maximum of R10 million to its FI’s who in turn can provide loans to its clients up to a maximum of R10 000. • Capacity Building - the following are the capacity building interventions that samaf offer: • Capacity buildingLoan linked grant: MFI’s receive a maximum of 50% of the total loan amount approved whilst FSC’s receive a maximum of 170% of the loan approved. • R200 000 grant: This grant is not linked to the loan and is given to FSC’s that are still to be capacitated in terms of training and operational costs. • Technical support: samaf staff provide technical support such as the development of operational policy documents, training of FSC’s, etc. • FSC Supervision: samaf is mandated to regulate and supervise all FSC’s in South Africa in terms of Exemption Notice 887 of the Banks Act. 7

8. Alignment to EDD Institutional Drivers • The performance objectives are aligned to the following policy and institutional drivers as defined by the Economic Development Department (EDD): • Co-operatives Review - Improved support for FI’s (Micro-finance Institutions and Financial Services Co-operatives). • Spatial development - Extension of samaf offerings to remote and rural areas with an appropriate provincial focus. • Youth employment - Creation of job opportunities for the youth. • Dashboard - Definition and implementation of an effective reporting mechanism. • Research and policy - Ongoing research for service delivery optimisation. • Red tape review - Review of turnaround times and bottlenecks. • Cost review - Reviewing and implementing measures to reduce costs.

9. Key Priorities for 2010/11 • Provision of financial support to FI’s totalling R36m for on-lending; • R23.4m for capacity & institutional building support for (Microfinance Institutions (MFI’s) and Financial Serviced Co-operatives(FSC’s) • Increase threshold of on-lending from R10k to R50k • Technical support through samaf’s provincial offices & industry experts • Review of institutional processes & cost drivers • Identification of skills gaps & implementation of appropriate interventions • Building public confidence in the micro-finance sector through development of appropriate reporting and prudential stds (i.e. minimum requirements); & • Lobbying for policy review & other support to enable growth of the sector. Through this, samaf will work closely with the interest groups and key stakeholders to develop an enabling policy and regulatory framework.

10. Performance Targets

11. Performance Targets - continued Split per Loan Type Demographic Split

12. Performance Targets - continued Provincial Split – Loans (R’m) Provincial Split – No. of FI’s (MFI’s & FSC’s)

13. Performance Targets - continued Provincial Split – Capacity Building (R’m) Provincial Split – Savings (R’m)

14. Performance Targets - continued • Key strategic alliances – 2 in 2010/11 & 3 each in 2011/12 & 2012/13 • Loan repayment rate to samaf – 50%, 60% & 70% over the three yrs • Tool to measure capacity building impact – investigate in 2010/11 & implement over subsequent two yrs. • Review operational costing model – 70%, 80% & 100% over the three yrs • Portfolio @ risk – 45%, 42% & 40%, reducing marginally over the three years • Bad debts recovered – 1%, 2% & 5%, increasing as capacity & systems improve • Improving awareness – brochures in all languages & community radio stations in 2010/11 & additionally utilising TV in next two years 14

15. Performance Targets - continued • Improve client satisfaction – 70%, 80% & 85%, increasing over three yrs • Retention of FI’s (MFI’s & FSC’s) – 50%, 60% & 80% over the three yrs • Reducing turnaround times for resolving client complaints from 5 to 2 days by 2012/13 • Review loan approval & disbursement process to improve turnaround times • Reduce turnaround times for paying creditors from 30 to 15 days by third yr • Finalisation of review of critical skills requirement for samaf & 60%, 80% & 100% staff trained over the three yrs in partnership with strategic alliances • Internships & youth learner ship – 6, 8, 10 over the next three yrs 15

16. Risk Assessment

17. Budget

18. 2010/11 Quarter 1 Performance

19. 2010/11 Quarter 1 Performance Demographic Split

20. 2010/11 Quarter 1 Performance

21. 2010/11 Quarter 1 Performance

22. 2010/11 Quarter 1 Performance 22

23. Challenges • Appropriate skills, leadership & accountability at senior levels within samaf • Lack of skills within the micro-finance sector • Sustainability of FI’s (MFI’s & FSC’s) • Turnaround times • Cumbersome systems & processes • Effective reporting & performance management systems • Profit margin for start-ups is small. • Deposit taking insurance – samaf FSC’s not covered in terms of the Bank Insurance Act. 23

24. Thank You