Assistance Provided to Export Oriented Businesses

1. Assistance Provided to Export Oriented Businesses Briefing to the Select Committee on Trade and International Relations 1 September 2010

2. Presenters • Ms Philisiwe Buthelezi Chief Executive Officer • Mr Andrew Wright Chief Financial Officer 2

3. NEF Mandate … • Established by the National Empowerment Fund Act 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 empowered businesses, as well as by promoting a culture of savings and investment among Black people. 2

4. 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. Key Strategic Objectives … 3

5. Sectors • NEF/ ASGISA: • BPOs; Tourism; Biofuels; Construction; Agri-processing; Transport; ICT & Media; Mining services; Franchising • Industrial Policy Action Plan: • Capital/ Transport Equip. • Metal Fabrication • Chemicals & Plastics • Pharmaceuticals • Forestry, pulp, paper & • furniture • Automotive The Strategic Planning Framework … Broad Based Black Economic Empowerment The Codes of Good Practice • Government Priorities: • Acceleration of economic growth and transformation, creating decent work and sustainable livelihoods; • Infrastructure development to achieve social and economic goals and rural development; • Skills and human resource development; • Build a developmental state and improve public service. The dti Objectives NEF Act: Objectives NEF priority sectors aligned with IPAP sectors 4

6. Alignment of NEF Strategic Objectives to National Performance AgreementOutcome 4: Decent employment through Inclusive growth • Promotion and support of business ventures pioneered and run by black people, thereby directly contributing to the outcome of inclusive economic growth. • Contribution to the fourth output: • Raising South Africa’s competitiveness through investments made by the NEF’s Strategic Projects Fund. • Contribution to the sixth output : • Critically review our support for cooperatives and small businesses .. address the circumstances of workers and enterprises in the survivalist sectors of the economy. • The NEF has specific and measurable targets in terms of the number and value of deals. • The provision of financial and non-financial support (mentorship programme) to small business. • Focus on increasing sustainable investment to strengthen the NEF’s balance sheet. • Development of new models for co-operative enterprise such as using the OVOP model from Japan. 5

7. NEF’s Performance and Investment 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 • Black Women Empowerment • Job Creation • Growth Sectors • Geographic Spread • Investment Return 6

8. To focus exclusively on providing investment funding to black empowered businesses and wealth creating investment opportunities for black individuals; To be experts in investment and funding structures for black empowered businesses and black individuals in direct support of black empowerment policy; To stimulate sector targeted economic growth, job and wealth creation as a direct product of investment and funding activities; To act as a warehousing conduit for the transfer of valuable equity allocations and investments to the black public; To ensure broad-based and sustainable empowerment; To maximize the empowerment dividend in parallel to the financial dividend; To create a prudently and effectively managed fund with a time horizon of at least 10 years; To maintain and grow the capital base of the NEF for the benefit of its beneficiaries and provide a self sustainable real return to stakeholders; To differentiate against and work in syndication with existing business funding offerings by other operating Development Finance Institutions (DFIs) in promoting BB BEE; To work in partnership with both public and private sectors; Key Positioning Objectives of the NEF … 7

9. To evaluate the effectiveness of black empowerment policy and the development thereof; To capitalise on the status of being the only gazetted “BEE Facilitator” and apply this status in the development of key sectors and the transformation thereof: Full black ownership status in the case of equity warehousing; Providing a BEE recognised fund allowing for full recognition for Enterprise Development scores for contributing companies; Effectively investing Enterprise Development contributions into mandated and recognised activities; Focusing on Enterprise Development contributions as a key source of additional capital for the NEF. Additional Key Positioning Objectives … 8

10. The Promotion of Exports by the NEF • The promotion of exports is built into the NEF strategic plan as a product of the output applied to the dti regarding the need to raise our competitiveness, to raise our net exports and to grow our trade as a share of world trade. • Addressed in the sourcing and evaluation of export orientated transactions within the existing product offering of the NEF. • Given the growth potential for exporters, should Black empowered companies applying for finance from the NEF be positioning themselves for export, this aspect is used as a motivator for funding. 2

11. The Promotion of Exports by the NEF • Once invested, the NEF actively seeks ways and means of assisting investees seek new export markets. • These initiatives will involve: • Introducing the investees into the dti Export Marketing & Investment Assistance Scheme (EMIA), • Facilitating their participation on state and trade visits to countries of potential new foreign markets, and • Sponsoring their participation on trade shows through the post investment non-financial support initiatives. 2

12. Standard NEF Investment Criteria • Overall sustainability of the Black empowered business is firstly considered. • Specific criteria for funding will vary depending on the type of funding requested, however generic criteria include: • The Black applicant/s should be actively involved in the operation of the business; • There should be a minimum Black ownership of 25.1% or 50.1%, depending on the funding product type; • There should be clear industry experience of the BEE party/ies or non-BEE partners; • The business model must be financially sustainability.

13. Export Oriented Investees • The NEF has identified five (5) businesses as examples of Black empowered businesses that the NEF has funded which are currently involved in export activities or are positioning themselves to do so and in sectors aligned to IPAP: • Amajuba Berries (Pty) Ltd • DMS Powders (Pty) Ltd • Safepak (Pty) Ltd • Colliery Dust Control (CDC) • Sun Space and Information Systems (SunSpace) (Pty) Ltd • Amajuba Berries & Safepak have previously been considered for sponsorship by the NEF for exhibitions at international trade shows.

14. Export Oriented Investees

15. Export Oriented Investees

16. Contact information … The National Empowerment Fund West Block 187 Rivonia Road Morningside, 2057 PO Box 31, Melrose Arch Melrose North, 2076 Tel: (+27)-11- 305 – 8159 Fax:(+27) – 11 – 305 – 8316 buthelezip@nefcorp.co.za

17. THANK YOU