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A SUMMARY OF KHULA OUTPUTS TO THE PORTFOLIO COMMITTEE 25 March 2003

Highlights Khula's strategic objectives and growth strategies to empower SMEs in South Africa. Detailed breakdown of financial outputs and market penetration.

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A SUMMARY OF KHULA OUTPUTS TO THE PORTFOLIO COMMITTEE 25 March 2003

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  1. A SUMMARY OF KHULA OUTPUTS TO THE PORTFOLIO COMMITTEE 25 March 2003

  2. High-level Objectives • To make an impact on the transformation of the South African economic landscape by contributing towards the DTI strategic objectives • Facilitate mobilization and directing of resources (public & private sector funding) towards SME development.

  3. Core Strategic Objectives • To achieve a return on investment that ensures retention of the capital base. (Finance) • To offer sustainable credit and capital through a network of efficient distribution intermediaries. (Customers)

  4. Core Strategic Objectives • Scaling and growing the operations, through managed risk, to achieve impact and outreach. (Finance) • To acquire, develop and retain the human talent to meet the short, medium and long-term needs of Khula. (People) • To develop and implement an integrated business marketing strategy. (Process)

  5. Growth Strategies • Mobilise banks for mass or scale delivery. • Training workshops with bankers and marketing • Mainstream and roll-out a credible mentorship • To stimulate the provision of venture [start-up] and small scale equity finance. • To research and package innovative products that can mobilise and attract the financial industry participation in Khula mandate. • Build on nation wide communication campaign

  6. Growth Strategies • Segment the market and design a suitable product mix and structure accordingly. • Emerging and matured markets • To support the distribution network in line with market needs. • capacitateand develop to serve the all market segments [from under-banked to bankable enterprises] • To improve outreach and efficiency of emerging market network • Improve market access through business linkage initiatives

  7. Where are we ?1996 – 2003 & year ending 2003 [28/02]

  8. Where are we ?1996 – 2003 & year ending 2003 [28/02]

  9. Where are we ?1996 – 2003 & year ending 2003 [28/02]

  10. Credit Guarantees“Numbers”

  11. Credit Guarantees“Rands”

  12. Khula Equity Funds • Rand value of deal approved = R 18m • Number of deal approved = 11 • Jobs created = 492 • Investee Companies: 83% Male 17% Female 17% Rural 83% Urban 100% PDI

  13. Land Reform Empowerment Facility • Funds loaned out to Date = R57 m • Number of projects = 16 • Number of PDI (Shareholders) = 794 • Male 360 Female 434 • Job created = 1,261 • Males 592 Females 669

  14. Retail Financial Intermediaries • Funds loaned out to Date = R338 m • Number of RFI’s = 16 • Number of RFI Clients = 165 880 • Male 30% Female 70% • Black 96% White 4% • Urban 70% Rural 30% • Job creation estimate = 948 466

  15. Khula-starts • Funds loaned out to Dec 2002 = R17 m • Number of Khula-starts = 17 • Number of Khula-starts Clients = 26 041 • Males 13% Females 87% • Black 100% White 0% • Rural 95% Peri-Urban 5% • 6 Provinces (Excl WC,NC,FS) Jobs created = 50 000 (Approx)

  16. Loans Representation in S.A. • Limpopo • 2 RFI’s; 2MCO’s • North West • 1 RFI; 1 MCO • Gauteng • 7 RFI’s; 1 MCO • Mpumalanga • 3 RFI’s; 5 MCO’s • Freestate • 1 RFI; 0 MCO’s • KwaZulu Natal • 3 RFI’s; 5 MCO’s • Northern Cape • 1 RFI; 0 MCO’s • Eastern Cape • 2 RFI’s; 4 MCO’s • Western Cape • 2 RFI’s; 0 MCO’s

  17. Summary of Assumptions • Required capital is obtained • Seed activities are inherent risk mitigation mechanisms of Khula balance sheet. [network and capacity support of RFI’s and quality mentoring] • Investment levels are necessary to off-set the price shortfall results. • A stable and committed human resource especially at senior level is achieved.

  18. Summary of Assumptions • Political support is unwavering [all government levels] and based on sound corporate administration. • Access to markets becomes sensitive to SMME needs. [Government and state enterprise procurement systems adapt] • Financial institutions [including insurance houses] do come to the party

  19. Thank you for your Support Sizwe Tati Managing Director Khula Enterprise Finance (Pty) Ltd 25/03/03

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