SAMAF Pilot Implementation Strategy

1. Presentation The Purposeof this presentation is to present an overview Of the Apex Fund Implementation Strategy May 25th, 2005 “Almost ten years after its liberation from white minority rule, our country still faces many challenges. Many of our people are unemployed. Many of our people continue to live in poverty……..” President Thabo Mbeki, State of the Nation Address February, 2004. SAMAF Pilot Implementation Strategy

2. Contents • DEFINITIONS • Samaf Overview • Economic Apex • Poverty Distribution by Province • Samaf target by Household Income • Apex Rationale • Samaf Pilot Project Plan • Samaf Partner Organization Profile to date • Samaf Partner Organizations by Province • SAMAF Operational Model • Re engineering current MCO / FSC to Partner Organizations • PO capacity • Levels of Capacity Building • Implementation preparedness • Financial Co-Operative Pilots • Emerging Picture • Capacity Building Philosophy • APEX PROVINCIAL ROLL_OUT PLAN SAMAF Pilot Implementation Strategy

3. DEFINITIONS • Financial Services Co-operatives • Partner Organization • Retail Finance Institution • Micro Credit Outlet • Savings mobilization • Institutional capacity building • MICROFINANCE/ MICROCREDIT SAMAF Pilot Implementation Strategy

4. SAMAF Overview MISSION To provide professional and customised services to developmental micro finance institutions, Through institutional capacity building, on-lendingmicrocredit funds and savings mobilisationsupport for broadening and deepening access to financial services to the poor in order to facilitate their participation in productive economic activities and smoothing their financial troughs for better livelihoods. VISION To be a leader in developmental Microfinance outreach and best practice in South Africa. SAMAF strives to attain its vision through: Being an effective mobiliser of capital for developmental microfinance; Bringing innovative development products and services to market; Forging valuable development partnerships between business, government and the community; and Developing human capital in the micro-economic sphere through supporting appropriate capacity building. SAMAF Pilot Implementation Strategy

5. SAMAF Pilot Implementation Strategy

6. Landscape – Poverty Distribution Source: van de Ruit, J. May, and B. Roberts (2001), SAMAF Pilot Implementation Strategy

7. LSM 2 LSM 3 LSM 4 LSM 5 LSM 6 LSM 7 LSM 8 LSM 9 LSM10 LSM 1 Landscape – Average Household income per month Samaf target Source: Futurefact Marketscape 2002 SAMAF Pilot Implementation Strategy

8. APEX RATIONALE • WHY THE APEX: • Market failure to reach the poor and unemployed with appropriate financial services- OUTREACH & ACCESS • Ten year review of Khula by the Government and Khula regarding the Microfinance sector and current model-IMPACT • Repeated inputs about gap by Developmental Microfinance Sector , cost of capital and migration of services to the not-so-poor.-SUSTAINABILITY VS POVERTY ALLEVIATION • Challenges of Institutional and client capacity, as well as poverty focused microfinance.- CAPACITY SAMAF Pilot Implementation Strategy

9. SAMAF Pilot Project Plan • Phase I (Jan – December 2005) Short Term • Registration –Principal • Board Selection and Management Appointments-Principal • Operational, H/Resources, Budgetary systems- Done • MCO/RFI/FSC capacity & funding-Selection done • Loan disbursements by June 2005 • Phase II (Jan – December 2006) – Medium Term • Deepening and widening of the APEX model outreach with emphasis on monitoring and evaluation • Detailed study of financial support systems dictated by unfolding micro-finance models Recommendations towards emerging financial institution, Phase III (2007 and beyond) – Long Term • Consolidate all data, experiences and research and recommendations into model SAMAF Pilot Implementation Strategy

10. RFI Pilots (4) • Assumptions • They know what they are doing, Apex wants to support their current outreach projections and monitor impact of Apex interventions. • Apex will study poverty targeting tools used by WDB and SEF as well as group formation methodologies used. Apex will identify poverty alleviation pilots using same. Apex will facilitate Beehive aspirations within Apex framework. Clear co-operation MOUs will have to be signed. • Apex will have a Poverty targeting expert on board, whether in-house or on contract. SAMAF Pilot Implementation Strategy

11. MCO Pilots (16) • Khula has 16 MCOs that have been inducted into the Apex – See provincial spread • MCOs operational expenses as per Khula system have been budgeted for by Apex as notice to ensure integration by June 2005. • Apex Application package already given to MCOs as initial assessment information. • See Apex Operational Model , regarding accreditation process for selection as PO, Capacity building and on-lending funding • Apex advocates rationalization of MCO location to achieve outreach. MCOs in one locality were encouraged to open a dialogue among themselves, especially where one is weaker ( in outreach) than the other. • MCO capacity building assessments started in March Assumption: Consolidation to be explored as some may not qualify as stand-alone Apex partners. SAMAF Pilot Implementation Strategy

12. Central Co-Operative Pilots • Institutional Capacity Building Assessment for : • Saccol-MIS and human resource capacity • Ficosa-All round ICB • Safobs-All round ICB • Dtsacco-All round capacity • Independent Village banks- Financial management of savings , governance and microcredit management. SAMAF Pilot Implementation Strategy

13. New APEX POs (15) • Hluma Africa-E.London • Tsosologo-Pta Youth Co-op • OPI Church Women-Daveyton • Silverlining Domestics RFi- Mpumalanga • Masisizane Womens’ Co-op,Ivory Park • Ten others that are being assessed SAMAF Pilot Implementation Strategy

14. SAMAF Market Portfolio Slide 1 i) PO’s Per Type ii) PO’s Per Location SAMAF Pilot Implementation Strategy

15. SAMAF Market Portfolio Slide 2 PO’s Per Type Per Location SAMAF Pilot Implementation Strategy

16. Apex in the Provinces to date …. • North West Province 5 • Eastern Cape 9 • Free State 2 • Gauteng 5 • KZN 8 • Limpopo 6 • Mpumalanga 7 • Western Cape 2 • Northen Cape 1 SAMAF Pilot Implementation Strategy

17. SAMAF Operational Model Receive Application Review PO Application Preliminary appraisal Field Visit and inspection Partnerships for ICB Approved Declined Loan Recovery Capacity Building Intervention Fully accepted/ approval Loan agreement concluded Outreach Default Orientation course Funds disbursed Monitor and evaluate Repay SAMAF Pilot Implementation Strategy

18. Re-engineering an MCO/ FSC for sustainability and Outreach SAMAF will provide capacity support on a target plan (customer outreach) only On-lending capital provided to support growth but repayment history is important Change Financing Introduce new simplified Key performance indicators Simplify Monthly reporting Re-establish policies Management (policies, Strategy and Key performance Indicators Change Change Change Products Market Business Model Grow market with new products Feedback to SAMAF with regards 2 product development • Implemented 2 SAMAF products • Poverty Alleviation (b&c) • MED (b) Change Replace internal systems Standarise all business processes Re-train people Capacities of People, process & systems Mergers & Acquire (MCO) Change Costs (fixed & variable) Relook cost structures to achieve appropriate cost to income ratio, and Cost per client SAMAF Pilot Implementation Strategy

19. Partner Organisation Capability PO Capability Maturity SAMAF CAPACITY BUILDING IMPACT • SAMAF Capacity Building interventions aims to have a Partner Organisation • on a capability maturity level where the Partner Organisation can disburse • retail finance products to its membership base within an acceptable level of • risk and sustainability to SAMAF. This means that Capacity is addressed on • all five dimensions of the Partner Organisation Management Planning & Control Infrastructure Processes Products People SAMAF Pilot Implementation Strategy

20. Levels of Capacity Building Poverty Alleviation & Micro- enterprise Development Capacity Building Loans PO Operations OPERATIONAL DELIVERY CB Capacity Building Grants INTERMEDIATE CAPACITY BUILDING FOR PO GOVERNANCE PO Board & Management PO Employees Stakeholders & Customers BASIC CAPACITY BUILDING INTERVENTIONS & BASIC INFRASTRUCTURE SAMAF Pilot Implementation Strategy

21. Co-Operative Pilots • Limpopo Province • Mathabathe, Legwareng Village,Sikhukhune • Bakenburgh, Mokopane • Mpumalanga • Matlerekeng Village, Moutse West • Masibelela Village, Umtfombo Wempilo • Fernie FSC, Gert Sibande District • NWest • Motswedi, Bakgatla Bakgafela Tribal Office • Disaneng, Mafikeng SAMAF Pilot Implementation Strategy

22. Co-Operative Pilots • Free State • Poelong, Ratanang Complex,Mphatlalatsane Village • Makwane FSC, Qwaqwa • E.Cape • Mt. Ayliff,Erf 188 Hlanekela Str, Behind Main Rd • Mqanduli, Municipality Bldng, • Pearston,25 Voortrekker Str. SAMAF Pilot Implementation Strategy

23. Co-Operative Pilots (see profiles) • KZN • Ingwavuma, Bambanani T-Junction, Ingwavuma Village • KwaMachi, Ezingolweni, Harding • Sizathina, Highflats, Ixopo Village,Next to Senzokuhle General Dealer SAMAF Pilot Implementation Strategy

24. MCO’s (ex Khula) (16) On Lending : R 9 mil Provincial Spread: 6 # of Members: 16 000 # of Groups: Unknown Profile: Urban/Peri-Urban Avg loan: R500/customer Pilot Size: 16 FSC’s (DoA) (61) Total Savings: R5.7 mil Provincial Spread: 8 # of Members: 35 000 # of Groups: 61 Profile: Rural Avg savings: R162/customer Pilot Size: 15 Emerging Picture SAMAF Pilot Implementation Strategy

25. Portfolio Manager Portfolio Manager SAMAF Operations Poverty Tool Assessor Portfolio Manager +4 +1 +1 +1 +1 Portfolio Institutional Capacity SAMAF Pilot Portfolio’s Customer Segmentation SAMAF Portfolio’s Geographical Segmentation • Migration during • Pilot phase to one • Partner Organisation • Model MCO’s FSC’s RFI’s New • +16 existing + 10 existing + 4 existing +10 new • (Spread in four provinces) SAMAF Pilot Implementation Strategy

26. APEX ROLL-OUT PLAN • April/ May launch in NorthWest Province-National & provincial launch (Motswedi Village.) • June- Gauteng (need to be close to NW & manage launch impact) • July- Limpopo & Mpumalanga • August- Eastern Cape & Free State • September- KZN & Northern Cape • October- Western Cape & UN Year of Microcredit ? SAMAF Pilot Implementation Strategy

27. HOW • Introduction of Apex programme & pilots to Provincial Government with communities. • Joint discussions regarding provincial new sites and profile (Apex/Province) • Assessment of partnerships involved and evaluation of contributions if any ( Ledas/Seda) • Discussion around Provincial launch and impact • LAUNCH • Post launch monitoring & evaluation co-operation SAMAF Pilot Implementation Strategy

28. Thank You SAMAF Pilot Implementation Strategy