CELEBRATING BLACK BUSINESS EXCELLENCE BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2018/19 - Presented to the Select Committee on ...

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CELEBRATING BLACK BUSINESS EXCELLENCE BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2018/19 - Presented to the Select Committee on ...
CELEBRATING BLACK
  BUSINESS EXCELLENCE

BRIEFING ON THE NEF STRATEGY AND
ANNUAL PERFORMANCE PLAN 2018/19
        Presented to the Select Committee on
              Trade & International Relations
                       Ms Philisiwe Mthethwa
                                 27 June 2018
CELEBRATING BLACK BUSINESS EXCELLENCE BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2018/19 - Presented to the Select Committee on ...
Contents
                           Section                   Slide
1    About the NEF                                    3
3    Life to date performance milestones              8
4    NEF activity summary and sector analysis         14
5    Financial Analysis                               24
6    Provincial Dynamics                              28
7    Strategic planning framework & objectives        37
8    NEF annual performance plan 2018/19              41
9    Update on Project Kopano                         54
10   Investee Stories                                 58
11   Thought leadership                               77
12   Black Industrialist                              89

                                                 2
CELEBRATING BLACK BUSINESS EXCELLENCE BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2018/19 - Presented to the Select Committee on ...
About the NEF

       3
CELEBRATING BLACK BUSINESS EXCELLENCE BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2018/19 - Presented to the Select Committee on ...
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 owned and managed
        businesses, as well as by promoting
        a culture of savings and investment
                 among black people.

The NEF is an agency of the dti and is the only
     DFI exclusively mandated to grow
                  B-BBE

                                4
CELEBRATING BLACK BUSINESS EXCELLENCE BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2018/19 - Presented to the Select Committee on ...
Funding across the economic
spectrum
    Fund             Focus                               Threshold

                     SME Fund providing
     iMbewu Fund     Entrepreneurship,                   R250 000 –
1
        (SMEs)       Procurement & Franchise             R15 million
                     Finance
2       Women        Achieve minimum 40% of              R250 000 –
     Empowerment     enterprises owned and               R75 million
      Fund (WEF)     managed by black women
3       Rural &      Supporting rural economic           R1 million –
       Community     development through New             R50 million
      Development    Ventures, Acquisition,
         Fund        Expansion & Greenfields
                     Finance
4   uMnotho Fund     Funding of New Ventures,            R2 million –
                     Acquisition, Project Finance,       R75 million
                     Expansion, Capital Markets,
                     Liquidity & Warehousing
                                                                            5
5      Strategic     Early-stage investment in           Up to R75
     Projects Fund   industrial / manufacturing          million
                                                                        specialist
                     transactions                                         funds

                                                     5
CELEBRATING BLACK BUSINESS EXCELLENCE BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2018/19 - Presented to the Select Committee on ...
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 etc.
  •   Black Women Empowerment
  •   Job Creation
  •   Growth Sectors
  •   Geographic Spread
  •   Investment Return

                                      6
CELEBRATING BLACK BUSINESS EXCELLENCE BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2018/19 - Presented to the Select Committee on ...
Non-Financial Support
     Pre-investment
     As the first-point-of-contact the unit provides product advisory services, manages the
     online business-plan solution, manages the administration of applications, incubation
     and entrepreneurial training.

     Socio Economic Development
     Empower black people in existing NEF transactions and other broad based groups
     through various interventions such as promotion of saving and investments, social
     facilitation, entrepreneurial training, investor education, corporate governance training
     and market access for the acceleration of meaningful participation.

     Post-investment support
     Monitor investments, provide ongoing portfolio management, manage mentorship
     support and collections as well as legal compliance

     Turnarounds, Workouts and Restructuring
     Rehabilitate distressed transactions and reduce impairments Through a combination
     of measures including balance sheet restructuring, equity and /or working capital
     injection, operational restructuring, introduction of a strategic equity partner and / or
     turnaround specialist and business rescue.

                                                         7
CELEBRATING BLACK BUSINESS EXCELLENCE BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2018/19 - Presented to the Select Committee on ...
8
CELEBRATING BLACK BUSINESS EXCELLENCE BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2018/19 - Presented to the Select Committee on ...
Deployment of Trust Capital
Cash funds received from the dti                     R 2.3 billion
Investment in listed shares (MTN) at cost               R171 million

Total Trust Capital                                  R 2.4 billion

Net asset Value as at 31 March 2018                  R 5.0 billion

Net appreciation in assets since                     R2.6 billion
inception
With the R2.4 billion total recapitalisation since inception, the NEF has more than
doubled its initial capital and delivered the following socio-economic benefits:
➢   Over R9.3 billion in approvals, R6.3 billion of which has been injected into the
    economy.

➢   R3.4 billion approved for the empowerment of black women.

➢   Over 95 000 jobs opportunities supported.

➢   Provided financial and non-financial support to entrepreneurs across all 9 provinces
    of the country
                                                    9
CELEBRATING BLACK BUSINESS EXCELLENCE BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2018/19 - Presented to the Select Committee on ...
Life to date performance milestones
             Output                                                      Achievements

1    Approvals                •   Approved 927 transactions worth more than R9.3 billion across the country

2    Disbursement             •   Approximately R6.3 billion has been disbursed to these companies since inception

3    Integrity                •   Secured clean external audit opinions for 12 years running
4    Supporting jobs          •   Since inception, the number of job opportunities supported is 95 798 of which 65 359 were new
                              •   26 strategic and industrial projects worth R29 billion, with the potential to support over 85 000
5    Industrialisation
                                  jobs
                              •   In a transaction worth over R1 billion the NEF Asonge Share Scheme made available more than
     A culture of savings &
6                                 12 million MTN shares to over 87 000 investors comprising black individuals and groups. 49% of
     investment
                                  investors were women
                              •   Reached over 40 000 people in villages and townships through 180 community seminars on
7    Investor education           how to save and invest, personal financial discipline, shares, dividends, bonds, the property and
                                  money markets
     Entrepreneurship         •   Business skills training provided over 2 900 potential entrepreneurs who attended 164
8
     training / incubation        seminars from 2012 to date
                              •   Opened 8 regional offices allowing us to invest 56% of our portfolio in the these regions
9    National footprint
                                  since inception
10   Collections              •   Over R2.8 billion has been repaid by investees
                              •   Since inception, RCDF invested over R238 million in six rural and township shopping centres
     Rural & Community        •   The R238 million leveraged an additional R662 million co-investment by the private sector
11
     Development              •   A total of 9,859 jobs were created with 5,087 of those being direct jobs and the balance indirect
                                  during construction
                                                                  10
Human Capital
                            Qualification Statistics

Item                   Qualification                         Number
   1     Chartered Accountants                                 17

   2     Master’s degree                                        11
         Engineers (additional 4 hold Masters                       4
   3     degrees)
   4     Honours degree                                         20

   5     Bachelors degree                                       46

   6     LLB degrees (All Admitted Attorneys)                       9

   7     Diplomas                                               18

   8     Certificates                                           33

   9     Abet                                                       3
         Total                                                  161

        Average age of NEF                                   *Head Count - Core vs Support = 2.3:1

       employee is 38 years –                                            No.       Percentage

       maturing organisation                                Core         111           69%
                                                            Support       50           31%

                                                            Total        161           100%
                                                       11
Cash collected
Since inception, over R2.8billion collected cumulatively from loans
disbursed across the country, in black-owned and managed
businesses across virtually all sectors of the economy

                                           12
Projected unencumbered cash position
                         Notes:

                         • Actual cash at 31 March
                           was R1.1 billion

                         • R94 million uncommitted
                           cash at hand

                         • To manage 2017/18
                           strategy, approval targets
                           were reduced.

                         • However to discharge
                           2018/19 strategy, at least
                           R680 million cash will have
                           to be injected.

                   13
NEF ACTIVITY SUMMARY & SECTORS

            14
NEF Investment Process
     Deal                                       Due                  Approval              Legal                  Post
                        Screening
  Origination                                Diligence                Stage                Stage               Investment
▪ Proactive           ▪ Pre-Investment   ▪ Screened   Report    ▪ Up   to R5m        ▪ Loan                ▪ Files
                                                                                                                 handed to
 Marketing             basic              referred to               approved by       Agreements            POIU– Allocated
                       evaluation         Funds’ Due                FM IC             drafted in-house      to Post IA
                                          Diligence
                                          Committees
▪ Investment          ▪ Detailed         ▪ DD performed         ▪ Above   R5m        ▪ Most equity         ▪ Initial
                                                                                                                   hand over
 team networks         screening by       based on nature           recommended       agreements also       site visit thereafter
                       IA’s               of deal                   to EXCO IC        drafted in-house      at least quarterly
▪Referrals from                          ▪ NEFOperating         ▪ EXCO    IC         ▪ Legal
external                                  Manual applied            approves up to    compliance by        ▪ Regular risk
stakeholders (e.g.                                                  R15m              FM IC                 ratings performed
deal originators,                                                                     Management            by POIA,
business                                                                                                    minimum once a
incubation centers                                                                                          year.
& other
government
                                                                                                           ▪ Mentorship
agencies
                                                                                                            provided
▪ Walk-in   Clients                      ▪ Final
                                               Investment       ▪ Above   R15m to    ▪Funds    disbursed
                                          Paper reviewed            R50m approved                          ▪ Collection   with
                                          by FM IC                  by Board IC                             Finance

                                         ▪ Credit
                                                Risk                                                       ▪ Monthly
                                                                                                                   PMC
                                          Assessment                                                        Meetings
                                          Process
                                                                ▪ Above    R50m
                                                                    approved by                            ▪ Distressed
                                                                    Board of                                investments
                                                                    Trustees                                transferred to
                                                                                                            TWR

                                                               15                                          15
NEF Activity Summary
 NEF Activity Summary                                               FYE 2018                                         FYE2017
                                                Volume Volume % Value        Value % Volume Volume % Value       Value %
 Approved                                             72     5%      527 127       5%      84    12%    844 500       10%
 Approved but declined pre-commitment                  2     0%       65 000       1%       1     0%     10 000        0%
 Approved to existing projects                         2     0%       44 000       0%       4     1%     11 900        0%
 Conditional approval                                  2     0%       47 165       0%       0     0%         -         0%
 Currently at DD stage                                53     4%      699 552       7%      35     5%    450 000        6%
 Currently at application development stage            4     0%       39 562       0%       6     1%       9 450       0%
 Currently at PreDD Stage                            221    15%    1 306 987      12%      34     5%    188 000        2%
 Currently at Screening                               38     3%      946 300       9%      42     6% 1 214 057        15%
 Declined after Pre DD                                10     1%      377 800       4%      12     2%    378 000        5%
 Declined at Screening                               998    68%    5 882 402      55%     407    59% 4 449 940        55%
 Declined at application development stage            25     2%       93 450       1%      32     5%    162 520        2%
 Declined post DD                                     10     1%      189 200       2%       3     0%     67 500        1%
 Withdrawn                                            36     2%      452 781       4%      33     5%    306 250        4%
 Total                                              1473   100% 10 671 326       100%     693   100% 8 092 117       100%

    Withdrawn; 2%        FYE 2018 Volume
                                                                  Currently                                    FYE 2018 Value                    Approved but
                                                                       at                                                                        declined pre-
                                                  Currently at    Screening                                                                      commitment;
       Declined post             Approved; 5%      DD stage;         ; 3%                            Withdrawn; 4%
                                                                                                                                                      1%
         DD ; 1%                                      4%       Currently at                    Declined post          Approved; 5%       Currently at
                                                               PreDD Stage;                      DD ; 2%                                  DD stage;
                                                                   15%               Declined at                                             7%
 Declined at
                                                                                     application
 application                                                       Declined         development
development                                                        after Pre                                                                            Currently at
                                                                                      stage; 1%
  stage; 2%                                                        DD ; 1%                           Declined at                                        PreDD Stage;
                  Declined at                                                                      Screening; 55%                                           12%
                Screening; 68%                                                                                                                         Currently at
                                                                                                                                                      Screening; 9%

                                                                                                                                     Declined after
                                                                                                                                      Pre DD ; 4%

                                                                               16
NEF Sector Analysis - Undisbursed
Commitment 2017/18

                            R'000          %
Energy                           103 121       23%
Retail                             2 753        1%
Transportation                     1 262        0%      Infrastructure
                                                              1%                                                       Retail
Services                          19 420        4%                                   Property
                                                         Mining                                           Energy        1%
Food and Beverages                12 600        3%                                     11%                 22%
                                                          3%
Construction and Material         23 309        5%
                                                                   Agro Processing
Manufacturing                    105 387       23%                      15%                                               Services
Automotive                           150        0%                                                                          4%
ICT & Media                       42 324        9%
Distributors, Dispatchers                                            ICT & Media
and Processors                    11 726        3%                        9%                                             Food and
                                                                                                Manufacturing            Beverages
Agro Processing                   69 621       15%
                                                                                                    23%                     3%
Mining                            13 000        3%
Infrastructure                     3 813        1% Distributors,                                                   Construction and
                                                   Dispatchers and
Property                          48 800       11%                                                                    Material
                                                      Processors                                                         5%
Tourism & Entertainment             811         0%       3%
Total                           458 097        100%

                                                                   17
Fuel Stations Portfolio Analysis
                                   Disbursed      Investment     ▪   Collections rate of more than 90%
Risk Category   Volumes   Risk % facility           received     ▪   Low impairments of 6%
                                                                 ▪   61% of disbursed amount repaid
Low Risk             51      85% R 222 614 462   R 147 429 977
                                                                 ▪   Success factors:
Medium Risk           4       7% R 15 506 900     R 11 884 271           Risk-sharing model with the oil companies
High Risk             5       8% R 38 672 141     R 10 549 200           ED funds from BP reduces weighted average
                                                                          cost of capital
TOTAL                60    100% R 276 793 503    R 169 863 448           Aggressive valuation of acquired sites at 3 x
                                                                          EBITDA

                                                        18
Fuel Stations Portfolio Analysis
EXPOSURE PER VALUE
Approved            Disbursed            Debt balance to Total collected
facility            facility             date            to date
 R 447 516 326 R 422 720 510                R 270 336 735         R 236 071 255

- To date the NEF has already collected 56% of the disbursed portfolio

                                                                          19
NEF Property Portfolio
•    The NEF has approved and committed 18 transactions as at 31 March
     2018.
      •    Retail properties:      7
      •    Social housing:         1
      •    Tourism:                6
      •    Student accommodation:  1
      •    Affordable housing:     3

•    Majority have been disbursed with the exception of two which are still
     at CP collection stage (i.e. The Village Hub, Fanaye Business Enterprise).
•    Two have been successfully exited (i.e. uMlazi Mega City & Mavundla Square)
•    Four of the active transactions are still on moratorium (Amazin Hotels,
     Matloasana Gardens, Ordicode, Halala Shopping Center).

•    One is in exit process (Afri-Devo).

•    Total committed:                  R 528m
•    Total Disbursed Amount:           R 476m
•    Total Project Value:              R1,825m
•    YTD Receipts/Collections:         R 261m

•    Average Jobs Created: 6915 during construction & 5536 permanent
     jobs

•    The cost per job is R103k vs target of R580k/job

                                                                20
NEF Construction Portfolio Analysis

                                                                                                                                                 Loan balance 31
                                                                                   NEF Loan
                  Name of Client                 CIDB Grading        Region                      Total Disbursed   Collections     % Collected   March 2018 (GL
                                                                                   Approved
                                                                                                                                                    Balance)
MOTHEO CONSTRUCTION GROUP (PTY) LTD          9GB 9CE                   GP           62 789 000        53 000 000      37 303 564          70%            37 554 194
SOLIDAIRE CONSTRUCTION                       7GB                       MP           38 500 000        37 843 383      10 655 178          28%            36 056 523
White-Hazy Building Construction (Pty) Ltd   8CE PE                    MP           14 800 000        14 698 303       5 824 164          40%                    -
RIVERPORT BRICKWORKS CC                                                GP            5 000 000         5 000 000       3 826 811          77%                    -
ZUFI INVESTMENTS (PTY)LTD                    6EB PE                    GP            5 100 000         5 100 000       1 293 926          25%                    -
Chryselda Building Construction              8GB PE, 7CE PE, 6EP PE, 6EB
                                                                       MPPE and 1ME PE
                                                                                     5 945 000         5 945 000       6 350 620         107%                    -
KWA DUMISANI ENTERPRISES                                               KZN           7 330 478         6 906 656       4 338 098          63%             3 622 386
TAWANA BUSINESS PROJECTS (PTY)LTD            4GB PE                    GP            7 500 500         5 498 137       3 393 568          62%                    -
PMPZ CONSTRUCTION CC                         6GB PE, 6CE PE            KZN           7 634 192         7 255 348             -              0%                   -
C Pro Construction                           XXX                       GP            8 000 000         5 116 533       4 015 329          78%             1 459 795
Anix Trading and construction                7GB PE, 6CE PE            EC            8 223 000         8 140 770             -              0%                   -
AHANANG HARDWARE & CONSTRUCTION CC (3)                                 NC            8 750 000         8 750 000       9 251 231         106%                    -
EYETHU TRANSLODGE & PLANT HIRE               6CE PE                    GP            8 919 954         8 919 954       3 159 757          35%                    -
Polyzomba Contractors CC                                               KZN          17 655 828        17 655 828      22 345 387         127%                    -
PATSA CIVIL WORKS AND CONSTRUCTION           6CE PE                    FS            9 962 752         9 962 451       5 288 516          53%             6 347 352
TTR BUILDING CONST                           7CE PE, 7GB PE            GP           10 000 000        10 000 000       7 538 425          75%                    -
QINISA CONSTRUCTION GAUTENG (PTY) LTD        9GB PE, 9CE PE            EC           10 000 000         8 867 944       4 556 340          51%             5 819 242
MMQS CC                                                                GP           11 000 000        11 000 000      13 636 996         124%                    -
Nkolele Projects CC                          7CE PE                    MP           11 000 000         9 741 759       2 300 000          24%             8 991 825
GA-MATLALA ROOF TILES AND BRICKS (PTY) LTD                             LP           11 660 000        11 607 016         328 703            3%           17 682 936
Mageba Projects                              7GB PE, 4CE PE            KZN          12 000 000        11 747 980      13 021 959         111%                    -
FM Crushers                                                            KZN          14 900 000        14 487 593      16 215 072         112%                    -
XJR CONSTRUCTION CC                                                    MP           14 985 000        11 070 361      11 538 953         104%                    -
 NARE HOUSING PTY LTD                                                  WC        15 000 000,00     15 000 000,00    2 520 910,60          0,17                   -
Other                                                             Various         209 946 434       198 341 813       96 310 565          49%           171 970 295

Total                                                                              536 602 138       501 656 829    285 014 074           57%           289 504 549

                                                                              21
Interventions and Recommendations
Interventions and key success
factors identified in the                     Recommendations
construction sector
 •   Appointment of a Technical Mentor    ▪   Investees to procure the correct
     such a qualified QS and project          pricing systems such as
     managers, s with expertise beyond        Construction Computer Software
     what the company possesses to            (CSS) that assists entities in
     execute the awarded contract;            pricing projects more accurately

 •   The NEF setting up a joint and co-   ▪   Investees should diversify the
     managed bank account;                    services and product offerings so

 •   Cession of contract proceeds.            as to avoid concentration on one
                                              revenue stream
 •   The client should have a strong
     debtors collection process;          ▪   Investees to start insourcing other
 ▪   Where possible, co-release               parts of the value chain such as
     payments for acquisition of              being their own material supplier.
     material and other project related
     payments

                                               22
NEF Investment Performance
Cumulative Approved ,Committed & Disbursed deals
by value since inception to 31 March 2018

            Value Approved (R million)    Committed Facility Value (R million)    Disbursement Value (R million)

10 000
                                                                                                               9 310

 9 000

 8 000                                                                                                         7 313

 7 000
                                                                                                               6 279
 6 000

 5 000

 4 000

 3 000

 2 000

 1 000

 0 000
         Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17
         - Mar- - Mar- - Mar- - Mar- - Mar- - Mar- - Mar- - Mar- - Mar- - Mar- - Mar- - Mar- - Mar- - Mar- - Mar-
           04     05     06     07     08     09     10     11     12     13     14     15     16     17     18

                                                                                 23
Financial Analysis

     16

24
NEF’s financial performance:
2010 - 2017

              Explanatory notes overleaf…

                            25
NEF’s financial performance:
2010 – 2017 cont
  ▪ NEF has consistently over the past eight years generated enough income each year to
    cover credit impairment charges as well as fair valuation movements from its unlisted
    investments. Total income after these impairment charges of R1.5 billion was in fact
    generated over the eight year period.

  ▪ NEF has however had to fully fund its operating costs (which include non-financial support
    programmes that are part of its mandate) over the years, resulting in a net reduction in
    reserves of the eight year period of R61 million. The NEF therefore asserts that, as a
    schedule 3A entity, if government had continued to fund its operating costs over this period,
    the ‘so called’ capital erosion as claimed by the NT officials would not have materialised as
    the full R1.5 billion value generated through its core mandate activities would have been
    added to its balance sheet.

  ▪ To derive the net surplus/deficit reported in our annual reports over the year, there are
    material annual fair value fluctuations from our listed shares, mainly MTN. These fair value
    movements which cumulatively resulted in a R144 million reduction in reported surpluses
    over the period, are completely outside NEF’s control as they are driven by other market
    factors and the perceived risk of MTN as an entity. It should however be noted that if one
    takes into account the same movements before changes made to accounting treatment,
    these listed shares have resulted in a net R49 million appreciation in the NEF’s net asset
    value over the period.

  ▪ It should therefore be emphasised that the net reduction in net assets between 2010 and
    2017 of R61 million is purely due to the non-subsidisation of the operating activities of the
    NEF as was envisaged when the NEF was formed by government.

  ▪ NEF last received operations grant from the dti in 2009.

                                                               26
Portfolio Impairment Ratios
Entity                       2017/18       2016/17       2015/16       2014/15
NEF                           15.4%        17.55%         24.41%           19.08%
DBSA                                        5.06%         5.18%            4.87%
IDC                                         16.7%         16.9%            16.7%
Business Partners                           8.87%         8.49%             6.6%
Sefa (direct lending)                                     67.0%          Separate
                                                                         disclosure
                                                                        not provided

Notes:
▪     The NEF has made concerted strides to improve recoverability of the portfolio through
      various post investment support of its investees. These include focused mentorship and
      proactive turnaround, workouts and restructuring interventions.
▪     The 2017 ratio of 17.55% is therefore fairly in line with the average 17% on the IDC book.
      IDC’s ratio has been averaging 17% over the period, which is not materially different from
      current NEF levels.
▪     The DBSA and Business Partners low impairment provision levels is largely driven by the
      high collateral requirements from investees.
▪     sefa’s direct lending portfolio is the most comparable to all other entities. At this point, the
      ratio is a material outlier

                                                           27
Provincial Dynamics
   Striving for growth across all provinces

                            28
Invested growth across all provinces
 1. As a national Development Finance institution (DFI) the NEF
    is committed to ensuring that its products and services reach
    the entire nation.

 2. Since the launch of the NEF Asonge Share Scheme in July
    2007 the NEF has implemented various measures and
    interventions to strive towards an even, representative and
    equitable distribution of its services across the country.

 3. As a result, the NEF’s invested presence in Gauteng has
    come down from above 60% of total disbursed funds in 2006,
    to 44% by March 2018.

 4. This is not as a result of a reduction of funding in Gauteng, but
    is a direct consequence of planned, targeted and increased
    funding in the other 8 provinces because they are integral to
    South Africa's economy, comprising 75% of the population.

                                                29
Geographic spread of investments

                                                                                   NEF invested portfolio by region by value since
     NEF invested portfolio by region by value since
                                                                                              inception-31March 2018
               inception 31 March 2009
                                 KZN          LP        MP
                                 6%           0%        4%
                                                                                           WC; 12%         EC; 7%
                                                                                                                       FS; 2%
                                                         WC                  NW; 5%
                                                         16%
                                                                          NC; 2%
                                                                        MP; 6%

                                                                        LP; 6%                                                       GP; 44%

                                                              EC
                                                             13%

     GP
    61%
                                                                           KN; 16%
                                                   FS
                                                   0%

▪     The opening of regional offices across nine provinces has increased the NEF’s presence
▪     Gauteng proportion of the portfolio has decreased from 61% in 2009 to 44% in 2018

                                                                   30
Reasons for growth across all
provinces
      Year                  Intervention                                             Outcome
                                                  Every year present & exhibit in a growing number of local community
                     Local community &
 1     2006 - 2015                                workshops hosted by national, provincial and municipal governments, as
                     stakeholder workshops
                                                  well as various business and civic stakeholders.
                                                  Visited over 180 villages, townships and cities countrywide, and reached
 2     2007 – 2018   Investor Education
                                                  over 40 000 participants.
                     NEF Asonge Share             Attracted 87 000 investors (47% in GP, 16% in KZN, 9% in WC, 7% in LP,
 3           2007                                 6% each in NW & MP, 4% each in EC & FS, and 1% in NC).
                     Scheme
                                                  26 strategic and industrial projects worth R29 billion, with the potential to
 4     2007 – 2018   Strategic Projects Fund
                                                  support over 85 000 jobs
                                             Proactively source transactions in rural areas in order to unlock underlying
                     Rural & Community
 5     2008 – 2018                           economic value. Since inception, RCDF invested over R238 million in six
                     Development Fund (RCDF)
                                             rural and township shopping centres.
                                                  Placement of adverts and stories in local, regional and national media
                     Advertising & media          countrywide. The media covered a variety of the work done by the NEF
 6     2007 – 2018
                     coverage                     throughout the Provinces. 88% of the coverage was positive, 8% balanced
                                                  and 2% negative in tonality
                                                  Workshops in every province raising awareness on the online solution for
                     Business Plan &
 7     2009 – 2018                                developing own business plans with financial projections. From April 2017
                     Mentorship launch
                                                  to date over 2,000 business plans have been started.
                                                  4 destinations in each province promoting understanding of B-BBEE,
 8     2009 – 2010   Eyethu Sonke Le BEE!         funding & access to government & private-sector procurement & enterprise
                                                  development opportunities.
                                                  Opened 8 regional offices allowing us to invest 56% of our portfolio in the
 9     2009 - 2018   Regional offices
                                                  these regions since inception.
                     Incubation &                 Business skills training provided over 2 900 potential entrepreneurs who
 10    2011 – 2018
                     entrepreneurial training     attended 164 seminars from 2012 to date

                                                                  31
Provincial Empowerment EXPOs
Objectives:
▪ Spread awareness of the mandate, products, services and milestones of the NEF.
▪ Maximise the NEF's invested presence across all Provinces.
▪ Disseminate information about funding, non-financial support, applicable regulations,
 preferential procurement and enterprise development opportunities for black
 entrepreneurs in the respective provinces.
▪ Deepen Public Private Partnerships among key stakeholders inclusive of Provincial
 Governments, DFIs, SOEs, corporates, municipalities and other stakeholders for the
 benefit of black entrepreneurs.

                                                                    32
          1746
       Attendees

                                             EXPOs
                                                                   WC                        KZN
                                           proposed
                                                                to follow                 to follow
                                           for repeat
                                                                 in 2018                   in 2018
                                            in 2018

                                                               32
Mabele Fuels
                   Background                                            Background
The project intends to develop a circa 154          ▪   Creation of a total of 16 700 jobs; with 636 direct
million litre per annum fuel grade bioethanol           jobs during construction and 90 permanent jobs
plant. The plant feedstock is grain sorghum and
                                                        post project completion; with downstream jobs in
the production methodology involves a process
                                                        agriculture;
utilising grain milling through starch conversion
to sucrose as well as fermentation and drying       ▪   Fixed capital investment of up to R50 million in a
that ultimately culminates in the production of         poverty node namely; Bothaville, in the Free State
saleable bioethanol.                                    Province;
                                                    ▪   NEF’s equity is warehoused for the future benefit of
Location                          Bothaville, FS        B-BBEE entities and Women Groups;
                                                    ▪   Deployment of a pioneering biofuels technology in
                                                        South Africa in alignment with first world economies,
Project Development Stage         Pre-Financial
                                                        and strategic government sectors and policies;
                                  Close
                                                         o the project is very advanced with financial close
NEF Investment to date            R61.75 million           pending, subject to the finalisation of the Biofuels
                                                           Regulatory Framework;
Equity Shareholding               20%                    o the total project capital funding requirement has
                                                           been secured with all of the funding agreements
Project Promoter                  Mabele Fuels             concluded; and sound financial viability.
                                  (Pty) Ltd
Projected Financial Close         R2.1 billion
Requirement                                                              Challenges
Total No. of Jobs to be Created   16, 700
                                                    ▪   Mabele Fuels has concluded all legal agreements
                                                        and obtained the requisite approvals to commence
                                                        construction, except for the finalisation of the
                                                        Biofuel Regulatory Framework;
                                                    ▪   Assistance is expediting the approval process for
                                                        the National Biofuel Pricing Regulatory Framework
                                                        is requested;

                                                        33
Construction Portfolio
Analysis
▪   The Eastern Cape has a total approved loan book of R19,1million
    where R17,9million of the funds approved were disbursed;
▪   The Eastern Cape loan book, accounts for 5% of the total approved and
    disbursed loans in the construction portfolio;
▪   The collections that have been achieved by the investees operating in
    the Eastern Cape is R4,3million;
▪   This amount represents 24% of the funds disbursed in the Eastern
    Cape and 2% of the total disbursed loans;
▪   Impairment amounts to R15,1 million which represents 84% of the
    loans disbursed to clients based and or operating in the Eastern Cape;
▪   The impairments in the region are only 4% of the total investment in the
    sector;
▪   The impairments are mainly due to the following:
▪   Investee not pricing their contracts correctly (as most of them lack the
    sophisticated systems and expertise within the management team)
▪   the investee’s customers (government departments) are not assisting
    the investees in terms of making payment on time.

                                            34
Construction Sector Investees Examples
Inca                                                   Stutt Brick
▪      Inca EC was a cement brick manufacturer         ▪   Stutt Brick is a clay brick manufacturer located
       located in East London                              in King Williams Town in the Eastern Cape
▪      The business went into distress and             ▪   Spending of allocated budgets by the Eastern
       eventually into business rescue mainly due to       Cape Government was slow and well behind
       poor sales and to an extent, other                  schedule and there were therefore delays with
       management related issues                           commencement of construction projects.
▪      The business was directly affected by the       ▪   As a result, businesses such as Stutt Brick
       slow-down of low-cost housing projects in the       which could have benefitted from the
       province, due to Government’s failure to pay        Government spend did not gain the requisite
       contractors timeously.                              benefit and this negative affected their cash
▪      This led to the closure of construction sites       flows.
       and a depressed construction sector in the      ▪   The business eventually went into distress
       province.                                           due to poor sales and other management
▪      The business was subsequently taken over            related issues.
       by a non-BEE company while under business       ▪   The business is still in the midst of a
       rescue.                                             turnaround process with a new management
                                                           company.

                                                            35
Construction Portfolio
Analysis
o   Building low cost housing with no        o    Building low cost housing with no
    bulk works being done, thus delaying          bulk   works    being     done,   thus
    the project                                   delaying the project
o   Questionable ethics and inexperience     o    Questionable           ethics     and
    of entrepreneurs                              inexperience of entrepreneurs

o   Late payments of more than 60 days       o    Late payments of more than 60 days

    affects the business cash flows               affects the business cash flows

o   Funding projects from municipalities     o    Funding projects from municipalities

    that do not have money, with financial        that do not have money, with

    budgets being exhausted mid-year.             financial budgets being exhausted
                                                  mid-year.
o   Projects not properly priced by the
                                             o    Projects not properly priced by the
    entrepreneurs
                                                  entrepreneurs   \Unrealistic salaries
o   Unrealistic salaries by promoters
                                                  by promoters
o   Cross-subsidisation with projects not
                                             o    Cross-subsidisation with projects not
    funded by the NEF
                                                  funded by the NEF

                                                 36
Strategic planning framework &
           objectives

               37
The strategic planning framework…

                  Broad Based Black Economic Empowerment
                         The Codes of Good Practice

                           Sectors
                            NEF
                           • Tourism; Biofuels; Construction;
              Objectives
 Objectives

                             Agri-processing; Transport; ICT & Media;   Government Priorities:
  NEF Act:

                             Mining services; Franchising
               The dti

                            Industrial Policy Action Plan:              1)      Acceleration of economic growth and transformation,
                           • Automotives, components, medium and                creating decent work and sustainable livelihoods;
                              heavy commercial vehicles                 2)      Infrastructure development to achieve social and
                           • Plastics, pharmaceuticals and chemicals            economic goals and rural development;
                           • Biofuels                                   3)      Skills and human resource development;
                           • Strengthening linkages between cultural
                                                                        4)      Build a developmental state and improve public
                              industries and tourism
                           • Business process servicing
                                                                                service.

      NEF Sectors in line with national industrial objectives

                                                                   38
Key Strategic Objectives
•   Provide finance to business ventures
    established and managed by black people;

•   Invest in black empowered businesses’ that
    have high employment creating opportunities;

•   Black economic empowerment is advanced
    through commercially sustainable enterprise;
    and

•   Encourage and promote savings, investment
    and meaningful economic participation by black
    people.

                                39
The NEF’s strategic outcome
     oriented goals are to:
1.    To provide finance to business ventures
      established and managed by black people.
2.    Invest in black empowered businesses that have
      high employment creating opportunities
3.    Support the participation of black women in the
      economy
4.    Facilitate investment across all provinces in South
      Africa
5.    Encourage and promote savings, investment and
      meaningful economic participation by black people
6.    Advance black economic empowerment through
      commercially sustainable enterprises
7.    Establish the NEF in the South African economy
      as a credible and meaningful DFI
8.    Establish the NEF as a sustainable DFI.

                                           40
NEF Annual
Performance Plan
   2018/19-21

          41
NEF Strategic Plan 2018/19
                                 Advance B-BBEE
                                 Approval Targets:
                                2018/19 = R1.046bn
                                2019/20 = R1.331bn
                                2020/21 = R1.531bn
                                                         Maximise Empowerment
 Financial Efficiency &                                         Dividend
     Sustainability
                                                              Support of job
 Impairment Provisions 18%
                                                              opportunities:
   ROI between 9% – 10%
                                                             2018/19 = 5 630
   Collections ratio 80%
                                  Growing                    2019/20 = 7 169
                                   Black                     2020/21 = 8 388
                                 Economic
                                Participation
                                                           Fund a Woman,
      Creating Black
       Industrialists                                       Fund a Nation
  Commercialise strategic                                   2018/19 = 40%
 projects geared to support                                 2019/20 = 40%
        85 000 jobs            Promote a Culture of
                                                                                       Other imperatives
                                                            2020/21 = 40%
                               Savings & Investment
                                   Host 45 Investor                     Objective                  Outcome
                               Education seminars per
                                 year countrywide, in                  Geographic
                              villages & townships, on             1                 Grow investments across all provinces
                                                                       Spread
                                  shares, dividends,
                              bonds, property & money                                Provide ongoing business-planning &
                                     markets etc                       Sustainable
                                                                                     mentorship support, business &
                                                                   2   Black
                                                                                     corporate governance training &
                                                                       Businesses
                                                                                     incubation support
                                                                       Reputation    Entrench commitment to integrity among
                                                                   3
                                                                       management    staff, investees and suppliers
                                                          42
Advancing B-BBEE
Strategic Objective 1: Provide finance to business
ventures established and managed by black people

                                       43
Approvals & Disbursements
                         Approvals (R’m)                                                                        Disbursements (R’m)
1 400                           1 332                                               900
                                                       1 248                                                                        819
                        1 162                                                       800
1 200                                                                                                          704                         699
                                                               1 067
                                                                                    700                               636
1 000                                                                                                   597
                                                 895                                600                                      562
           749   749              Moratorium
 800                                                                                500
                                                                       634                424                                                     411
                                                                                                 377
 600                                                                                400
                                        418                                         300
 400
                                                                                    200
 200                                                                                100

   -                                                                                  0
          2010   2011   2012    2013    2014    2015   2016    2017    2018               2010   2011   2012   2013   2014   2015   2016   2017   2018

       Note:
       • Financial year ends March
                                               Targets over strategic Period in (R’m)

        Year                    Approvals                              Commitments                              Disbursements
2018/19                            1,046                                       839                                     915
2018/19
(Potential                             470                                     387                                     422
revision)

2019/20                            1,331                                      1,065                                   1,165
2020/21                            1,531                                      1,225                                   1,363
                                                                               44
Graskop
▪      The project has developed the Graskop Gorge area into a major tourism node along the
       Panorama Tourist Route in Mpumalanga.

▪      The development is setup in two major phases with developmental goals in each phase to
       ensure adequate growth and continued sustainability over time.

▪      Phase1 has now completed and operational it features an outdoor lift system that ferry people up
       and down off the cliff face into the forest environment below, where various elevated and ground
       walkways allow visitors to explore the unique environment.

▪      Supporting this outdoor lift system is a newly constructed tourism centre that provide a multitude
       of tourism products and services including a restaurant, bar, retail outlets, kids play area and
       centre management offices that will support the entire development.

▪      The planning of the launch has commenced and dates will be communicated.

▪      Phase 2 of the project will include the development of a 90 Bed 4 Star graded Hotel. Project is
       currently capital raising for the bankable feasibility study for Phase 2.

Location                                         Graskop, Mpumalanga
Project Development Stage                        Phase 1 Operational
NEF Investment to date                           R33.4 million
Project Promoter                                  Graskop Gorge Lift Company (Pty) Ltd
Total Project Size                               R85 million (ca. USD7,1 mil)
                                                 Phase 1 - 215 jobs
Jobs
                                                 Phase 2 - 42 Direct and 102 Indirect jobs

                                                                            45
Busamed
▪   Busamed is a Black-owned hospital group that competes with the big three.

▪   It aspires to be an innovative, quality-centred South African health care group,
    advancing the provision of healthcare in world-class facilities with dynamic,
    inclusive partnerships for all.

▪   The project was kick-started with the commercialisation of 4 hospital licenses for
    630 hospital beds, spread over three provinces, namely Gauteng, Cape Town and
    the Free State. Busamed also aims to develop centres of excellence, which will
    provide world-class services.

▪   Since opening the initial four hospitals, the group has acquired three new hospitals,
    bringing the total hospitals within the group to seven and total beds to 860.

Location                                                National

Project Development Stage                               Operational

NEF Investment to date                                  R260 million

Project Promoter                                        Goldenwood Pty Ltd

Current Project Size                                    R3.5 billion

Jobs                                                    7 000

                                                            46
Maximizing the Empowerment
Dividend
Strategic Objective 2: Invest in black empowered
businesses that have high employment creating
opportunities.

                             47

                                    47
Job-Creation since inception

 31 March     31 March      31 March      31 March        31 March       31 March      31 March      31 March
   2011         2012          2013          2014            2015           2016          2017          2018

25 500 jobs    28 624        44 179         47 800         81 618         86 859        92 189         95 798
                jobs          jobs           jobs           jobs           jobs          jobs           jobs

Targeted number of jobs expected to be created or supported
      Year                                                 No. of jobs
                 Support 3 077 new or existing job opportunities (By Q4 the NEF had supported 3 609 job
2017/18
                 opportunities)
                 Support 5 630 new or existing job opportunities (potentially to be reviewed to 2 597 due to lack
2018/19
                 of resources)
2019/20          Support 7 169 new or existing job opportunities
2020/21          Support 8 388 new or existing job opportunities
                                                     48
Cumulative Maximizing the
empowerment dividend
Strategic Objective 3: Support the participation of black
women in the economy
 Annual target             2017/18
                           35% of disbursed
 40% of disbursed funds
                           funds benefited
 to benefit women
                           women

                          Targeted women ownership

       Year               Percentage of (Annual) Portfolio Disbursed

  2018/19                                     40%

  2019/20                                     40%

  2020/21                                     40%

                                              49
Maximizing the empowerment dividend
Strategic Objective 4: Facilitate investment across all provinces in South
Africa
NEF invested portfolio by region by
value since inception as at 31 March
2018
                                       2017/18
            WC
            13%
                   EC
                   8%
                          FS
                          2%
                                       36% of disbursement were made in Northern
      NW
   NC 4%                               Cape, Free State, Limpopo, Mpumalanga,
MP 2%
5%                                     North West and Eastern Cape.
LP
6%
                                GP
                               44%
                                        Targeted Disbursements in under-represented
                                            provinces (NC, NW, FS, LP, MP &EC)
      KN
     16%                                     Year   Percentage of Annual Disbursements
                                       2018/19                    25%
                                       2019/20                    25%
             Decreased from
              61% in 2009              2020/21                    25%

                                        50
Optimising non-financial support
Strategic Objective 5: Encourage & promote savings,
investment & meaningful economic participation by black
people

2017/18
58 investor education seminars were held

Targeted number of investor education seminars held
across the country

Year                    No. of Seminars per year

2018/19                            45

2019/20                            45

20129/21                           45

                                            51
Optimising non-financial support
Strategic Objective 6: Advance black economic empowerment
through commercially sustainable enterprises

                              Performance

                      Indicators                              2017/18
Number of Business Today Training Sessions provided              19

Number of entrepreneurs who successfully complete
                                                                 13
business incubation
Number of Social Facilitation sessions for NEF
                                                                 49
investees
                                   Targets
                 Indicators                      2018/19     2019/20    2020/21
Number of Business Today Training
                                                   18          18         18
Sessions provided
Number of entrepreneurs who successfully
                                                   15          20         25
complete business incubation
Number of Social Facilitation sessions for
                                                   36          36         36
NEF investees

                                                        52
Financial efficiency and sustainability
Strategic Objective 7: Establish the NEF as a sustainable
DFI.

                                  Performance

                         Indicators               2017/18

            Percentage of Portfolio Impaired          15.4%

            ROI                                       8.3%

            Collection Ratio                      142.5%

                                       Targets

            Indicators                2018/19         2019/20   2020/21

   Percentage of Portfolio
                                       18%             18%       18%
   Impaired

   ROI                                9%-10%          9%-10%    9%-10%

   Collection Ratios                   80%             80%       80%

                                                 53
UPDATE ON PROJECT KOPANO

              54
Background
➢   14 February 2017 Ministers signed the Memorandum for incorporation of NEF as
    an IDC subsidiary.

➢   IDC and NEF have prepared a “Transitional Arrangements” document which will
    govern the relationship of the parties during implementation phase which were
    submitted to the Minister for approval

➢   IDC and NEF have established two structures to oversee process:

        (i) Chairpersons and CEO’s Forum and
        (ii) Executives Forum

➢   Executive Forum established workstreams to consider aspects of process:

        (i) Strategy and Mandate Workstream – (Sefa included as part of this
     stream);
        (ii) Finance and Accounting Matters Workstream;
       (iii) Legislative and Governance Workstream

                                                 55
Update on Bridging Facility
➢   The IDC facility of R500m to the NEF has been approved by the IDC Board.

➢   The NEF is unable to fulfil three of the conditions precedent set by the IDC for
    any payments that can be made to NEF:
        (i) pledge of MTN shares and
        (ii) Cabinet approval
        (iii) NT s66 approval – Limited Borrowing Rights

➢   The incorporation of NEF as an IDC subsidiary is a “merger” in terms of the
    Competition Act therefore the approval of the Competition Commission and
    Tribunal are required for the merger to proceed.

➢   IDC and NEF have been working on a submission to the Competition
    Commission, however, a filing fee of R350,000 is payable when submission is
    made.

➢   The NEF financial reporting is in accordance with GRAP whilst IDC uses IFRS.

➢   Should NEF become an IDC subsidiary, the financial reporting will have to be
    aligned.

➢   IDC and NEF started a process of facilitating the conversion of NEF reporting
    from GRAP to IFRS by looking for a suitable service provider to assist.

                                                            56
Thank you
                 Contact Details
    WHERE               TELEPHONE
1   Head Office,        011 305 8000 or 0861843 633 /
    Johannesburg        0861 THE NEF
2   Eastern Cape        0861 633 327 / 0861 NEF ECP
3   Free State          0861 633 377 / 0861 NEF FSP
4   KwaZulu Natal       0861 633 596 / 0861 NEF KZN
5   Limpopo             0861 633 546 / 0861 NEF LIM
6   Mpumalanga          0861 633 678 / 0861 NEF MPU
7   Western Cape        0861 633 927 / 0861 NEF WCP
8   North West          0861 633 697 / 0861 NEF NWP
9   Northern Cape       0861 633 627 / 0861 NEF NCP

                 www.nefcorp.co.za
                                   57
Investees stories

           58
Challenges/Market Failures
     MARKET FAILURES                                        NEF SOLUTIONS
                                 Funding of between R250 000 and R75 million for start-up, expansion and
Limited own capital              equity transformation purposes as well as use of concessionary facilities.
                                 Non-descriptive on % of own contribution.
Limited management skills,
including financial, marketing   Entrepreneurship Development tools and dedicated mentorship support.
and technical expertise
                                 Competitive cost of finance with a higher risk appetite as well as
Access to affordable capital     requirement for operational involvement (sweat-capital) reduces the need
                                 for collateral payment.
Lack of accurate and reliable    Dedicated pre-investment mentorship support and technical assistance
financial information            with our partners.
Poor Quality Business Plans      Collaboration with other Government agencies like seda, incubation,
                                 entrepreneurial training and general pre-investment support and NEF
                                 Online Business Plan-Tool Kit.
Lower bargaining and strong      Linkages and emphasis on the implementation of the codes of good
competition power from           practice (B-BBEE).
established businesses with
entrenched market dominance      Wholesale Franchisor Facilities (Engen, Nandos, etc.)
Lack of access to local and      Linkages with off-takers. Relationships with franchisors and corporates for
international markets            access to markets.

                                                  59
Medical Devices Manufacturing
 JaLo Renal Izintso

                                                                The project seeks to
                                                                  establish a Hollow
  Location                    Dube Trade Port IDZ                      Fibre Dialyser
                                                                Manufacturing Plant
  Project Development Stage   Capital raising for FC.
                                                                   with a capacity to
  NEF Investment to date      R50 million.                         produce 1 million
                                                               dialysers per annum.

  NEF Equity                  49%
                                                                The project will also
                              JaLo Enterprise Pty Ltd                   produce other
  Project Promoter                                           haemodialysis products
                                                                 such as dialysates,
  Projected Financial Close   R240 million (ca. USD 20mil)      dialysis kits etc. The
  Requirement                                                 BFS is completed and
                                                                the project is capital
  Jobs                        60 (200 indirect)                   raising for financial
                                                                close to be reached.

                                             60
Social Infrastructure
Joyhouse Academy: Low Fee Independent School
 The project has established a low fee independent school in
 Jozini, KwaZulu Natal. The project is black woman owned and it
 was founded 2006 by Ms Jabulile Nyawo from her own
 resources. The school has grown from 84 enrolled learners in
 2006 to a total of 214 learners enrolled from Grades R to 4.
 Phase 1 construction was completed in March 2018 and it
 envisaged that Phase 2 should be implemented in period of 24
 months.

  Location                           Jozini, KwaZulu Natal

  Project Development Stage          Operations

  NEF Investment to date             R15 million

  NEF Equity                         45%

                                     Joyhouse Academy (Pty)
  Project Promoter                   Ltd

  Projected Phase 2 Construction     R60 million (ca. USD
  Costs                              5mil)
  Jobs                               29 direct; 130 indirect

                                                   61
Condom Manufacturing
GEMILATEX JV
Gemilatex aims to set up a male condom manufacturing plant
in South Africa. The manufacturing facility will be the first
majority black women owned condom manufacturing facility in
South Africa. It is envisaged that the facility will produce 70
million condoms and will supply South Africa as well as the
rest of the continent.

 Location                      Eastern Cape

 Project Development Stage     Bankable Feasibility Stage

 NEF Investment                R6.6 million

 NEF Equity                    20%

 Project Promoter              Gemilatex Pty Ltd

 Projected Financial Close     R60 million (ca. USD5 mil)
 Requirement
 Jobs                          131 Direct

                                               62
Transport: APM

▪   APM provides intercity passenger transport
    services.
▪   APM started its operations with four rented/leased
    buses before obtaining NEF funding.
▪   APM received R45m expansion finance from the
    NEF.
▪   The company has sales offices in Pretoria,
    Johannesburg and Durban.
▪   APM has 32 operating licenses for all the routes
    envisaged in the business plan.
▪   Black ownership is 100% and includes black
    women and youth.
▪   Through this investment, 30 jobs were retained
    and 33 new jobs were created.
▪   Localisation: All NEF-funded buses were
    assembled South Africa.
▪   Local content of body value is 31%, chassis is
    19%. Average of 25%.

                                                         63
Hospitality: Amazin Hotel
•   Amazin Hotel is a 3 star Park lnn in Polokwane,
    Limpopo.
•   The NEF provided R45.8million towards the total
    cost of R175 million. R108.2million is being funded
    by the IDC, and R21million being provided by
    sponsors.
•   Hotel is well located next to a golf course and Peter
    Mokaba stadium; within walking distance to many
    professional firms & entertainment; 3–6km from the
    CBD and the airport.
•   BBBEE ownership is 83% (including the NEF
    equity). Black woman shareholding is 30%.
•   Created 508 job opportunities, 90% of these
    employees is women,
•   Operations started in February 2017, achieving
    occupancy rate of over 40% against the projected
    30%.
•   Amenities include restaurant, conference facility, spa
    and other related facilities typical of a 4* up-scaling
    hotel experience.

                                                       64
Construction: L&R Building and Civils
•   L&R Building and Civils Construction (Pty) Ltd
    (“L&R”) is a construction company that has been
    operating since 2003.
•   The business is 100% black woman owned and
    specialises in social housing.
•   Product and Service offering:
    •       General Building;
    •       Concrete Supplies; and
    •       L&R is expanding its services into civil engineering
•   The NEF approved a R15 million working capital
    facility.
•   Key Highlights of L&R:
        •   Past projects to the value of R322 million since
            inception;
    •       Confirmed order book to the value of R201,4million;
            and
    •       Created and maintained 165 jobs where 134 are
            temporary and 31 are permanent;
    •       Through assistance with the NEF funding has potential
            of creating 10 new jobs.
•   The business’ head office is based in Meyerton,
    Gauteng and satellite offices in the Eastern Cape
    and other site operations.

                                                                   65
Media: Beat FM and Rhythm FM

                       66
Property Finance:Ordicode
▪   The project is a green field property development
    with retail on the ground floor plus 8 storeys of
    106 2-bedroom affordable housing units;
     ▪   The ground floor will be 100% let to Shoprite U-Save on a
         20-year commercial lease.

▪   Project cost - R50.5m,
     ▪   R27.2m – NEF Senior Loans
     ▪   R 19.6m – GPF Junior Loans
     ▪   R4.3m – Sponsors Equity contribution

▪   The business is 100% black female owned,
    controlled and managed;
▪   8 direct permanent jobs and est. 343 indirect
    jobs.
▪   The area is classified as an Urban Development
    Zone (“UDZ”). Joubert Park, Johannesburg CBD
    within 5 minutes walking distance to Park Station,
    Gautrain Station, Metro rail and many other eco-
    trans node amenities.

                                                      67
Manufacturing: Chele Holdings
▪   Chele Holdings (Pty) Ltd is 100% woman owned by Ms. Palesa Chele, a 27 year old woman with sales

    experience in toilet paper purchasing and supply.

▪   Ms Chele identified an opportunity to establish a new paper milling plant in Witbank, Mpumalanga after she

    discovered that there is a gap in the market where most companies are manufacturing toilet tissues(finished

    product) but there are few suppliers of recycled jumbo reels for the manufacturing of toilet tissues.

▪   The paper mill will produce jumbo reels from recycled paper, which can be sold to clients who in turn produce

    final products, including but not limited to, toilet paper, sanitary towels, serviettes and other related products.

▪   The paper mills production capacity will be 250 tonnes per month.

▪   The NEF will support the creation of 14 jobs with an approved investment of R10 508 000 which will be utilised for

    working capital and the installation and commissioning of the manufacturing plant.

Location                Witbank, Mpumalanga
Deal Stage              Start-up
NEF Approved
                        R10.5m
Amount
NEF Disbursed
                        R1.5m
Amount
                        100% Black and Female Youth-
Ownership
                        owned
Number of jobs          1 4 new jobs to be created
Product                 Entrepreneurship

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Retail: Pick ‘n Pay Spaza Shop
Conversion Programme
▪   PnP Conversion Programme is an initiative by Pick n Pay to revive township economies through the upgrading and
    refurbishing of township supermarkets (“spaza shops”) This initiative created a partnership between the NEF, Western Cape
    Economic Development (WCED), the Department of Small Business Development (DSBD) and Pick n Pay, where the said
    parties will co-fund the establishment of spaza shop (Township Supermarkets) upgrades which have been identified by Pick n
    Pay as part of Pick n Pay’s Spaza Shop Conversion Programme.
▪   This is in line with Government’s strategy to revive township economies. Retail was identified as one of the critical avenues
    that can be used to boost township economies.
▪   Once a spaza shop is approved for the programme, Pick n Pay refurbishes, provides initial stock, business mentoring, back
    office support and connects the stores with the Pick n Pay Group suppliers, where they enjoy preferential rebates. PnP also
    closely monitors the performance of each of the sites and provides intervention when needed.
▪   NEF ring fenced a facility of R15 m for additional spaza shop conversions
                                                                                          Salient details
                                                                   Location                        Western Cape
                                                                   Deal Stage                      Start-up

                                                                   NEF Ring-fenced Amount          R15m

                                                                   WC Govt Contribution            R1.5m

                                                                                                   100% Black & Female Youth-
                                                                   Pick ‘n Pay Contribution
                                                                                                   owned

                                                                   Total Expected Investment       1 4 new jobs to be created

                                                                   Product                         Franchise

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Services: Quickloc8
Quickloc8 (Pty) Ltd, pronounced “Quicklocate” is a 100% black owned entity that was established in 2015 by Mr Mbavhalelo

Mabogo. Mr Mabogo developed, tested and piloted a tracking device for motor vehicles with complete mobile capabilities

which operates from a smartphone based platform. Their main target market is the taxi industry. Mr Mobogo approached NEF

to raise finance to commercialise and to rollout the product to the target market

The device provides the following unique capabilities:
▪   real-time smartphone vehicle tracking and monitoring on the app with 3D maps;
▪    push notification for speed, ignition and driving style (harsh/economy driving) data;
▪    GPS location with real time speed;
▪   On/off-route alerts through geolocation features on the app, route analysis and replaying (total kilometres travelled/stopped
    with addresses);
▪   ability to track and analyse driving style and performance of each driver and compare best drivers;
▪   Advanced antitheft system through combined auto geofencing and towing detection functionality;
▪   Bluetooth wireless connectivity features that allows owners to call drivers using through the tracking devices
▪   Smart crash detection that sends a message to owners immediately after accident.

Location                       Cape Town, Western Cape
Deal Stage                     Start-up
NEF Approved Amount            R2.5m
NEF Disbursed Amount           R1.3m
Ownership                      100% Black Male-owned
Number of jobs                 10 new jobs
Product                        Entrepreneurship
                                                                 70
Manufacturing (Textiles): Rise Uniforms
▪   Phakamile Industries CC t/a Rise Uniforms is 100% owned and managed by a black female, Ms Ntombekaya Nonxuba. The

    business is a clothing manufacturing company that specializes in the mass production of a wide range of clothing items like

    corporate uniforms and school uniforms. The business started trading informally in 2007 and has grown into an established,

    reputable business.

▪   The company is located in Teguka Business Park in Philipi, a black township in Cape Town. Rise Uniforms mainly employs

    women (staff consists of 81% of women) from the township who are mostly single parents, thus positively contributing to the

    improvement of the highly skewed socio-economic dynamics in the Western Cape province.

▪   The business holds an annual renewable contract to supply staff uniforms to Pick n Pay. Rise Uniforms is listed as a national

    supplier with Pick n Pay and is part of Pick n Pay’s Enterprise and Supplier Development Programme. Through this

    programme, Pick n Pay develops, mentors, and provides support to small scale suppliers while securing its own value chain.

▪   The NEF investment funded machinery, equipment and working capital required for the expansion of the business

                      Teguka Business Park in Phillipi, Cape Town,
Location
                      Western Cape
Deal Stage            Expansion
NEF Approved
                      R5m
Amount
NEF Disbursed
                      R4.1m
Amount
Ownership             100% Black Female-owned
Number of jobs        42 jobs (19 new, 23 maintained)
Product               Entrepreneurship
                                                                71
Contract Mining: Mmutle Mining
    Projects
▪    Mmutle Mining (Pty) Ltd was established in 2016 by Mr John M Mmutle. Mmutle Mining (Pty) Ltd provides material

     handling, crashing and screening, mining rehabilitation, drilling, blasting and plant hire services

▪    Mmutle was awarded a material handling contract by Zizwe Open cast Mining (Pty) Ltd that will take place at Anglo

     Greenside Colliery for 36 months.

▪    The rates and volumes were renegotiated with Zizwe Open Cast mining in favour of Mmutle and that resulted in a change

     of Total Contract Value from R35 783 208 to R43 760 854 over 36 months.

    Location                Middelburg, Mpumalanga

    Deal Stage              Start-up

    NEF Approved
                            R13m
    Amount

    Ownership               100% Black and Youth owned

    Number of jobs          24 new jobs to be created

    Product                 Contract

                                                                    72
Energy: BP Bridge City
▪    BP Bridgeview (Pty) Ltd t/a BP Bridge City is a 100% black youth owned entity formed for the sole purpose of establishing

     a BP service station in Kwa-Mashu Bridge City. The land that the site will be built on is owned by a property development

     company owned by the two entrepreneurs, Mr Siyabonga Hlengwa and Mr Wandile Zulu. Both the operating company and

     the property company are 100% owned by Mr Zulu and Mr Hlengwa with each holding a 50% shareholding.

▪    The partners did not have the funds to purchase the land but negotiated with BP to make an upfront payment of R10.8

     million for the land. The upfront payment equates to ten (10) years rental that BP would have paid to the entrepreneurs

▪    BP will build the service station and install all the necessary equipment. BP Bridge City will comprise of a service station, a

     Pick n Pay convenience store, a Hot Dog Café, a Wild Bean Cafe and an ATM.

Location                 Kwa-Mashu, Kwazulu Natal

Deal Stage               Start-up
NEF Approved
                         R 2,9m
Amount
BP ED Funds              R 1,9m
Ownership                100% Black and Youth-owned
Number of jobs           34 new jobs to be created
Product                  Franchise
                                                                   73
Energy: Shell Ultra City M2
▪   Kwenta Group CC is a 100% black women owned entity. The entity is 80% owned by Ms. Nawaal Motlekar, 45 year old female, with her two siblings

    (Ms. T Mdluli and Ms. N Mdluli) both owning 10% each. Ms. Motlekar approached the NEF to acquire the Shell service station on the M2, which is

    located between the Denver and Cleveland off ramps in Denver, Johannesburg. The purchase price for the service station was R16,2m. The service

    station comprises of a forecourt and three quick service restaurants (QSR) namely, Debonairs, Vida Café, Steers and KFC (KFC not included in

    acquisition).

▪   The total funding required was R19.4 million and the entrepreneur contributed R4.4 million of her own funds towards the transaction.

    Location                    Denver, Gauteng

    Deal Stage                  Acquisition

    NEF Approved
                                R 15m
    Amount

    NEF Disbursed
                                R 15m
    Amount

    Ownership                   100% Black Woman Owned

    Number of jobs               120

    Product                     Franchise

                                                                             74
Agro-Processing: Amantle Trading &
  Projects
                                                     Project Description
• Amantle Trading and Projects is a start-up dairy processing facility located in rural Groot Marico in the North West province;
• Amantle has secured an off take agreement with Big Save Supermarket for the supply of pasteurised fresh milk, Amasi and
  yoghurt over a period of seven years;
• The company is currently leasing a farm from the Department of Rural Development and Land Reform;
• Amantle will source its manufacturing equipment from Delmar Milktech; and
• The company will be sourcing all its raw milk from Tip-Top Milk.

                    Shareholding Structure                           Funding Structure
                    The Shareholding in Amantle Trading              The NEF approved a total investment of R8.5 million
                    and Projects splits as follows:                  structured as follows:

                    • Mr. Nkosana Mtimkulu (40%),                    • Senior Loan of R6.8 million repayable over seven years
                    • Mr. Sechaba Mtimkulu (30%), and                  with priced at prime interest rate with 12 months capital
                    • NEF (30%) to be warehoused                       and interest moratorium; and
                    (NEF will provide 20% of shares to the           • Shareholders Loan of R1.7 million repayable on availability
                    trust upon registration and the remaining          of cash flow. The loan will target an IRR of 8% upon exit.
                    10% to the promoters upon exit).

                          • Create access to and ownership of lucrative agri-business operations for BEE;
                          • The project will have a positive impact on the previously disadvantaged individuals and the
Investment
                            community at large;
Rationale
                          • The project is a Rural and Community development initiative because of its location and
                            ownership structure, and
                          • 16 permanent Jobs will be created in remote areas in dire need of job opportunities.

                                                                75
Retail: Fruit and Vegetables: Goseame
•   Goseame was previously majority owned by black
    owners including management and staff. Following a
    number of defaults from the BEE sponsor, the NEF
    took over ownership and management of the
    business.

•   The business is in retail industry by selling fresh
    vegetables, fruits, meat, grocery and fresh flowers.
    The business operates on a floor space of around
    2200sqm, being a property owned by the NEF. The
    business is based in Limpopo, Polokwane industrial
    site.

•   The NEF provided initial funding of R71 million to
    acquire this business from the white sellers. This
    was in support of the BEE sponsor who had
    identified this opportunity.

•   The business is currently under the            NEF
    management and has maintained 260 jobs.

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