Presentation to the Portfolio Committee on Agriculture and Land Affairs 27 March 2007

Presentation to the Portfolio Committee

on Agriculture and Land Affairs

27 March 2007

2006/07 F/Y Performance Review

• Provincial spread of the portfolio• Portfolio mix: Mortgage vs Equity • Sectoral mix: Agriculture vs Eco-Tourism• New projects approved• Rate Conversion: JIBAR to Prime-linked • Banks and other RFI’s participation• LREF BEE Scorecard

• RFI Margin Cap

2007/08 Business plan

• Grow loan book by R40m• Grow projects numbers by 10• Emphasis in Free State, Limpopo, Northern

Cape, Mpumalanga and Northwest• Improve portfolio mix • Facilitate beneficiaries training and capacity

building• Financial Review

Strategic initiatives

• Khula/Mafisa project • Khula/TSB/ABSA project• Khula/dti Eco-Tourism potential Funding

Challenges• Disbursements• Loan size per project • Dependence on LRAD• Capacity building

PROVINCIAL SPREAD: CUMULATIVE INVESTMENTS

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

MAR '05

MAR '06

MAR '07

FEB '07

MAR '05 6.00% 0% 0.45% 30.30% 3.80% 6.10% 3.40% 4.60% 45.10%

MAR '06 5.00% 0% 0.30% 28.00% 2.90% 13.80% 11.00% 4.30% 34.50%

MAR '07 6.40% 5.00% 1.80% 23.20% 4.70% 13.40% 10.00% 5.00% 28.00%

FEB '07 9.51% 0% 4.08% 23.68% 2.50% 11.84% 9.45% 6.49% 31.62%

EC FS GP KZN LP MP NC NW WC

65%

35%

59%

41%

55%

45%

60%

40%

PORTFOLIO MIX: EQUITY VS MORTGAGE

MORTGAGE

EQUITY

MORTGAGE 35% 41% 45% 40%

EQUITY 65% 59% 55% 60%

MAR '05 MAR '06 MAR '07 FEB '07

ECO-TOURISM VS AGRICULTURE

153,081,742 (90%)

16,673,000 (10%)

ECO -TOURISM

AGRICULTURE

New Projects Approved

Name of Project Channel Partner

Loan Amount

PDI’s Shareholding

Province Enterprise Beneficiaries

Male Female Total

Simile Farm Trust STD 2,880,000 100% E.Cape Poultry 6 - 6

PennyBEE Dairy FNB 1,393,000 50% E.Cape Dairy 14 12 26

Galaxtic Deals FNB 3,400,000 49% E.Cape Citrus 31 2 33

Inthaba Farming ABSA 1,100,000 55% E.Cape Goats 13 1 14

Evening Flame ABSA 3,700,000 25% Gauteng Poultry 8 9 17

RZT Zelpy ABSA 2,800,000 30% N.Cape Grapes 61 57 118

Die Eilands ABSA 800,000 30% W.Cape Ostrich & Lucern

15 9 24

Vukanathi ABSA 4,700,000 72% N.West Poultry 6 8 14

Bambanani STD 4,100,000 25% Gauteng Stone Fruit 29 26 55

Endulini Sunday River

FNB 7,840,000 40% E.Cape Citrus 25 25 50

Total 32,713,000 208 149 357

RATE CONVERSION: JIBAR TO PRIME-LINKED

• All existing projects converted to prime-linked rates• New projects approved on prime-linked rates• Less Cumbersome admin process• 3% margin Cap on Retail Financial intermediaries to

projects

BANKS AND OTHER RFI's PARTICIPATION (LREF)

67,845,500, (40%)

4,000,000, (2%)10,243,000,(6%)

8,189,000, (5%)5,200,000, (3%)

30,600,000, (18%)

43,677,242, (26%)

ABSA

NEDBANK

FNB

STD

ITHALA

IDC

SPIER

LREF BEE SCORECARD

[a] DIRECT EMPOWERMENT Weight

  Ownership (shares) and control 20%

Participation in Decision Making [Average] 20%

Aggregate Weight & Score 40%

[b] HR DEVELOPMENT PLAN & EMPLOYMENT EQUITY

  Skills Development & Learnerships 22.5%

Gender Equity 22.5%

Aggregate Weight & Score 45%

[c] STAFF WELFARE

  Compliance to Minimum Wage Legislation 5%

  Aggregate Weight & Score 5%

[d] RESIDUAL (including indirect empowerment)

  Enterprise and Rural Development. 5%

  Procurement, Job Creation, etc. 5%

  Aggregate Weight & Score 10%

Weighted Average Score 100%

Calculated @ Prime = 12.5%

RFI MARGIN CAP

Project Score Jibar Rate Equivalent Chg To RFI Max Chg To End User

Up to 33 Jibar – 0.65% Prime – 4.07% 8.43% 11.43%

34 To 67 Jibar – 1.15% Prime – 4.57% 7.93% 10.93%

68 To 100 Jibar – 1.65% Prime – 5.07% 7.43% 10.43%

FINANCIAL REVIEW

FY March 2007Budget

Year-to-date actualFebruary 2007

BudgetMarch 2008

Operating Income 6,869,200 6,310,977 8,797,676

Operating Expense 3,881,150 1,873,742 4,647,702

Investment Income 3,317,150 8,140,605 8,413,762

Total Net Income 6,305,200 12,613,841 12,565,736

KHULA/MAFISA PARTNERSHIP• Khula/Mafisa Agreement• Production inputs• Target: BEE farmers• 100k – 300k per PDI• Up to R100k: Fund 90%: Bank(10%)• R100k-R200k: Fund 80%: Bank(20%)• R200k-R300k: Fund 70%: Bank(30%)• Interest rate to end-user @ Prime(Max)• 1% Indemnity Fee to RFI

Qualifying Criteria for MAFISA

• Off-take agreement for farmers produce• Insurance for all crops• Interest rate to farmers not more than Prime• Assistance package to includeMechanisation for:

Soil preparation Planting Weed cultivation Chemical application Spraying Harvesting

• Project management and farmer mentorship.

KHULA/TSB/ABSA

• Initiative to create a fund• Size of the fund R50m • Objective: settle at least 50 emerging farmers• Enterprise: sugarcane • Province: Mpumalanga(Malelane)

KHULA/DTI

• Khula in negotiations with the dti for funds to continue funding potential Eco-Tourism projects

• Khula is in the process of structuring a proposal to the dti

Challenges

• Disbursement bottlenecks• Loan size per project• Dependence on LRAD• Capacity building • The bulk of the applicants are still coming from

the Western Cape and KZN

Thank You