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Business Opportunities in the Energy Sector
Workshop - Mpumalanga
Bundu Lodge 28th August 2014
Name of the presenter:
Sabelo Mamba – Regional Manager
Overview and Background
Challenges that led to the establishment of sefa
• Limited success in fostering a strong and large SMME sector
• Weak small business performance
• Poor uptake of Khula and Samaf products
• Poor visibility among small businesses
• Duplication of services amongst government agencies
• High cost of delivering financial services to SMMEs
2
Overview and Background (Cont)
Establishment of sefa
• Cabinet support for an integrated approach
• sefa was established on 1st April 2012 as a wholly owned subsidiary of IDC
(merger of Samaf, Khula and the small business activities of the IDC)
• Established in terms of IDC Act
• Shareholder compact between IDC and EDD incorporates sefa
• sefa’s Corporate Plan informed and guided by a number of Legislative and
Policy Prescripts (eg New Growth Path, Outcome 4 and other National
Imperatives and legislation)
3
Organisational Framework
4
Mission: to provide simple access to finance in an efficient and sustainable manner to survivalist, micro, small and medium enterprises throughout South Africa. Vision: To be the leading catalyst for the development of sustainable Survivalist, Micro, Small and Medium enterprises through the provision of finance.
Direct Lending Products Working Capital loan,
Asset finance,
Term loans,
Revolving loan,
Bridging loan,
Short-term trade
finance
Wholesale Financing Business Loans –
(RFIs/MFIs/FSCs/FIs),
Joint Ventures/Equity Funds,
Credit Guarantee Scheme,
Land Reform Empowerment Fund
sefa’s values: Kuyasheshwa, Passion for development, Integrity, Transparency, Innovation
Enab
ling/
Sup
po
rt
Hu
man
Cap
ital
Man
agem
ent,
IT S
yste
ms,
Sta
keh
old
er R
elat
ion
s &
Co
mm
un
icat
ion
s,
Fin
ance
an
d P
rocu
rem
ent C
orp
orate G
overn
ance
B
oard
of D
irectors, sefa M
anagem
ent, R
isk & C
om
plian
ce, Cred
it Co
ntro
ls, Au
dit &
fraud
p
reventio
n an
d Legal
Pro
du
ct P
ort
folio
DistributionChannels
sefa’s Regional Offices, RFIs, MFIs, FSCs, Commercial Banks, Specialised Funds, Provincial Development Corporations (PDCs), Post Office, & Post Bank
Customers SMMEs and Co-operatives
R500 R5m
Capacity Building Services (RFIs/MFIs/FSCs/FI’s)-
Institutional Strengthening,
Pre Post loan mentoring,
Mandate
Overarching Mandate
To promote the establishment, survival and growth of SMMEs and thus contribute towards poverty alleviation and job creation.
Legislative Mandate
“To foster the development of Small and
Medium Enterprises and Cooperatives;” as stipulated by the IDC Act s(3)(d).
5
Target Market
sefa’s target market consists of small businesses that have been failed by the existing formal banking and finance sector.
These include:
• Survivalists and microenterprises – those requiring loans of anything between R500 and R50 000
• Small enterprises – loans between R50 000 and R1 000 000
• Medium enterprises – loan between R1 000 000 and R5 000 000
6
Targeted Group Funding
• 30% of funding disbursed targeted towards youth-owned enterprises.
• 45% of funding disbursed targeted towards priority rural provinces.
• 40% of funding disbursed targeted towards women-owned businesses,
progressively increasing in subsequent years.
• 70% of funding disbursed targeted towards black-owned businesses.
7
Overall Strategic Objectives
The strategic objectives of sefa are to:
1. Increase access and provision of finance to small businesses and thereby
contribute towards job creation.
2. Develop and implement a national footprint for effective product and
service delivery.
3. Build an effective and efficient sefa that is a sustainable performance
driven organisation.
4. Build a learning organisation .
5. Build a sefa that meets all legislative, regulatory and good governance
requirements.
6. Build a strong and effective sefa brand emphasizing accessibility to
SMMEs
8
9
Products & Services - Wholesale Lending
Product Description
Business Loans Partnership with Non Bank Financial Intermediaries for on-lending to SMMEs (eg sefa provides loan to SEF, who lends money to micro enterprises)
Funds/ Joint Ventures Partnership with mainly private sector entities for on-lending to SMMEs (e.g. sefa’s partnership with Anglo to provide finance to small mining contractors)
Credit Indemnity Scheme sefa provides guarantees to banks, enabling loans to small businesses that do not otherwise have sufficient collateral/security to support facilities.
Land Reform Empowerment Fund (LREF)
Facility through which sefa lends money to commercial banks and other reputable agricultural lenders for on-lending to land reform beneficiaries
10
Products & Services - Direct Lending
Product Description
Revolving/Bridging Loans
To facilitate short term capital requirements or bridging finance for delivery of contracts or orders (eg a small business gets a contract to supply stationery, but needs finance to buy the stock)
Asset Finance
For acquisition of fixed assets (eg a small business needs a new machine. sefa provides a loan, repayable over 5 years)
Term Loans To finance longer term business expansion requirements and specific capital acquisitions (similar to asset finance, but not necessarily linked to a specific machine)
Working Capital
To finance purchase of stock, overheads, etc (eg sefa provides a shorter term loan (3 years) to a small shop to buy stock needed to expand)
11
Products and Services - Non Financial Services
Product Description
Post-loan Business Support Programme
This service is only provided to SMMEs that have benefitted from facilities provided by sefa and its financing partners as a risk mitigating intervention (e.g. sefa provides a mentor to a small business to assist with specific aspects of running the business)
Institutional Strengthening Grants
Aimed at providing institutional strengthening and technical assistance to Financial Intermediaries (eg grant funding provided to an intermediary to assist it in improving its systems)
Wholesale Lending Short Term Initiatives
• Partner with stronger financial intermediaries and recapitalise
• Sign agreements with financial institutions and increase utilization of the Credit Indemnity Scheme
• Continue with the review of the wholesale lending portfolio, including the consolidation of intermediaries
• Expand wholesale offering through partnerships targeting specific sectors and/or markets
• Introduce new products that are aligned to intermediary needs that meets sefa’s developmental objectives
• Influence interest rate charged by intermediaries to SMMEs to meet sefa’s developmental objectives
• Institutional strengthening of intermediaries through targeted capacity building grants and technical support
• Target specific co-operative markets
• Finalise the wholesale lending division’s structure and placements
• Review the financial modeling for the wholesale lending division
12
Funding and pricing strategy
• sefa’s pricing strategy will be developmental in nature.
• The pricing will be affordable to small businesses, incorporating an
appropriate discount for developmental impact, whilst ensuring the
sustainability of the institution.
• Continued support via grant funding is required to offer some of the
products (e.g. Credit Indemnity)
13
Delivery Network
14
Existing sefa offices
Existing Retail Financial Intermediaries
Existing Micro-finance intermediaries
Planned sefa branch/ satellite offices (branch office is a small staffed office. Satellite office is a desk in eg. seda/Post Office, manned at specific times.)
Cities/towns
THANK YOU
NELCITY BUILDING – OFFICE U5 (First Floor)
Cnr Samora Machel Drive and Paul Kruger St -
Nelspruit,
Tel: 013 755 3923 / 013 755 2370 / 013 755 2648
Cell: +27 83 452 3439 [email protected]
www.sefa.org.za