BUSINESS PLAN 2015/16 - Department of Trade and Industry · National Empowerment Fund Business Plan for 2015/16 3 Acronyms and Abbreviations AMD : Asset Management Division APP :

BUSINESS PLAN

2015/16

N Empowerment Fund

Business Plan for 2015/16 2

Approval of the Business Plan

Recommended by the CEO for endorsement

Endorsement by the Accounting Authority

Name: Philisiwe Mthethwa

Signature: --------------------------

Rank: CEO

Date: 30 / 01 / 2015 30 / 01 / 2015

Name: Rakesh Garach

Signature: -------------------------------

Rank: Acting Chairman

Date:

: ----------- -------------------------------------------- --------------------------------------------------------------- ------------------------------- ---------------

National Empowerment Fund


Acronyms and Abbreviations

AMD : Asset Management Division

APP : Annual Performance Plan

Approved: Final committee approval obtained, legal agreements not signed

B-BBEE: Broad-Based Black Economic Empowerment

BFS : Bankable Feasibility Study

Commitments: Legal agreements signed. (Deals may have been approved in current and previous financial periods.) All Conditions Precedent may not have been met yet.

CP : Construction Phase

CPs : Conditions Precedent

DFIs : Development Finance Institutions

Disbursements: Total cash advancements made against all approved deals (deals may have been approved in current and previous financial periods) subject to all Conditions Precedent having been satisfied by the investee.

Drawdowns: Advances made against disbursed facilities

EC : Eastern Cape

EIA : Environmental Impact Assessments

ETF : Exchange Traded Funds

FC : Financial Closure

FMD : Fund Management Division

FS : Free State

GDP : Gross Domestic Product

IDC : Industrial Development Corporation

IPAP : Industrial Policy Action Plan

IPF : Industrial Policy Framework

IRR : Internal Rate of Return

KZN : KwaZulu-Natal

KPI : Key Performance Indicator

MBO : Management Buy-Out



MOU : Memorandum of Understanding

MP : Mpumalanga

NC : Northern Cape

NCOP : National Council of Provinces

NEF : National Empowerment Fund

NIPF : National Industrial Policy Framework

PFMA : Public Finance Management Act

PFS : Pre-feasibility study

PIU : Pre-Investment Business Support Unit

POIU : Post Investment Business Support Unit

RMC : Risk and Portfolio Management Committee

ROI : Return on Investment

SAIs : State-Allocated Investments

SME : Small and Medium Enterprise

SOCE : State Owned Commercial Enterprise

SPF : Strategic Projects Fund

TC : Technical Completion

WC : Western Cape



Table of Contents

1. Chairman’s Note ............................................................................................................................. 6

2. Strategic Overview.......................................................................................................................... 8

3. Risk Management around the NEF’s Strategic Objectives............................................................ 27

4. Human Resource Requirements ................................................................................................... 34

5. Financial Plan ............................................................................................................................... .35

6. Business Plan Matrix ..................................................................................................................... 39

7. Indicator Profiles ........................................................................................................................... 44

Appendix A: Financial Projections........................................................................................................ 59

Em werme Fu d

ess f 2015/16 6

1. Chairman’s Note

The targets presented herein presume that additional funding will be sourced in time for the

beginning of the 2015/16 financial year and have been deliberated on and approved by the

Board of Trustees.

The Board has decided to focus on entrenching the implementation of the current strategy

as well as ensuring that set targets for the strategic period are met. There are therefore no

new strategic objectives or projects that have been introduced since the last approved APP.

The Board has focused on discussing how the NEF will ensure that in all levels of its

activities there is a common theme of building Black Industrialists.

Critical risks currently facing the NEF relate to Recapitalisation, Sustainability and

Credit/Asset quality. Various initiatives are in progress to deal with the Recapitalisation and

Sustainability risk. The NEF made a Medium Term Expenditure Framework (MTEF)

application with the National Treasury in July 2014 however no allocation was made to the

fund. The NEF is also looking to tap into the financial resources of development finance

institutions as a solution to its liquidity shortfall. The NEF is in discussions with the IDC to

obtain a bridging funding for further approvals while the process of exploring an optimum

business combination structure with the IDC ensues. Various working groups consisting of

IDC and NEF staff have been established to implement this process. A Board sub-committee

has also been established to monitor this process.

In addition the following actions are being implemented to ensure the sustainability of the

organisation:

Re-examining the current funding instruments and developing a

guideline on moratoriums to improve on cash-inflows.



Increase focus on funding expansion finance type transactions that do

not require long moratoriums or funding instruments that delay

repayments to the NEF.

Re-examining the current pricing model used by the organisation.

With the progress made in obtaining bridging funding from the IDC, the NEF believes that it

is geared to deliver targets as set in this Business Plan for the 2015/16 financial year.

Em werme Fu d

ess f 2015/16 8

2. Strategic Overview

2.1. Vision

Our vision is to be the leading provider of innovative transformation solutions for an

economically inclusive South Africa. We seek to be the lead financier of B-BBEE

investments in the DFI space.

2.2. Mission

The National Empowerment Fund is a catalyst of Broad-Based Black Economic

Empowerment in South Africa.

We enable, develop, promote and implement innovative investment and transformation

solutions to advance sustainable black economic participation in the economy.

2.3. Values

The NEF has implemented a values & culture programme which has been developed,

communicated and implemented through various workshops with staff. The values are:

Ethics – Choosing to do what’s right over what’s wrong

Motivation – Being self-driven and passionate in what we do

Performance – Achieving results timeously, accurately and performing to create an impact

Ownership – Owning our actions, our decisions and consequences of our actions

Worthy – Creating an environment where we make a valued contribution and where we feel

valued for our contribution

Excellence – Consistently exceeding expectations and being the best in everything we do

Respect – Treating everyone fairly and with dignity and demonstrating humility

Em werme Fu d

ess f 2015/16 9

2.4. Strategic goals and objectives

The NEF’s key strategic outcome-oriented goals against which performance is reported are

to:

1. 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.

In order to achieve these objectives the NEF is structured to deliver against this mandate by

performing the following core activities:

Fund Management, which comprises:

o The Venture Capital & Corporate Finance Division, which is comprised of

Umnotho Fund, the Strategic Projects Fund and the newly established

Women Empowerment Fund.

o The SME & Rural Development Division, which consists of Pre-Investment

Unit, Imbewu Fund, Rural & Community Development Fund and Regional

Offices.

o General Counsel, which provides legal support and post-investment support

services to the invested portfolio including turnaround, workout and

restructure services. The General Counsel also looks after the newly

Em werme Fu d

ess f 2015/16 10

merged Socio-economic Development and Asset Management Unit through

which the NEF provides support to communities, aims to foster a culture of

savings and investment among its beneficiaries, as well as promote

Enterprise Development.

2.4.1. Empowerment Dividend

The NEF seeks to measure and assess its impact not only on the basis of financial return,

but in accordance with what is referred to as the Empowerment Dividend which is the socio-

economic impact of the NEF’s investment activities, as provided for in the Broad Based

Black Economic Empowerment Act, that has to manifest itself in measurable impact results

over and above only financial return.

Elements of the Empowerment Dividend are as follows:

Contribution to Broad Based Black Economic Empowerment – the NEF

assesses each transaction against the results of the B-BBEE scorecard, before and

after funding, to ensure that each transaction contributes to the advancement of B-

BBEE.

Participation by black women – the NEF emphasises the empowerment of women

by providing for an additional weighting for black women participation.

Job Creation – Contribution towards employment creation and the number of jobs

created per rand invested or jobs sustained through investment in expansion type

activities.

Investment in Priority Growth Sectors – The number of investments facilitating

black ownership and control of existing and new enterprises in the priority sectors of

the economy as identified by the IPAP and the National Development Plan.

Em werme Fu d

ess f 2015/16 11

Geographic Spread - Geographic spread of investments and contribution towards

increased economic activity across all provinces, particularly in areas of regional

economic disadvantage.

Investment Return - The return that each Fund realises on capital employed after

impairment.

2.5. Products and Services

In pursuit of this mandate the NEF provides financial and non-financial support to investees.

The financial support provided comprises the provision of innovative financing products to

black entrepreneurs and black empowered businesses through the five funds of the NEF,

which are Imbewu Fund, Rural & Community Development Fund, Umnotho Fund, Strategic

Projects Fund and the newly established Women Empowerment Fund.

The non-financial support provided comprises pre-investment services, together with post-

investment services which include mentorship and training for investees. The NEF’s Socio-

Economic Development and Asset Management Unit focuses on fostering a culture of

savings and investment among its beneficiaries by offering investor education seminars

around the country as well as by promoting enterprise development.

2.5.1. Financial Support

The NEF provides funding to black empowered businesses and entrepreneurs from

R250 000 to R75 million across a range of sectors, for venture capital, start-up, expansion

and business acquisition purposes. The NEF differentiates itself not only with a focused

mandate for growing black economic participation, but by also assuming a predominantly



equity-based risk to maximise the Empowerment Dividend in that it places little if no reliance

on the credit strength of its applicants with the emphasis being on the investment risk of the

funding advanced. The investment risk associated with transactions that apply for funding is

mitigated against the evaluation of the entrepreneur, their ability to make sound commercial

decisions which are also in support of national priorities and government policy such as that

contained in the National Development Plan and in support of targeted investments as

identified in the dti’s IPAP. The work of the NEF therefore straddles and complements other

DFI’s by allowing the organisations to work in close collaboration in the promotion of B-

BBEE with the intervention of the NEF in many cases as the provider of equity funding

allowing for the unlocking of the bulk of the funding required from other sources.

NEF funding is provided via two divisions viz.

1. SME & Rural Development Division, which comprises two funds, viz.

a. iMbewu Fund; and

b. Rural & Community Development Fund.

The division is also comprised of:

a. the Pre-Investment Unit,

b. the regional offices.

2. Venture Capital & Corporate Finance Division, which is comprised of:

a. Umnotho Fund, and

b. Strategic Projects Fund

c. Women’s Empowerment Fund

Details about each fund are outlined below:

Emw

erm

eFu

d

ess

f20

15/1

613

2.5.1.1.

ImbewuFund

The

iMbe

wu

Fund

see

ks to

add

ress

mar

ket f

ailu

res

expe

rienc

ed b

y bl

ack-

owne

d S

ME

’s.

The

fund

has

thre

e pr

oduc

ts, v

iz.

Fran

chis

e,

Pro

cure

men

t/Con

tract

and

Ent

repr

eneu

rshi

p pr

oduc

ts.

An

over

view

of t

he p

rodu

cts

is o

utlin

ed b

elow

.

Fr

anch

ise

Con

trac

t /Pro

cure

men

t En

trep

rene

ursh

ip

Des

crip

tion

sredro ,stcartnoc deruces evah taht sE

MS roF

sesnecil esihcnarf gniruces roF

or s

hort-

term

brid

ging

fina

nce

To p

rovi

de c

apita

l to

SM

Es

that

see

k to

pro

vide

pro

duct

or

serv

ice

to a

spe

cific

nic

he m

arke

t

Inst

rum

ents

Term

Loa

n

Term

Loa

n

B

ridgi

ng L

oan

R

evol

ving

Cre

dit

D

ebto

r Fin

ance

R

ever

se F

acto

ring

S

uspe

nsiv

e S

ale

Le

asin

g

S

truct

ured

loan

s

E

quity

inst

rum

ents

Am

ount

R25

0k –

R10

m

R

250k

– R

10m

R25

0k to

R10

m (f

or s

tart-

up a

nd e

xpan

sion

)

R

1m to

R10

m (f

or a

cqui

sitio

n ca

pita

l)

Inve

stm

ent p

erio

d

Up

to fi

ve y

ears

but

can

go

up to

7 y

ears

in

som

e in

stan

ces

M

atch

ed to

the

dura

tion

of th

e

cont

ract

U

p to

7 y

ears

Crit

eria

Clie

nt m

ust h

ave

been

app

rove

d by

the

franc

hiso

r

N

EF

will

onl

y do

bus

ines

s w

ith c

redi

ble

franc

hiso

rs w

ith s

trong

trac

k re

cord

S

ite m

ust h

ave

been

iden

tifie

d

O

pera

tiona

l inv

olve

men

t

Th

ere

mus

t be

a vi

able

con

tract

or

orde

r

Th

e co

ntra

ct m

ust b

e aw

arde

d by

a

cred

ible

ent

ity w

ith s

trong

trac

k

reco

rd

O

pera

tiona

l inv

olve

men

t

C

omm

erci

al v

iabi

lity

S

ecur

ed m

arke

ts

C

lear

val

ue p

ropo

sitio

n

N

EF

will

not

sup

port

acqu

isiti

on o

f bus

ines

ses

that

are

mak

ing

loss

es

O

pera

tiona

l inv

olve

men

t

Pric

ing

P

rime

linke

d

Prim

e lin

ked

P

rime

linke

d

Emw

erm

eFu

d

ess

f20

15/1

614

2.5.1.2.

Ruraland

CommunityDevelopmentFund

The

Rur

al a

nd C

omm

unity

Dev

elop

men

t Fun

d fa

cilit

ates

com

mun

ity in

volv

emen

t in

proj

ects

by

supp

ortin

g th

e B

-BB

EE

Act

obj

ectiv

es o

f

empo

wer

ing

loca

l and

rura

l com

mun

ities

. In

acco

rdan

ce w

ith th

e B

-BB

EE

Act

, it a

ims

to in

crea

se th

e ex

tent

to w

hich

wor

kers

, coo

pera

tives

and

othe

r col

lect

ive

ente

rpris

es o

wn

and

man

age

busi

ness

ent

erpr

ises

.

A

cqui

sitio

nN

ew V

entu

re C

apita

l Ex

pans

ion

Cap

ital

m05R ot

m1R

m05R ot

m1R

m05R ot

m1R

dlohserht tnemtsevnI Tr

igge

r for

RC

DF

part

icip

atio

n C

o-op

erat

ives

, com

mun

ity g

roup

ings

arr

ange

d as

Trus

t or a

ny le

gal e

ntity

, and

wor

kers

trus

t

Co-

oper

ativ

es, c

omm

unity

gro

upin

gs a

rran

ged

as T

rust

or a

ny le

gal e

ntity

, and

wor

kers

trus

t.

Co-

oper

ativ

es, c

omm

unity

gro

upin

gs

arra

nged

as

Trus

t or a

ny le

gal e

ntity

, and

wor

kers

trus

t.

Prin

cipa

l goa

lTo

cat

er fo

r rur

al e

ntre

pren

eurs

or c

omm

uniti

es

seek

ing

to b

uy e

quity

in e

xist

ing

rura

l and

com

mun

ity e

nter

pris

es

To a

ssis

t rur

al e

ntre

pren

eurs

and

co-

oper

ativ

es a

nd

com

mun

ities

with

equ

ity c

ontri

butio

n to

war

ds

esta

blis

hmen

t of s

usta

inab

le n

ew v

entu

res

in a

gri-s

ecto

r.

To fa

cilit

ate

invo

lvem

ent a

nd o

wne

rshi

p by

com

mun

ities

in p

roje

cts

prom

otin

g so

cial

uplif

tmen

t

Type

s of

com

pani

es/p

roje

cts

Focu

s on

sm

all t

o la

rge

vent

ures

whe

re

partn

ersh

ips

betw

een

NE

F, B

EE

par

ties

or

com

mun

ity e

ntity

, and

tech

nica

l par

tner

is in

volv

ed

Med

ium

siz

ed n

ew v

entu

re p

roje

cts

with

tota

l fun

ding

requ

irem

ents

of b

etw

een

R1m

and

R50

m

Rur

al a

nd c

omm

unity

pro

ject

s us

ing

entit

ies

such

as

co-o

pera

tives

and

priv

ate

com

pani

es

Type

s of

inst

rum

ent

Deb

t, eq

uity

, qua

si e

quity

and

pre

fere

nce

shar

es

Deb

t, eq

uity

, qua

si e

quity

and

pre

fere

nce

shar

esD

ebt,

equi

ty, q

uasi

equ

ity a

nd p

refe

renc

e

shar

es

Bla

ck e

quity

thre

shol

dM

inim

um o

f 50.

1%

Pric

ing

Prim

e (+

/ -) E

mpo

wer

men

t Div

iden

d or

Dev

elop

men

t Im

pact

Influ

ence

d

Term

s of

Inve

stm

ent a

nd

othe

r ter

ms

5

to 1

0 ye

ars

C

lear

exi

t Stra

tegy

U

p to

10

year

s

To

tal p

roje

ct e

quity

4

0%

N

EF

Exp

osur

e 5

0% o

f pro

ject

cos

ts

Up

to 1

0 ye

ars

Emw

erm

eFu

d

ess

f20

15/1

615

2.5.1.3.

UmnothoFund

This

Fun

d is

des

igne

d to

impr

ove

acce

ss to

BE

E c

apita

l and

has

six

pro

duct

s: A

cqui

sitio

n Fi

nanc

e, N

ew V

entu

res

Fina

nce,

Exp

ansi

on F

inan

ce,

Cap

ital M

arke

ts F

und,

Liq

uidi

ty a

nd W

areh

ousi

ng a

nd P

rope

rty.

Thes

e pr

oduc

ts p

rovi

de c

apita

l to

blac

k-ow

ned

and-

man

aged

ent

erpr

ises

,

blac

k en

trepr

eneu

rs w

ho a

re b

uyin

g eq

uity

sha

res

in e

stab

lishe

d w

hite

-ow

ned

ente

rpris

es, n

ew v

entu

res

finan

ce a

nd B

EE

bus

ines

ses

that

are

or w

ish

to b

e lis

ted

on th

e JS

E. F

undi

ng ra

nges

from

R2

milli

on to

R75

milli

on.

The

Fund

pric

ing

is to

ach

ieve

retu

rns

that

are

in li

ne w

ith th

e

leve

l of r

isk

take

n by

the

NE

F. D

etai

ls o

f the

five

pro

duct

s ar

e pr

ovid

ed b

elow

.

Emw

erm

eFu

d

ess

f20

15/1

616

A

cqui

sitio

n Fi

nanc

e N

ew V

entu

re F

inan

ceEx

pans

ion

Cap

ital

Cap

ital M

arke

tsLi

quid

ity &

War

ehou

sing

Prop

erty

Fun

d

Inve

stm

ent

thre

shol

d R

2 m

illion

to R

75m

illion

R

5 m

illion

to R

75

milli

on

R5

milli

on to

R75

milli

on

R2

mill

ion

to R

75

milli

on

R2

mill

ion

to R

75 m

illio

n R

5 m

illio

n to

R75

milli

on

Prod

uct

purp

ose

BE

E a

pplic

ants

see

king

to fu

nd e

quity

purc

hase

s of

bet

wee

n

R2

mill

ion

and

R75

milli

on in

exi

stin

g

busi

ness

es

BE

E p

artie

s se

ekin

g to

parti

cipa

te in

med

ium

-

size

d gr

eenf

ield

s

proj

ects

with

tota

l

fund

ing

requ

ests

of

betw

een

R10

milli

on

and

R20

0 m

illion

.

Fund

ing

prov

ided

to

entit

ies

that

are

alre

ady

blac

k-em

pow

ered

, but

seek

exp

ansi

on c

apita

l

to g

row

the

busi

ness

.

This

pro

duct

inve

sts

in

BE

E e

nter

pris

es,

parti

cula

rly th

ose

owne

d

by b

lack

wom

en th

at

seek

to li

st o

n th

e JS

E

or it

s ju

nior

AltX

mar

ket.

The

Um

noth

o Fu

nd w

ill

also

hel

p lis

ted

BE

E

com

pani

es to

rais

e

addi

tiona

l cap

ital f

or

expa

nsio

n.

This

pro

duct

ass

ists

BE

E

shar

ehol

ders

who

nee

d to

sell

a po

rtion

or a

ll of

thei

r

shar

es (a

s m

inor

ity s

take

s

in u

nlis

ted

firm

s ar

e ha

rd

to s

ell).

Als

o ac

quire

s an

d

tem

pora

rily

war

ehou

ses

thes

e sh

ares

bef

ore

on-

selli

ng th

em to

new

BE

E

shar

ehol

ders

, and

refin

ance

s B

EE

shar

ehol

ding

s w

here

exis

ting

finan

cing

stru

ctur

es a

re c

ostly

and/

or in

effic

ient

.

This

pro

duct

see

ks

to c

ater

for B

EE

grou

ps s

eeki

ng to

buy

equi

ty in

exis

ting

prop

erty

busi

ness

es;

deve

lop

new

prop

erty

ven

ture

s;

and

to p

rovi

de

expa

nsio

n fin

ance

to e

ntiti

es th

at a

re

alre

ady

empo

wer

ed

Emw

erm

eFu

d

ess

f20

15/1

617

A

cqui

sitio

n Fi

nanc

e N

ew V

entu

re F

inan

ceEx

pans

ion

Cap

ital

Cap

ital M

arke

tsLi

quid

ity &

War

ehou

sing

Prop

erty

Fun

d

Prod

uct

crite

ria

M

ediu

m to

larg

e

com

pani

es

Fo

cus

on

partn

ersh

ips

with

exis

ting

man

agem

ent t

eam

s

and

othe

r equ

ity

inve

stor

s

A

ctiv

e B

EE

invo

lvem

ent i

n

inve

stee

com

pani

es

B

EE

fina

ncia

l

cont

ribut

ion

on a

case

-by-

case

bas

is

S

ecur

ity to

incl

ude

pers

onal

guar

ante

es

M

ediu

m-s

ized

gree

nfie

lds

proj

ects

with

tota

l fun

ding

requ

ests

of

betw

een

R10

milli

on a

nd R

200

milli

on.

B

EE

-spe

cific

finan

cial

cont

ribut

ion

asse

ssed

on

a

case

-by-

case

bas

is

N

EF

expo

sure

to

the

prod

uct

gene

rally

not

to

exce

ed 5

0% o

f the

tota

l pro

ject

cos

ts

P

rove

n

man

agem

ent

expe

rienc

e w

ithin

the

cons

ortiu

m

A

ctiv

e B

EE

invo

lvem

ent i

n

inve

stee

com

pani

es

S

ecur

ity to

incl

ude

pers

onal

guar

ante

es

A

ctiv

e B

EE

invo

lvem

ent i

n

inve

stee

com

pani

es

S

ecur

ity to

incl

ude

pers

onal

guar

ante

es a

nd

secu

rity

over

busi

ness

ass

ets.

M

ediu

m to

larg

e

com

pani

es

Fo

cus

on

partn

ersh

ips

with

exis

ting

man

agem

ent t

eam

s

and

othe

r equ

ity

inve

stor

s

A

ctiv

e B

EE

man

agem

ent

parti

cipa

tion

A

ctiv

e B

EE

invo

lvem

ent i

n

inve

stee

com

pani

es

B

EE

fina

ncia

l

cont

ribut

ion

on a

case

-by-

case

bas

is

S

ecur

ity to

incl

ude

pers

onal

gua

rant

ees

M

ediu

m to

larg

e

com

pani

es

Fo

cus

on p

artn

ersh

ips

with

exi

stin

g

man

agem

ent t

eam

s

and

othe

r equ

ity

inve

stor

s

A

ctiv

e B

EE

man

agem

ent

parti

cipa

tion

A

ctiv

e B

EE

invo

lvem

ent i

n

inve

stee

com

pani

es

B

EE

fina

ncia

l

cont

ribut

ion

on a

case

-by-

case

bas

is

S

ecur

ity to

incl

ude

pers

onal

gua

rant

ees

M

ediu

m to

larg

e

com

pani

es

A

lignm

ent w

ith

prio

rity

sect

ors

A

ctiv

e B

EE

invo

lvem

ent i

n

inve

stee

com

pani

es

B

EE

fina

ncia

l

cont

ribut

ion

on

a ca

se-b

y-ca

se

basi

s

S

ecur

ity to

incl

ude

pers

onal

guar

ante

es

Emw

erm

eFu

d

ess

f20

15/1

618

A

cqui

sitio

n Fi

nanc

e N

ew V

entu

re F

inan

ceEx

pans

ion

Cap

ital

Cap

ital M

arke

tsLi

quid

ity &

War

ehou

sing

Prop

erty

Fun

d

Type

s of

in

stru

men

t

Inve

stm

ent i

nstru

men

t

can

incl

ude

a

com

bina

tion

of d

ebt,

equi

ty a

nd m

ezza

nine

finan

ce.

Inve

stm

ent i

nstru

men

t

can

incl

ude

a

com

bina

tion

of d

ebt,

equi

ty a

nd m

ezza

nine

finan

ce.

Inve

stm

ent i

nstru

men

t

can

incl

ude

a

com

bina

tion

of d

ebt,

equi

ty a

nd m

ezza

nine

finan

ce

Inve

stm

ent i

nstru

men

t

can

incl

ude

a

com

bina

tion

of d

ebt,

equi

ty a

nd m

ezza

nine

finan

ce.

Inve

stm

ent i

nstru

men

t can

incl

ude

a co

mbi

natio

n of

debt

, equ

ity a

nd

mez

zani

ne fi

nanc

e.

Inve

stm

ent

inst

rum

ent c

an

incl

ude

a

com

bina

tion

of d

ebt,

equi

ty a

nd

mez

zani

ne fi

nanc

e.

Bla

ckeq

uity

th

resh

old

Min

imum

of 2

5.1%

M

inim

um o

f 25.

1%M

inim

um o

f 50.

1%M

inim

umof

25.

1%M

inim

um o

f 25.

1%M

inim

um o

f 50.

1%

Pric

ing

Influ

ence

d by

Em

pow

erm

ent D

ivid

end

or D

evel

opm

ent I

mpa

ct. D

ebt l

inke

d to

prim

e ra

te a

nd e

quity

bas

ed o

n ta

rget

IRR

Term

s of

In

vest

men

t an

d ot

her

term

s

Typi

cal i

nves

tmen

t

horiz

on o

f 4 to

7 y

ears

Typi

cal i

nves

tmen

t

horiz

on o

f 5 to

10

year

s.

Typi

cal i

nves

tmen

t

horiz

on o

f 4 to

7 y

ears

Typi

cal i

nves

tmen

t

horiz

on o

f 4 to

7 y

ears

Typi

cal i

nves

tmen

t

horiz

on o

f 4 to

7 y

eas

Typi

cal i

nves

tmen

t

horiz

on o

f up

to 1

0

year

s on

sen

ior

debt

and

up

to 1

5

year

s on

mez

zani

ne

debt

and

equ

ity

inst

rum

ents

Em werme Fu d

ess f 2015/16 19

2.5.1.4. Women Empowerment Fund

This is a newly established fund aimed at accelerating the provision of funding to businesses

owned by black women.

Finance to be provided from R250,000 to R75 million across all the existing NEF product

suite. Depending on type of funding the horizon of funding provided ranges between 4 and

10 years. Minimum of 51% black female ownership. In addition, the women have to be

operationally involved at the managerial and board levels. Other empowerment dividend

pillars are also considered

2.5.1.5. Strategic Projects Fund

The Strategic Projects Fund will facilitate the acquisition of equity in large strategic projects

where the NEF assumes the role of BEE partner.

The fund aims to play a central role in early stage projects by identifying, initiating, scoping

and developing projects that are in sectors identified by government as the key drivers to

South Africa’s economic growth. These projects will be taken through 6-stages of the project

development phases.

The phases being the following:

Scoping and Concept Study; Pre-Feasibility Study; Bankable Feasibility Study; Financial

Closure; Construction Phase and Technical Completion.

Em werme Fu d

ess f 2015/16 20

Through the Strategic Projects Fund, NEF will facilitate B-BBEE in the following ways:

Warehouse equity for B-BBEE in early stage projects at valuations with little or no

premium paid to access the projects. This enables NEF to distribute its warehoused

equity to B-BBEE at lower valuations once the project is operational;

Take early stage risk on behalf of black people as early stage projects have higher

execution risks compared to operational companies. The NEF will assume most of

the financing risk and devise instruments to carry or transfer equity to B-BBEE once

project fatal flaws have been mitigated;

Manage the project and venture capital finance structuring complexities as it is more

complex and difficult to raise capital for new ventures as compared to Umnotho

finance deals where valuations can be ascertained based on historical performance

and risks are clearly understood;

Enable project promoters to focus on making projects bankable and operational by

giving the B-BBEE status as NEF is the only DFI gazetted as a B-BBEE facilitator;

Once the initial project risks have been reduced, the NEF will transfer its

shareholding to selected B-BBEE groups through a transparent process.

2.5.2. Non bus ness support

The NEF provides non-financial support through three of its business units, specifically:

The Socio-Economic Development and Asset Management unit performs two

functions. Firstly, it structures retail savings products, manages the national investor

education programme and is responsible for the Enterprise Development Fund. The

unit also facilitates the establishment, operationalisation and monitoring of B-BBEE

structures like Workers’ Trusts, Community Trusts and Co-operatives.

The Pre-Investment Unit and regional offices, which provide the first line of non-

financial assistance to prospective investees and support to applicants seeking

Em werme Fu d

ess f 2015/16 21

funding. In addition Pre-Investment Unit provides entrepreneurial development

training.

The Post-Investment Unit, which manages the investment portfolio and assists

investees with mentorship and training.

A Turnaround, Workouts & Restructuring Unit is aimed at strengthening

interventions and support to investee businesses that are experiencing operational

and financial challenges. This team works together with the entrepreneurs in

assessing and re-structuring the financial and/or operational aspects of the

businesses.

2.5.2.1. Investor Education

The NEF’s Investor Education campaign is planned to reach localities across the country,

providing information necessary to make prudent savings and investment decisions. The

initiative has covered all nine provinces during the past two years.

2.5.2.2. Socio Economic Development

The Socio-Economic Development and Asset Management Unit provides social

interventions in deals which have broad-based groups or communities as beneficiaries. The

unit provides the following services to these beneficiaries:

Foster a culture of savings and investment through its Investor Education

programme.

Promote and facilitate Enterprise Development.

Educate beneficiaries about roles and responsibilities in business.

Em werme Fu d

ess f 2015/16 22

Empower groups as fellow shareholders, on fiduciary duties and promotes the

understanding of equity ownership.

Facilitate workshops with communities who will be receiving NEF funding, in order to

assist with the understanding of the transactions and to manage community

expectations.

Ensure that schemes (i.e. trusts and co-operatives) are formally registered.

Identification of opportunities for beneficiaries in transactions and develop market

linkages.

Development of social plans and plans on how funds will be used by the group.

Assist with compliance issues e.g. AGM’s and corporate governance matters.

The Unit also assists with securing grants for NEF investees, and provides assistance with

the identification of beneficiaries where these have not been identified.

2.5.2.3. Enterprise Development Fund

The NEF Enterprise Development Fund (NEF ED Fund) which was launched in July 2011 is

aimed at providing a sustainable and meaningful solution to corporates who are committed

to the Enterprise Development code. The opportunity entails private sector enterprises

making their enterprise development contributions to the NEF ED Fund, and the NEF

utilising these contributions to co-finance the NEF’s investments in enterprise development

beneficiaries with the objective of facilitating the development, sustainability and/or financial

and operational independence of beneficiaries. The NEF ED Fund will be under the

administrative and management authority of the NEF and will benefit from the NEF’s

institutional and fund management infrastructure, support and investment expertise. The

NEF will ensure that investments are appropriately targeted, have a high chance of success

and sustainability, and that the investments assist in the development and growth of

sustainable, black empowered, small and medium enterprises.

Em werme Fu d

ess f 2015/16 23

Through the NEF ED Fund, the Measured Entities will receive enterprise development

credits in compliance with Code 400 whilst still retaining focus on their core business, be

able to develop sector value chains through ED, whilst the beneficiaries could tap into an

additional source of funding. Most importantly, the NEF ED Fund would be able to make

more investments designed to enable meaningful black economic participation, working in

partnership with Measured Entities in identifying opportunities for enterprise development.

2.5.2.4. Pre Investment Business Support

Applicants for funding may be excellent entrepreneurs, but often struggle to navigate the

necessary application procedures and to manage their businesses and this is often evident

during the initial assessment of the funding application. The NEF therefore assists with

funding advice, business planning and general assistance to help ensure that applications

are of sufficient quality to complete all steps in the application process.

As the first point of contact for many potential clients, the PIU's primary functions are to:

Provide information on NEF products and procedures;

Control and assist in drawing up funding applications;

Identify applications that will qualify for funding;

Keep clients informed on the progress of their applications;

Advise applicants and assist with drawing up business plans.

The NEF currently faces a number of challenges in delivering on its mandate, including the

quality of applications received, the level of skills of the target market, the high level of

impairments currently being experienced within the funds and the limited ability of applicants

to supply own contributions or collateral.

Em werme Fu d

ess f 2015/16 24

The NEF’s Pre-Investment Unit has developed the Entrepreneurship Development Strategy

in order to better assess and support the development of black entrepreneurs. This

intervention will in addition to the above challenges also explore additional interventions

aimed at addressing the issue of limited own capital, which many black entrepreneurs face.

The intervention comprises:

Entrepreneurship Assessment Tool (which is in the process of being revised);

The provision of training services;

The provision of interventionist support for entry-level entrepreneurs;

Provision of incubation services.

The Pre-Investment Unit has implemented a business incubation model in order to support

the development of aspirant black entrepreneurs. The NEF realises the value and impact

that can be made through incubation and has established partnerships with various

incubation service providers.

2.5.2.5. Post Investment Business Support

Black empowered businesses need to be robust and self-sustaining for B-BBEE to succeed.

In recognition of this fact, the NEF has established structures to monitor its clients for risk

and provide advice when needed. Although start-ups are inherently higher risk, the rewards

for success are jobs and increased capital for further start-ups.

The Post Investment Unit manages this process of client monitoring and support. The unit is

responsible for:

Monitoring and preparing management information on investments

Administering investment contracts

Coordinating mentorship programmes

Em werme Fu d

ess f 2015/16 25

Facilitating investment valuations with fund managers

Conducting strategic reviews

2.5.2.6. Turnarounds, Workouts and Restructuring Unit

The Turnarounds, Workouts and Restructuring Unit (TWR) has been established in order to

work closely with investees whose businesses are in distress. This unit will play a more

hands-one role in detecting challenges and identifying possible solutions.

The TWR looks after NEF clients that are experiencing financial difficulties in meeting their

obligations towards the NEF, and those that are in financial distress. The TWR works closely

with various NEF departments (POIU, Legal, Finance, the Funds) as well as external parties

(mentors, consultants, external legal counsel) to conduct its core activities of turnarounds

and workouts in an effort to normalise the distressed accounts.

TWR is responsible for acting timeously on non-performing loans to minimise the risk of

financial losses to the NEF and to reduce the risk of business failures. The optimal

restructuring solution is informed by early analysis of the cause and effect of distress, the

formulation of appropriate interventions and timeous approval and implementation of

corrective measures.

The primary objectives of TWR are to:

Perform restructuring analysis, develop and submit restructuring strategies for

approval and execution, and monitor the implementation of the approved

restructuring.

Restructure the company while preserving the NEF’s BEE mandate and reduce the

significant impairments and / or write-offs.

Advise on restructuring proposals where early warning signs of distress are evident.



Initiate suitable turnaround solutions and turnaround strategies, to minimise the high

risk clients (subject to such clients displaying economic viability).

Attend to business rescue proceedings and advice on the acceptance of the

business rescue plan

Manage/ monitor the non-performing loans until these loans have been rehabilitated

and handed back to POIU or until the non-performing loans have been transferred to

Legal.

Em werme Fu d

ess f 2015/16 27

3. Risk Management around the NEF’s Strategic Objectives

The realisation of the strategic objectives presented by the NEF may be affected by the

following key risks as ranked in the NEF’s organizational Key Risk Register:

1. Recapitalisation Risk: The risk that the NEF will not be able to raise sufficient

capital to fund the NEF’s short to medium-term investment and operating

activities.

The NEF has lifted the moratorium on funding new transactions as the NEF’s available cash

position has improved since when the moratorium was initially put in place. Without an

injection of new capital in the medium term, the NEF will however run out of capital to

finance new transactions going forward. The lack of adequate capital will also negatively

impact on the NEF’s ability to follow through on participation interest or equity options for

transactions within the NEF’s Strategic Projects Fund. This will have a negative impact on

the achievement of the NEF’s mandate and the ability to transform the economy.

Various initiatives are underway regarding resolving the issue relating to the recapitalisation

of the NEF. The NEF is looking to tap into the financial resources of development finance

institutions as a solution to its lack of funding. The NEF is in discussions with the IDC to

obtain additional funding to enable the NEF to continue fulfilling its mandate. In addition a

project has commenced to implement an optimum business combination structure with the

IDC. A team of individuals consisting of IDC and NEF staff are working on this process and

they report to a project steering committee. The steering committee reports to key

stakeholders regarding the progress of this project. An NEF board sub-committee has also

been established to monitor this process.



2. Sustainability Risk: The risk that the NEF will not be financially sustainable due

to erosion of the capital base and the NEF not having adequate capital to fund

planned programs and meet medium term cash requirements.

The NEF was not allocated capital via the recent budget process and was required to

sustain itself over the strategic planning period (three years) out of current capital and

internally generated portfolio returns.

This risk will materialise should the current capital not be prudently managed and the

investment portfolio becomes significantly impaired in the absence of future funding being

allocated to the NEF or the NEF not being able to source additional capital.

Due to increase in the level of approvals, the risk that the NEF approves transactions that it

does not have the available funds to follow through.

The current funding instruments (i.e. Equity, Shareholders loans etc.) used to structure

transactions and the use of moratoriums is also negatively impacting on the NEF’s cash-

flows.

The actions implemented to mitigate against the recapitalisation and sustainability risks

include:

Close monitoring of the portfolio by the Post Investments Unit.

Intervention by the Restructure and turnaround unit for businesses that are in

distress.

Re-examining the current funding instruments and developing a guideline on

moratoriums to improve on cash-inflows.

Increase focus on funding expansion finance type transactions that do not require

long moratoriums or funding instruments that delay repayments to the NEF.

Tracking available cash against commitments made on a monthly basis.



Engagements with the dti and National Treasury regarding funding requirements.

Exploring option of obtaining bridging funding from the IDC.

Entering into an optimum business combination structure with the IDC.

3. Credit Risk: The risk of exposure to high credit risk investments and poor

quality of the invested portfolio

The NEF is mandated to intervene in the economy through the provision of funding to black

owned enterprises which, due to past economic imbalances, may be of a higher credit risk.

This risk is exacerbated by the recent poor economic conditions that may impact on funded

businesses and their cash flows leading to the inability to honour loan repayments and

possible defaults on loans to the NEF. Due to the high risk mandate of the NEF, this risk is

rated as one of critical exposures facing the NEF.

Internally, the risk that the assessment processes of the NEF not being able to inform

appropriate investment decisions does exist as does the risk of not collecting on amounts

due and not being able to timeously identify distressed investments which may be able to be

rescued. The risk of funding the wrong “jockey’s” impacting on the performance of

investments and the portfolio also exists.

Inadequate controls mitigating this risk may negatively impact on the performance and

quality of the portfolio.

The controls introduced to attempt to mitigate this risk include the appointment of skilled and

experienced management and staff in the fund management sector, managing the mix of

start-ups versus later stage investments within investment policies, due diligence and

approval processes, monitoring and credit collection processes and enhancing financial and

pricing models to adapt to most recent experiences and developments in the development

finance environment. A turnaround, workouts and restructure unit has also been established



to deal with clients that are currently in distress. This unit implements relevant interventions

to prevent businesses that are in distress from failing.

A new Impairment model has been developed and implemented.

4. Business/Market Risk: The risk that changes in external market conditions

have a negative impact on the viability of funded transactions

The investment portfolio of the NEF consists of business in the commercial environment that

are susceptible to normal business risks of economic environment, fluctuations in commodity

prices and foreign exchange rates amongst other variables. The current volatile local

economic environment has led to relatively lower GDP growth rates. In addition household

personal finances are under financial strain due to an increase in living costs. This is

negatively impacting on business conditions and has placed strain on some of the clients in

the portfolio.

The NEF portfolio is arguably more susceptible to these variations given the nature of the

businesses being supported i.e. early stage business, inexperienced entrepreneurs, geared

balance sheets and hence not as able to absorb the impact of these fluctuations as much as

more established businesses.

In evaluating transactions, much work is performed during the due diligence phase on the

potential impact that economic changes would have on the business risk of the proposed

transaction. In addition the financial models of these business applicants are further stressed

for potential scenarios where several economic variables change in order to ascertain the

ability of the forecasted cash flows to accommodate these changes. Where necessary

funding structures are adjusted in order to provide some lee-way for this business risk to be

accommodated. The Post Investment unit also closely monitors the portfolio to identify

potential issues before they materialise.



5. Information Technology Risk

The risk that the IT systems not meeting user’s requirements or that the system is not fully

utilized could impact on the efficiencies within the organisation and reliability of information.

The risk within this area of the organisation impacts on all areas of the organisation.

Various initiatives have been implemented to improve the controls within this area i.e. IT

governance structure, including an IT steering committee, which has been established and is

now responsible for overseeing implementation of IT projects. An exercise to identify

possible issues with the existing system was completed and a report has been issued. Due

to the business combination process that is currently underway, management felt that it

would not be prudent to incur significant costs at this point and thus the implementation of

the second phase for enhancements have been placed on hold. Focus is however being

placed on certain quick wins as well as providing additional training to users to ensure that

users are aware of all of the functionalities within the system.

6. Mandate Implementation: The risk of the NEF not being able to meaningfully

contribute towards its mandate

The mandate of the NEF is clearly set out within the NEF Act. The risk does however exist

that in executing the mandate, the NEF does not achieve the desired impact in advancing

B-BBEE.

The contribution to this risk could be exacerbated through management and staff potentially

not fully understanding the operational implementation of the mandate of the NEF, are

inadequately skilled or lack the capacity and thus may be too thinly spread to consistently

monitor adherence to mandate in all activities of the NEF.

The NEF undertakes a rigorous recruitment process in order to ensure that staff is

adequately skilled to perform their jobs. Staff is also required to attend a detailed orientation



process, as well as the staff strategic planning workshop, in order to ensure that staff

understand the mandate of the NEF and their role in contributing towards the achievement of

the mandate.

This risk is further mitigated through the development of funding products individually aligned

to the overall strategy and mandate of the NEF. These products each have their own specific

criteria which have to be met in order for applicants to be eligible for funding. Furthermore,

specific strategies is formally developed in response to areas of continuing market failure

e.g. the SME strategy. Each transaction is currently being assessed against a measure of

impact termed the NEF Empowerment Dividend. This will further create a consistent base

against which each application will need to be assessed for meeting the mandated criteria

for funding. Due to the current moratorium on funding new transactions, the achievement of

the NEF’s mandate has negatively been affected.

Inability to secure future funding will negatively impact on the ability of the NEF to implement

its mandate. Various actions, as indicated in item 1 above, are being implemented to deal

with the future funding requirements of the NEF.

7. Reputation risk

The NEF has recently experienced certain negative media coverage and it is not certain as

to what is causing this. Various initiatives are in progress to engage with stakeholders and

the media to address issues regarding negative media coverage. In addition a brand audit is

currently in progress to determine what the perception is regarding the NEF’s brand by all

stakeholders.

8. People Risk

The uncertainty due to the recapitalisation process led to an increase in resignations during

the financial year ending 31 March 2014. The level of resignations has decreased from the



prior year and vacancies for critical positions have been filled. The resignations may

however increase, should there not be certainty with regard to the future capitalisation of the

NEF.

9. Business Combination Risk

The delay in implementation of the Business combination process with the IDC could

negatively impact on the future sustainability of the NEF due to lack of adequate funds to

fund future transactions and the negative impact on the reputation of the NEF. The

inappropriate management of the business combination process could also lead to loss of

staff. A project steering committee consisting of all relevant stakeholders has been

established to monitor the progress of implementation of the business combination

process. This includes the development of communication plans regarding the business

combination process, for staff and external stakeholders such as media, clients and other

stakeholders. In addition regular reporting is also provided to key stakeholders and a

change management process is being implemented.

Em werme Fu d

ess f 2015/16 34

4. Human Resource Requirements

4.1. Personnel information

Staff numbers have reduced by 14% (from 168 to 146) between 31 March 2013 and

31 March 2014 as a result of uncertainties regarding the recapitalisation and job security.

The NEF would need to increase capacity in order to meet its strategic objectives, and grow

staff numbers to around 183 during 2015/16 and to 195 thereafter. The staffing complement

is made up of mainly professionals. Personnel cost remains a significant contributor to total

operational expenditure, which is an acceptable norm in Development Finance

Institute/Private Equity environments, where there is a high dependence on professional

staff. The ratio of support to line staff is 1:2.

Audited outcomes Revised over the MTEF

Occ o 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18Number ofposts ed of dedes ishme t

Number ofposts ed of dedes ishme t





cc s2 2 2 2 2 2

8 8 8 8 8 8

e34 30 35 35 35 35

a ci 70 56 79 81 93 93

40 37 30 40 40 40S i ma s 13 12 14 16 16 16

Head f 1 1 1 1 1 1

168 146 169 183 195 195

Detailed staff numbers are provided in Appendix A.

Em werme Fu d

ess f 2015/16 35

5. Financial Plan

The NEF’s strategic objectives are detailed in section 2 of this Business Plan, and detailed

Financial Projections are provided in Appendix A.

5.1. Projections of revenue, expenditure and borrowings

Revenue projections include interest on loans and investments, raising /origination fees

(newly introduced over the strategic period), interest on cash in bank and dividend income

from listed and unlisted shares. The interest on loans is projected at rates based on the

pricing policies of each fund and the interest rate projections over the entire investment

portfolio. Most of the NEF’s loan instruments are priced against the prime lending rate. Fees

are projected at 1% of a third of funds disbursed each year.

Interest on cash in bank is projected at between 5% and 6%, which are the projected rates

achieved on monies invested with the South African Reserve Bank. A further margin of 3%

was applied to calculate potential finance costs.

Dividend income is particularly difficult to predict/project as these are linked to different

dividend policies of the NEF’s investee companies. The NEF has a portfolio of listed and

unlisted investments, the majority of which relates to the MTN shares allocated to the NEF

by Government. The dividend projections included in the overall revenue is therefore based

our best estimate of what the NEF could receive each year.

The Net Asset Value of the NEF has increased from R2.1 billion in 2005/06 to just over

R6 billion as at 31 March 2014. This has largely been a factor of appreciation in fair value of

the NEF’s listed investment portfolio and retained earnings.

Total Expenditure (ie including funding for non-financial services offered by the NEF) has

increased in line with increased activities and targets. Operational expenditure includes

general & administration and employee costs, and apart from office rental and salaries, are



all budgeted for from a zero base. The overall methodology applied when budgeting for

operational expenditure is largely linked to the organizational targets and activities. The

NEF has implemented operational expenditure reductions across all business units which in

the past year have mainly entailed a self-imposed headcount moratorium that has since

evolved to a targeted critical role recruitment drive since the lifting of the funding moratorium.

The NEF also embarks on various mandate related projects (ie non-financial services) for

which specific budget allocations are required. To this end a further R 16m per annum has

been budgeted for over the next three years. Some of the projects that the NEF is and will

be involved in are Investor Education road shows, non-financial support to NEF investees

(mentorship, entrepreneurship development as well as governance training).

Over the strategic period, the efficiency ratio (based on total costs) is being managed down

to the upper end of the intended long term range of 54%-58%. In the event that the NEF

gets transfers from the dti to fully fund the non-financial services we currently undertake, the

efficiency ratio would peak at 60% in the first year and be managed down to about 54% by

the end of the strategic period. The NEF has therefore made an application to the dti in that

regard.

The current and required capitalisation of the NEF will allow it to move forward and make a

meaningful contribution in achieving its mandate, with its investment approvals projected to

reach the R10 billion milestone by the end of the strategic period.

Em werme Fu d

ess f 2015/16 37

5.2. Asset and liability management

The NEF, as a Schedule 3A entity under the PFMA, is required to operate fully on the basis

of not budgeting for a deficit. Investment activity is funded out of cash balances and thus all

liabilities will at all times be off-set by cash balances.

Excess cash is managed through a cash management process where short term cash is

invested in call accounts of varying maturities at two approved banks to meet short term

cash requirements and excess cash with the South African Reserve Bank in terms of the

requirements of the PFMA.

5.3. Cash ec ns

Please refer to Appendix A.

5.4. Capital expenditure pr ects

Annual capital expenditure allocation is mostly related to replenishment of existing capital

expenditure items such as computers, furniture and office equipment. The average budget

allocation for capital expenditure over the three year period is R6 million.

5.5. Infrastructure plans

The NEF does not directly fund infrastructure for itself or the country as part of its mandate

though there may be an element of infrastructure funding provided through projects funded

by the Strategic Projects Fund that is a specific requirement of that project and in line with

Em werme Fu d

ess f 2015/16 38

national targeted strategic sectors. In addition, the NEF is involved in assisting with funding

for the PRASA and AREVA infrastructure development initiatives.

5.6. Dividend policies

The NEF does not have a dividend policy with respect to any surplus reported. Surpluses

are retained following a section 53(3) application to the National Treasury each year in order

to meet further capitalisation needs of the NEF since it is not currently on the MTEF and thus

not a recipient of any government allocated funding.

Emw

erm

eFu

d

ess

f20

15/1

639

6.BusinessPlan

Matrix

Targ

ets

for 2

015/

16 h

ave

been

revi

ewed

bas

ed o

n di

scus

sion

s at

Man

agem

ent,

Exe

cutiv

e an

d B

oard

leve

l. T

he ta

rget

s ha

ve b

een

upda

ted

to

agre

e to

the

revi

sed

AP

P re

latin

g to

the

stra

tegi

c pe

riod

2015

/16-

18 a

s ta

bled

.

Stra

tegi

c O

bjec

tive

Perf

orm

ance

In

dica

tor/

Mea

sure

by

Fund

ing

Prog

ram

me

Bas

elin

ePe

rfor

man

ceas

at

31 M

arch

20

14

Ann

ual

Targ

ets

2013

/14

Ann

ual T

arge

ts

for 2

014/

15

Ann

ual

Targ

ets

for

2015

/16

Qua

rter

ly M

ilest

ones

1st

2nd

3rd

4th

AD

VAN

CIN

G B

BB

EE

1. P

rovi

de

finan

ce to

bu

sine

ss

vent

ures

es

tabl

ishe

d an

d m

anag

ed

by b

lack

pe

ople

.

1.1.

Val

ue o

f de

als

appr

oved

by

the

NE

F

(R m

illio

n)

R41

8 m

illion

R

175

milli

on

R71

8 m

illion

R

1 12

0 m

illion

R

186

milli

on

R55

1 m

illion

R

872

milli

on

R1

120

milli

on

1.2.

Val

ue o

f ne

w

Com

mitm

ents

(R

mill

ion)

R30

3 m

illion

R

220

milli

on

R 6

19 m

illion

R

980

milli

on

R14

5 m

illion

R

419

milli

on

R72

1 m

illion

R

980

milli

on

1.3.

Val

ue o

f ne

w

Dis

burs

emen

ts

(R m

illio

n)

R63

6 m

illio

n N

/A

R65

0 m

illio

n R

880

mill

ion

R95

mill

ion

R35

7 m

illio

n R

630

mill

ion

R88

0 m

illio

n

1.4.

Val

ue o

f ne

w E

nter

pris

e D

evel

opm

ent

cont

ribut

ors

secu

red.

R25

.8 m

illio

n S

ecur

e at

le

ast 5

new

co

ntrib

utor

s

R23

milli

on

secu

red

R

33 m

illio

n se

cure

d N

il R

11m

illio

n

R22

mill

ion

R

33m

illio

n

Emw

erm

eFu

d

ess

f20

15/1

640

Stra

tegi

c O

bjec

tive

Perf

orm

ance

In

dica

tor/

Mea

sure

by

Fund

ing

Prog

ram

me

Bas

elin

ePe

rfor

man

ceas

at

31 M

arch

20

14

Ann

ual

Targ

ets

2013

/14

Ann

ual T

arge

ts

for 2

014/

15

Ann

ual

Targ

ets

for

2015

/16

Qua

rter

ly M

ilest

ones

1st

2nd

3rd

4th

MA

XIM

ISIN

G T

HE

EMPO

WER

MEN

T D

IVID

END

2. I

nves

t in

blac

k em

pow

ered

bu

sine

sses

th

at h

ave

high

em

ploy

men

t cr

eatin

g op

portu

nitie

s.

2.1.

Num

ber o

f jo

bs e

xpec

ted

to b

e su

ppor

ted

or

crea

ted.

Fund

ing

appr

oval

s ar

e pr

ojec

ted

to

supp

ort 3

621

jo

bs (2

661

ne

w a

nd 9

60

exis

ting)

.

Sup

port

at

leas

t 1 8

50

new

or

exis

ting

jobs

Sup

port

4 00

0 ne

w o

r exi

stin

g jo

bs

Sup

port

5 41

5 ne

w o

r exi

stin

g jo

b op

portu

nitie

s

Sup

port

585

new

or

exi

stin

g jo

b op

portu

nitie

s

Sup

port

2 20

3 ne

w

or e

xist

ing

job

oppo

rtuni

ties

Sup

port

3 87

7 ne

w

or e

xist

ing

job

oppo

rtuni

ties

Sup

port

5 41

5 ne

w

or e

xist

ing

job

oppo

rtuni

ties

3. S

uppo

rt th

e pa

rtici

patio

n of

bla

ck

wom

en in

the

econ

omy.

3.1.

P

erce

ntag

e of

po

rtfol

io

disb

urse

d ow

ned

by

blac

k w

omen

25%

(For

the

year

)

21%

(on

tota

l ac

tive

portf

olio

)

25%

(For

the

year

)

30%

(on

tota

l act

ive

portf

olio

)

35%

(on

tota

l act

ive

portf

olio

)

30%

32%

34%

35%

Emw

erm

eFu

d

ess

f20

15/1

641

Stra

tegi

c O

bjec

tive

Perf

orm

ance

In

dica

tor/

Mea

sure

by

Fund

ing

Prog

ram

me

Bas

elin

ePe

rfor

man

ceas

at

31 M

arch

20

14

Ann

ual

Targ

ets

2013

/14

Ann

ual T

arge

ts

for 2

014/

15

Ann

ual

Targ

ets

for

2015

/16

Qua

rter

ly M

ilest

ones

1st

2nd

3rd

4th

4. F

acili

tate

in

vest

men

t ac

ross

all

prov

ince

s in

S

outh

Afri

ca

4.1.

Tot

al

colle

ctiv

e in

crea

se in

pe

rcen

tage

of

portf

olio

by

valu

e in

vest

ed

in E

C, N

C,W

C,

KZN

, NW

, M

pum

alan

ga,

FS a

nd

Lim

popo

The

prop

ortio

nate

va

lue

of th

e po

rtfol

io

inve

sted

in

the

liste

d pr

ovin

ces

has

incr

ease

d fro

m 5

0% to

51

%, w

hich

w

as d

riven

by

new

in

vest

men

ts

in th

e E

aste

rn

Cap

e, F

ree

Sta

te,

Nor

ther

n C

ape,

M

pum

alan

ga

and

Lim

popo

.

Mai

ntai

n th

e pr

opor

tiona

te

valu

e of

the

portf

olio

in

vest

ed in

E

C, N

C,W

C,

KZN

, NW

, M

pum

alan

ga,

FS a

nd

Lim

popo

as

at 3

1 M

arch

20

13.

.

Incr

ease

the

over

all,

colle

ctiv

e va

lue

of th

e po

rtfol

io in

vest

ed

in E

C, N

C,W

C,

KZN

, NW

, M

pum

alan

ga, F

S

and

Lim

popo

by

5% o

vera

ll.

Incr

ease

the

over

all,

colle

ctiv

e va

lue

of th

e po

rtfol

io

inve

sted

in

EC

, NC

,WC

, K

ZN, N

W,

Mpu

mal

anga

, FS

and

Li

mpo

po b

y 5%

ove

rall.

Incr

ease

the

over

all,

colle

ctiv

e va

lue

of th

e po

rtfol

io in

vest

ed

in E

C, N

C,W

C,

KZN

, NW

, M

pum

alan

ga, F

S

and

Lim

popo

by

5% o

vera

ll.

Incr

ease

the

over

all,

colle

ctiv

e va

lue

of

the

portf

olio

inve

sted

in

EC

, NC

,WC

, KZN

, N

W, M

pum

alan

ga,

FS a

nd L

impo

po b

y 5%

ove

rall.

Incr

ease

the

over

all,

colle

ctiv

e va

lue

of

the

portf

olio

inve

sted

in

EC

, NC

,WC

, KZN

, N

W, M

pum

alan

ga,

FS a

nd L

impo

po b

y 5%

ove

rall.

Incr

ease

the

over

all,

colle

ctiv

e va

lue

of

the

portf

olio

inve

sted

in

EC

, NC

,WC

, KZN

, N

W, M

pum

alan

ga,

FS a

nd L

impo

po b

y 5%

ove

rall.

OPT

IMIS

ING

NO

N-F

INA

NC

IAL

SUPP

OR

T

5. E

ncou

rage

&

pro

mot

e sa

ving

s,

inve

stm

ent

&

mea

ning

ful

econ

omic

pa

rtici

patio

n by

bla

ck

peop

le

5.1.

Num

ber o

f se

min

ars

held

ac

ross

the

coun

try.

Four

Inve

stor

E

duca

tion

sem

inar

s he

ld in

Li

mpo

po.

32 In

vest

or

Edu

catio

n se

min

ars

per

year

32 In

vest

or

Edu

catio

n se

min

ars

per y

ear

32 In

vest

or

Edu

catio

n se

min

ars

per

year

8 In

vest

or

Edu

catio

n S

emin

ars

16 In

vest

or

Edu

catio

n S

emin

ars

24 In

vest

or

Edu

catio

n S

emin

ars

32

Inve

stor

E

duca

tion

Sem

inar

s

Emw

erm

eFu

d

ess

f20

15/1

642

Stra

tegi

c O

bjec

tive

Perf

orm

ance

In

dica

tor/

Mea

sure

by

Fund

ing

Prog

ram

me

Bas

elin

ePe

rfor

man

ceas

at

31 M

arch

20

14

Ann

ual

Targ

ets

2013

/14

Ann

ual T

arge

ts

for 2

014/

15

Ann

ual

Targ

ets

for

2015

/16

Qua

rter

ly M

ilest

ones

1st

2nd

3rd

4th

6.

Bla

ck

econ

omic

em

pow

erm

ent

is a

dvan

ced

thro

ugh

com

mer

cial

ly

sust

aina

ble

ente

rpris

e

6.1.

Num

ber o

f B

usin

ess

Toda

y Tr

aini

ng

sess

ions

pr

ovid

ed

Six

trai

ning

se

ssio

ns h

eld

5 tra

inin

g se

ssio

ns p

er

year

, with

an

aver

age

scor

e of

60%

re

quire

d in

th

e po

st-

train

ing

asse

ssm

ent.

18 tr

aini

ng

sess

ions

per

yea

r, w

ith a

n av

erag

e sc

ore

of 6

0%

requ

ired

in th

e po

st-tr

aini

ng

asse

ssm

ent

18 tr

aini

ng

sess

ions

per

ye

ar, w

ith a

n av

erag

e sc

ore

of 6

0%

requ

ired

in th

e po

st-tr

aini

ng

asse

ssm

ent

5 tra

inin

g se

ssio

ns w

ith a

n av

erag

e sc

ore

of

60%

requ

ired

in

the

post

-trai

ning

as

sess

men

t

10 tr

aini

ng s

essi

ons

with

an

aver

age

scor

e of

60%

re

quire

d in

the

post

-tra

inin

g as

sess

men

t

15 tr

aini

ng s

essi

ons

with

an

aver

age

scor

e of

60%

re

quire

d in

the

post

-tra

inin

g as

sess

men

t

18 tr

aini

ng s

essi

ons

with

an

aver

age

scor

e of

60%

re

quire

d in

the

post

-tra

inin

g as

sess

men

t

6.2.

Num

ber

of

entre

pren

eurs

w

ho

succ

essf

ully

co

mpl

ete

busi

ness

in

cuba

tion

Tota

l of 6

4 en

trepr

eneu

rs

refe

rred

to

incu

batio

n pa

rtner

s.

60 re

ferr

als

for i

ncub

atio

n pe

r yea

r, an

d 5 en

trepr

eneu

rs

in th

e fin

al

incu

batio

n st

age.

75 re

ferr

als

for

incu

batio

n pe

r ye

ar, a

nd 5

en

trepr

eneu

rs in

th

e fin

al

incu

batio

n st

age.

10

entre

pren

eurs

in

the

final

in

cuba

tion

stag

e.

2 en

trepr

eneu

rs in

th

e fin

al

incu

batio

n st

age.

4 en

trepr

eneu

rs in

th

e fin

al in

cuba

tion

stag

e.

7 en

trepr

eneu

rs in

th

e fin

al in

cuba

tion

stag

e.

10 e

ntre

pren

eurs

in

the

final

incu

batio

n st

age.

6.

3. N

umbe

r of

Cor

pora

te

Gov

erna

nce

Trai

ning

for

NE

F in

vest

ees.

N/A

New

targ

et

N/A

(New

)

18 C

orpo

rate

G

over

nanc

e Tr

aini

ng s

essi

ons

18 C

orpo

rate

G

over

nanc

e Tr

aini

ng

sess

ions

5 C

orpo

rate

G

over

nanc

e Tr

aini

ng s

essi

ons

10 C

orpo

rate

G

over

nanc

e Tr

aini

ng s

essi

ons

15 C

orpo

rate

G

over

nanc

e Tr

aini

ng s

essi

ons

18 C

orpo

rate

G

over

nanc

e Tr

aini

ng s

essi

ons

7. E

stab

lish

the

NE

F in

th

e S

outh

A

frica

n ec

onom

y as

a

cred

ible

and

m

eani

ngfu

l de

velo

pmen

t fin

ance

in

stitu

tion.

7.1.

Bra

nd

audi

t sur

vey

findi

ngs

N/A

S

urve

y

perfo

rmed

ev

ery

se

cond

yea

r

N/A

S

urve

y

perfo

rmed

ev

ery

se

cond

yea

r

Ach

ieve

bra

nd

awar

enes

s of

34

%

N/A

S

urve

y pe

rform

ed

ever

y se

cond

ye

ar

N/A

N

/A

N/A

N

/A

Emw

erm

eFu

d

ess

f20

15/1

643

Stra

tegi

c O

bjec

tive

Perf

orm

ance

In

dica

tor/

Mea

sure

by

Fund

ing

Prog

ram

me

Bas

elin

ePe

rfor

man

ceas

at

31 M

arch

20

14

Ann

ual

Targ

ets

2013

/14

Ann

ual T

arge

ts

for 2

014/

15

Ann

ual

Targ

ets

for

2015

/16

Qua

rter

ly M

ilest

ones

1st

2nd

3rd

4th

FIN

AN

CIA

L EF

FIC

IEN

CY

& S

UST

AIN

AB

ILIT

Y

8. E

stab

lish

the

NE

F as

a

sust

aina

ble

DFI

.

8.1.

P

erce

ntag

e of

po

rtfol

io

impa

ired

The

prov

isio

nal

impa

irmen

t is

22.2

7% o

n th

e lo

ans

portf

olio

and

19

.94%

on

the

entir

e di

sbur

sed/

in

vest

men

t po

rtfol

io.

21%

19

%

18%

19

%

18.5

%

18%

18

%

8.2.

Tar

get

RO

I bef

ore

impa

irmen

ts

(to b

e re

view

ed

annu

ally

)

The

prov

isio

nal

retu

rn fo

r the

ye

ar is

8.8

%

on th

e lo

ans

portf

olio

and

10

.1%

on

the

entir

e po

rtfol

io.

8 –

10%

8%

- 10

%

9% -

10%

9%

- 10

%

9% -

10%

9%

- 10

%

9% -

10%

8.3.

C

olle

ctio

ns

ratio

s

87%

72

.5%

75

%

80%

80

%

80%

80

%

80%

Em werme Fu d

ess f 2015/16 44

7. Indicator

Performance Indicator 1.1: Value of deals approved by the NEF

1. Indicator title Value of deals approved by the NEF

2. Short definition Total value of deals approved by the NEF

3. Purpose/importance Indicates the level of financial support approved by the NEF’s investment committees

4. Source/collection of data Funds; CRM system

5. Lead/ coordinating agency

Funds

6. Method of calculation The information is captured on the CRM information. The final values and reports are reviewed and signed off by Fund Managers and Divisional Executives.

7. Calculation type Cumulative – for the year

8. Baseline (for the year ended 31 March 2014)

R418 million

9. Data limitations Reflects the total value of funds committed by the NEF to investees. In some instances, deals may not make it to actual funding stages due to negotiations, conditions precedent not being met or lapsed facilities.

10. Quality assurance strategy

Review by Fund, Finance department and Strategy & Planning unit

11. Indicator responsibility Fund Managers



Performance Indicator 1.2: Value of Commitments

1. Indicator title Value of Commitments made by the NEF

2. Short definition Total value of Commitments

3. Purpose/importance Indicates the total cash which the NEF has agreed to advance to investees in legal agreements signed.

4. Source/collection of data Finance department; Funds; CRM system


Funds

6. Method of calculation The information is recorded by the Legal Department and the Funds as part of the legal/ disbursement process.



R303 million

9. Data limitations No known limitations.


Submitted and reviewed by the Legal Department.

11. Indicator responsibility Legal Manager



Performance Indicator 1.3: Value of Disbursements

1. Indicator title Value of Disbursement made by the NEF

2. Short definition Disbursements

3. Purpose/importance Indicates the total cash which the NEF has advanced to investees

4. Source/collection of data Finance department; Funds


Funds

6. Method of calculation The information is recorded by the Funds and Finance department as part of the financial management processes.



R636 million

9. Data limitations No known limitations.


Review by Funds and Finance department

11. Indicator responsibility Finance Manager



Performance Indicator 1.4: Value of new Enterprise Development contributors secured

1. Indicator title Value of Enterprise Development contributions secured into the approved NEF ED Fund from measured entities

2. Short definition Value of ED Fund contributions

3. Purpose/importance Reflects the total value of cash contributions made by private sector organisations to the ED Fund

4. Source/collection of data

Asset Management; Finance Department


Asset Management

6. Method of calculation Asset Management and Finance keep track of contributors and contributions made.



R25.8 million secured

9. Data limitations None known


Review by Asset Management and Finance Departments

11. Indicator responsibility Asset Management Project Manager



Performance Indicator 2.1: Number of job opportunities supported or created

1. Indicator title Number of job opportunities supported or created

2. Short definition Number of job opportunities supported

3. Purpose/importance Reflects the approximate number of jobs supported i.e. new and existing jobs, according to funds committed to investees by the NEF.


Funds


Funds

6. Method of calculation The information is captured on the CRM information. The final values and reports are reviewed and signed off by Fund Managers and Divisional Executives.



Funding approvals are projected to support 3 621 jobs (2 661 new and 960 existing)

9. Data limitations Jobs are recorded during due diligence phase and actual number of jobs supported may vary depending on business requirements post the disbursement process.


Review by Fund Managers




Performance Indicator 3.1: Percentage of the portfolio owned by black women

1. Indicator title Percentage of the portfolio owned by black women

2. Short definition Percentage of the portfolio owned by black women

3. Purpose/importance To maximise the participation of black women in the economy.


Funds

5. Funds Funds

6. Method of calculation The information is captured by the Funds and stored on the CRM system

7. Calculation type Based on total active portfolio as at reporting date


21%

9. Data limitations This represents value of the portfolio disbursed that is owned by women.


The information is checked and submitted by the Funds onto CRM.

11. Indicator responsibility Funds



Performance Indicator 4.1: Increase the overall collective value of the portfolio invested in EC,NC, WC, KZN, NW, Mpumalanga and Limpopo by 5%

1. Indicator title Total collective increase the percentage of portfolio by value invested in EC, NC, WC, KZN, NW, Mpumalanga, FS and Limpopo

2. Short definition Increase portfolio size in under-represented provinces

3. Purpose/importance To facilitate investment across all provinces of South Africa


Fund managers


Funds

6. Method of calculation Provincial data is captured and stored on the CRM system which can be tracked per fund and for the NEF.

7. Calculation type Cumulative


The proportionate value of the portfolio invested in the listed provinces increased from 50% to 51% which was driven by new investments in the Eastern Cape, Free State, Northern Cape, Mpumalanga and Limpopo.

9. Data limitations None


Information is captured and verified by funds.




Performance Indicator 5.1: Number of seminars held across the country

1. Indicator title Number of investor education seminars held across the country

2. Short definition Number of seminars held

3. Purpose/importance To increase the understanding of equity ownership among black people and increased activity in savings and investment by black people.


Asset Management Division


Asset Management Division

6. Method of calculation Total number of seminars held per province. Record is kept of the seminars held and this is reported on by the Project Manager.



Four investor education seminars held in Limpopo.

9. Data limitations No specific limitations


Seminars are managed and attended by NEF. The number of seminars and the number of attendees are counted.

11. Indicator responsibility Asset Management Project Manager



Performance Indicator 6.1: Number of Business Today Training Sessions provided

1. Indicator title Providing Business Skills (Business Today and Bootcamp) Training

2. Short definition Business Skills Training

3. Purpose/importance Provision of training to black-owned businesses and entrepreneurs


Pre-Investment Unit


Pre-Investment Unit

6. Method of calculation A record is kept of the training sessions held together with the towns in which training hosted.



6 training sessions provided



A record is kept of the training sessions held together with the towns in which training hosted. This can be verified by Supply Chain and Finance department, based on orders and invoices raised.

11. Indicator responsibility Pre-Investment Unit Manager



Performance Indicator 6.2: Number of entrepreneurs that progress to the final stages of theBusiness Incubation programme

1. Indicator title Number of Entrepreneurs that progress to the final stages of the Business Incubation programme

2. Short definition Business Incubation

3. Purpose/importance Focus on tracking progress of those referred to the business incubation programmes


Pre-Investment Unit


Pre-Investment Unit

6. Method of calculation Count of the number of entrepreneurs who have reached the final stage of the Incubation Programme



Total of 64 entrepreneurs referred to incubation partners.

9. Data limitations The NEF has in the past few years focused on counting the number of referrals made to business incubation programmes. The focus going forward will be to ensure that those referred actually successfully complete the programme.


A list of entrepreneurs referred to the incubation programme is kept by Pre-Investment. Progress of referrals will be verified with the Incubation Programme itself.

11. Indicator responsibility Pre-Investment Unit Manager



Performance Indicator 6.3: Number of Corporate Governance Training Sessions provided

1. Indicator title Number of Corporate Governance Training provided

2. Short definition Corporate Governance Training

3. Purpose/importance Provision of corporate governance training to black-owned businesses and entrepreneurs


Socio-Economic Development Unit


Socio-Economic Development Unit

6. Method of calculation A record is kept of the training sessions held together with the towns in which training hosted.



This is a new target



A record is kept of the training sessions held together with the towns in which training hosted. This can be verified by Supply Chain and Finance department, based on orders and invoices raised.

11. Indicator responsibility Socio-Economic Development Unit



Performance Indicator 7.1.: Brand Audit Survey findings

1. Indicator title Brand Audit Survey findings

2. Short definition The findings of the Brand Audit Survey

3. Purpose/importance To track brand awareness of the NEF in order to drive the utilisation of the NEF’s services and financing products.


Marketing & Communications has outsourced this function to a media agency


Marketing & Communications

6. Method of calculation A survey is performed every second year.

7. Calculation type Non-cumulative


N/A for 2013/14 as Audit only conducted every second year.



Checked and verified by the media agency

11. Indicator responsibility Marketing & Communications Manager



Performance Indicator 8.1: Percentage of Portfolio Impaired

1. Indicator title Percentage of the portfolio impaired

2. Short definition The total percentage of the value invested in investees that is valued at less than the original valuation, and that may have to be written off in future.

3. Purpose/importance The level of impairment is an indication of the sustainability of the fund.


Finance Department


Finance Department

6. Method of calculation Valuations are performed on the portfolio based on the current performance of investee’s businesses.

7. Calculation type Non-cumulative

8. Baseline (as at 31 March 2014)

22.27% on the loans portfolio and 19.94% on the entire disbursed portfolio.



The valuations are performed by an independent consultant together with the Post Investment Unit and the Finance Department.

11. Indicator responsibility Finance Manager



Performance Indicator 8.2: Target ROI before impairments

1. Indicator title Target return on investment before impairments

2. Short definition Annual return earned by the total portfolio i.e. loans and preference share portfolio before impairments

3. Purpose/importance The ability to generate a healthy return improves the ability of the fund to be sustainable.


Finance Department


Finance Department

6. Method of calculation Returns are calculated based on actual collections received from investees

7. Calculation type Cumulative

8. Baseline (as at 31 March 2014)

8.8% on the loans portfolio and 10.1% on the entire portfolio.



Calculations are performed by the Finance Manager and audited by the external auditors

11. Indicator responsibility Fund Manager, Post Investment Unit Manager, Chief Financial Officer



Performance Indicator 8.3: Collections ratio

1. Indicator title Improve collections ratios

2. Short definition The NEF seeks to improve the percentage of monies collected from investees based on the total amount invoiced.

3. Purpose/importance To ensure sustainability of the fund


Finance Department, Post Investment Unit


Finance Department

6. Method of calculation Percentage of funds received based on the total amount invoiced



87%



Invoicing is performed by Finance Department, and audited as part of the annual audit exercise.

11. Indicator responsibility Chief Financial Officer

N BANe

BP

a2

Appe

ndix

A:

Fud

2015

/16

Fina

ncia

lPrro

ject

ions

559

AC

TUA

LFO

REC

AST

BU

DG

ETB

UD

GET

BU

DG

ETM

ar-1

4M

ar-1

5M

ar-1

6M

ar-1

7M

ar-1

8 R

R

R

R

R

INC

OM

E:

Div

iden

ds11

5,97

0,28

2

104,

373,

254

95,0

00,0

00

95,0

00,0

00

95,0

00,0

00

Inte

rest

Rec

eive

d B

anks

75,9

59,7

97

75

,959

,797

73

,179

,911

48

,596

,994

(3

,937

,298

)

Inte

rest

from

Inve

stm

ents

193,

420,

218

21

7,20

7,06

5

25

7,93

3,43

4

32

7,65

6,94

7

41

5,17

4,57

8

Fe

es

-

-

3,

020,

160

3,04

9,20

0

4,

224,

000

Ente

rpris

e D

evel

opm

ent F

und

19,3

10,9

47

23

,000

,000

23

,000

,000

33

,000

,000

43

,000

,000

O

ther

inco

me

59,2

90

-

-

-

-

B

ad D

ebts

Rec

over

ed75

8,50

0

2,00

0,00

0

2,

000,

000

2,00

0,00

0

2,

000,

000

405,

479,

034

42

2,54

0,11

6

45

4,13

3,50

5

50

9,30

3,14

1

55

5,46

1,28

0

EXPE

ND

ITU

RE

Goo

ds &

Ser

vice

s53

,875

,388

69,4

40,5

93

72,3

73,3

57

77,0

76,1

35

81,8

92,6

69

Com

pens

atio

n to

em

ploy

ees

135,

825,

922

17

0,17

4,61

8

19

4,28

9,97

3

20

5,29

1,04

0

21

3,51

6,47

2

D

epre

ciat

ion

3,39

6,82

1

3,

893,

530

4,97

5,47

1

5,

132,

830

5,39

2,98

1

Pr

ojec

ts/ N

on-fi

nanc

ial s

uppo

rt6,

662,

410

14,5

00,0

00

15,3

12,0

00

16,1

54,1

60

16,9

61,8

68

Impa

irmen

t Pro

visi

on15

2,31

8,52

2

153,

597,

265

149,

151,

782

153,

536,

959

168,

654,

414

Tota

l Exp

endi

ture

352,

079,

063

41

1,60

6,00

7

43

6,10

2,58

3

45

7,19

1,12

4

48

6,41

8,40

4

OPE

RAT

ION

AL

SUR

PLU

S/(D

EFIC

IT)

53,3

99,9

71

10

,934

,109

18

,030

,922

52

,112

,017

69

,042

,876

Fair

valu

e A

dj -

Hel

d at

fair

valu

e 57

4,96

5,29

7

-

-

-

-

Fair

valu

e A

dj -

unin

corp

orat

ed e

quity

inve

ntm

ents

(2,3

02,0

00)

-

-

-

-

Fair

valu

e ad

j - in

vest

men

t in

asss

ocia

tes

(22,

297,

305)

-

-

-

-

TO

TAL

FAIR

VA

LUE

AD

JUST

MEN

TS55

0,36

5,99

2

-

-

-

-

Net

sur

plus

/(def

icit)

603,

765,

963

10

,934

,109

18

,030

,922

52

,112

,017

69

,042

,876

Nat

iona

l Em

pow

erm

ent F

und

Sum

mar

y St

atem

ent o

f Fin

anci

al P

erfo

rman

ce

N BNEm

pow

e

Busi

ness

Plan

for

2rmen

tFun

d

2015

/16

660

Mar

-14

Mar

-15

Mar

-16

Mar

-17

Mar

-18

RR

RR

R

ASS

ETS

Non

Cur

rent

Ass

ets

4,49

4,38

3,78

3

4,98

5,32

6,49

1

5,

809,

201,

165

6,65

8,55

1,96

2

7,97

1,27

7,58

3

Pro

perty

, Pla

nt a

nd E

quip

men

t4,

784,

867

8,

249,

407

10

,324

,585

10,3

77,2

09

10

,764

,047

Inta

ngib

le A

sset

s19

3,56

6

83

5,49

6

1,

284,

847

1,59

9,39

3

1,81

9,57

5

Inve

stm

ents

in A

ssoc

iate

s42

3,87

0,55

6

58

6,37

0,55

6

815,

170,

556

1,

046,

170,

556

1,

366,

170,

556

Inve

stm

ents

Hel

d at

Fai

r Val

ue2,

254,

784,

956

2,

254,

784,

956

2,25

4,78

4,95

6

2,

254,

784,

956

2,

254,

784,

956

Inve

stm

ent i

n su

bsid

iary

6,17

8,10

4

6,17

8,10

4

Fina

nce

Leas

e re

ceiv

able

s10

3,90

3,99

6

12

3,36

4,17

0

159,

287,

865

19

6,36

6,88

3

25

5,89

3,99

9

Lo

ans

and

Pre

fere

nce

Sha

res

1,70

0,66

7,73

8

2,00

5,54

3,80

1

2,56

8,34

8,35

6

3,

149,

252,

965

4,

081,

844,

450

P

refe

renc

e sh

ares

224,

006,

841

224,

006,

841

224,

006,

841

224,

006,

841

224,

006,

841

Loan

s1,

476,

660,

897

1,

781,

536,

960

2,

344,

341,

515

2,92

5,24

6,12

4

3,85

7,83

7,60

9

Cur

rent

Ass

ets

1,53

8,21

2,58

3

1,05

1,84

0,97

9

24

5,99

7,22

6

(551

,241

,553

)

(1,7

94,9

24,2

98)

Acc

ount

s R

ecei

vabl

e1,

009,

474

1,

009,

474

1,

009,

474

1,00

9,47

4

1,00

9,47

4

Non

-cur

rent

ass

ets

- Hel

d fo

r sal

e8,

100,

000

-

-

-

-

Inve

stm

ents

Hel

d fo

r Tra

ding

49,0

70,6

75

49

,070

,675

49,0

70,6

75

49

,070

,675

49,0

70,6

75

Cas

h an

d B

ank

1,48

0,03

2,43

4

1,00

1,76

0,83

0

19

5,91

7,07

7

(601

,321

,702

)

(1,8

45,0

04,4

47)

TOTA

L A

SSET

S6,

032,

596,

366

6,

037,

167,

469

6,05

5,19

8,39

1

6,

107,

310,

409

6,

176,

353,

285

EQU

ITY

AN

D L

IAB

ILIT

IES

Trus

t Cap

ital a

nd R

eser

ves

5,97

6,23

3,36

0

5,98

7,16

7,46

9

6,

005,

198,

391

6,05

7,31

0,40

9

6,12

6,35

3,28

5

Trus

t Cap

ital

2,46

8,43

1,47

2

2,46

8,43

1,47

2

2,

468,

431,

472

2,46

8,43

1,47

2

2,46

8,43

1,47

2

Ret

aine

d In

com

e3,

507,

801,

888

3,

518,

735,

997

3,

536,

766,

919

3,58

8,87

8,93

7

3,65

7,92

1,81

3

-

Bal

ance

at B

egin

ning

of t

he Y

ear

2,90

4,03

5,92

5

3,50

7,80

1,88

8

3,

518,

735,

997

3,53

6,76

6,91

9

3,58

8,87

8,93

7

-

Ret

aine

d In

com

e/(D

efic

it) fo

r the

Yea

r60

3,76

5,96

3

10

,934

,109

18,0

30,9

22

52

,112

,017

69

,042

,876

Cur

rent

Lia

bilit

ies

56,3

63,0

06

50

,000

,000

50,0

00,0

0050

,000

,000

50,0

00,0

00

Acc

ount

s P

ayab

le56

,363

,006

50,0

00,0

0050

,000

,000

50,0

00,0

0050

,000

,000

TOTA

L EQ

UIT

Y A

ND

LIA

BIL

ITIE

S6,

032,

596,

366

6,

037,

167,

469

6,05

5,19

8,39

1

6,

107,

310,

409

6,

176,

353,

285

Nat

iona

l Em

pow

erm

ent F

und

Sum

mar

y St

atem

ent o

f Fin

anci

al P

ositi

on

N BNEm

pow

e

Busi

ness

Plan

for

2rmen

tFun

d

2015

/16

661

Natio

nal E

mpo

wer

men

t Fun

dCa

sh F

low

Sta

tem

ent

2014

2015

2016

2017

2018

March

March

March

March

March

RR

RR

R

Cash

flows fr

om op

erating

activi

ties(16

7,994,

671)

(22

7,378,

218)

(256,9

75,331

)

(26

3,521,

336)

(267,3

71,009

)

Ca

sh rec

eipts f

rom cu

stome

rs20,

128,73

7

25,

000,00

0

25,000

,000

35,

000,00

0

45,000

,000

Ca

sh pai

d to su

ppliers

and e

mploy

ees(18

8,123,

408)

(25

2,378,

218)

(281,9

75,331

)

(29

8,521,

336)

(312,3

71,009

)

Cash

flows fr

om inv

esting

activi

ties(41

,034,7

66)

(250,8

93,387

)

(54

8,868,

422)

(533,7

17,443

)

(97

6,311,

736)

Additi

ons to

proper

ty, and

equip

ment

(672,7

08)

(7,000,

000)

(6,5

00,000

)

(4,500,

000)

(5,0

00,000

)

Additi

ons to

intangi

ble as

sets

(5,647)

(1,0

00,000

)

(1,000,

000)

(1,0

00,000

)

(1,000,

000)

Inv

estme

nt disb

ursem

ents

(636,1

22,042

)

(812,5

00,000

)

(1,1

44,000

,000)

(1,155,

000,00

0)

(1,600,

000,00

0)

Divide

nds rec

eived

168,65

6,837

104

,373,2

54

95,

000,00

0

95,000

,000

95,

000,00

0

Interes

t recei

pts76,

002,55

4

75,

959,79

7

73,179

,911

48,

596,99

4

(3,937,

298)

Re

payme

nts on

origin

ated lo

ans, pr

eferen

ce sha

res an

d lease

s351

,106,2

40

389,27

3,563

428,27

3,563

483,18

5,563

538,62

5,563

Procee

ds from

sale o

f inves

tments

-

-

6,1

78,104

-

-

Decre

ase in

cash a

nd cas

h equi

valent

s(20

9,029,

437)

(47

8,271,

604)

(805,8

43,753

)

(79

7,238,

779)

(1,243,

682,74

5)

Cash

at begi

nning

of the

year

1,689,

061,86

9

1,480,

032,43

4

1,0

01,760

,830

195,91

7,077

(601,3

21,702

)

Total C

ash at

end of

year

1,480,

032,43

4

1,001,

760,83

0

195

,917,0

77

(60

1,321,

702)

(1,845,

004,44

7)

N BP Ne

BP

a2

Pers

onne

l inf

or

Fud

2015

/16

rmat

ion

662

PP ers

onne

l inf

orrm

atio

n

noitapuccOleveL yralaS

yrogetaCCo

mpon

ents

of Re

mune

ration

Numb

er of

posts

filled

on

funde

d est

ablish

ment

Expe

nditu

re on

posts

fill

ed on

fun

ded

estab

lishme

nt

(R tho

usan

d)

Unit C

ost

Numb

er of

posts

filled

on

funde

d est

ablish

ment

Expe

nditu

re on

po

sts fil

led on

fun

ded

estab

lishme

nt

(R tho

usan

d)

Unit C

ost

Numb

er of

posts

filled

on

funde

d est

ablish

ment

Expe

nditu

re on

po

sts fil

led on

fun

ded

estab

lishme

nt

(R tho

usan

d)

Unit C

ost

Numb

er of

posts

filled

on

funde

d est

ablish

ment

Expe

nditu

re on

po

sts fil

led on

fun

ded

estab

lishme

nt

(R tho

usan

d)

Unit C

ost

Numb

er of

posts

filled

on

funde

d est

ablish

ment

Expe

nditu

re on

po

sts fil

led on

fun

ded

estab

lishme

nt

(R tho

usan

d)

Unit C

ost

Numb

er of

posts

filled

on

funde

d est

ablish

ment

Expe

nditu

re on

po

sts fil

led on

fun

ded

estab

lishme

nt

(R tho

usan

d)

Unit C

ost

102 8

74 - 1

21 91

1Ele

menta

ry occ

upatio

ns

Basic

Salar

y2

204

10

2

2

21

8

109

2

280

14

0

2

29

2

146

2

301

15

1

2

31

6

158

121 9

12 - 1

45 75

8Ad

ministr

ative r

elated

Basic

Salar

y3

356

119

3

381

12

7

3

49

0

163

3

510

17

0

3

52

6

175

3

552

18

4

145 7

59 - 1

75 02

3Ad

ministr

ative r

elated

Basic

Salar

y5

721

14

4

5

77

2

154

5

991

19

8

5

1,0

34

20

7

5

1,0

64

21

3

5

1,1

17

223

175 0

24 - 2

16 08

4Ad

ministr

ative o

ffice w

orkers

Basic

Salar

y5

896

17

9

5

96

0

192

5

1,231

246

5

1,273

255

5

1,321

264

5

1,387

277

216 0

83 - 2

68 33

8Ad

ministr

ative o

ffice w

orkers

Basic

Salar

y15

3,412

227

12

3,154

263

16

5,000

313

16

5,170

323

16

5,364

335

16

5,632

352

268 3

39 - 3

27 12

6Ad

ministr

ative o

ffice w

orkers

Basic

Salar

y14

4,009

286

13

4,494

346

14

5,025

359

14

5,694

407

14

5,909

422

14

6,204

443

327 1

25 - 5

32 27

7Fin

ancia

l and r

elated

profe

ssion

als

Basic

Salar

y16

5,280

330

12

5,655

471

24

9,979

416

26

12,18

9

46

9

26

12

,648

486

26

13,28

0

511

532 2

78 - 6

27 00

0Fin

ancia

l and r

elated

profe

ssion

als

Basic

Salar

y43

23,17

4

53

9

36

22

,419

623

39

29,60

0

75

9

39

39

,396

1,010

43

42

,105

979

43

44,15

0

1,0

27

627 0

01 - 8

19 12

5Fin

ancia

l and r

elated

profe

ssion

als

Basic

Salar

y11

6,909

628

8

7,400

925

16

12,57

4

78

6

16

13

,345

834

24

14,34

2

59

8

24

15

,056

627

yralaS cisaB sreganaM

209 469 - 621 91840

35,06

9

87

7

37

34

,970

945

30

38,96

3

1,2

99

40

40,43

0

1,0

11

40

49

,276

1,232

40

51

,903

1,298

964 9

03 - 1

181 4

69Se

nior m

anag

ers

Basic

Salar

y7

7,265

1,038

6

7,5

81

1,2

64

8

10,80

4

1,3

51

10

11,89

2

1,1

89

10

12,23

9

1,2

24

10

12,85

1

1,2

85

1 181

470 -

1 35

3 732

Senio

r man

agers

Ba

sic Sa

lary

2

2,2

05

1,1

03

2

2,362

1,181

2

3,0

30

1,5

15

2

3,159

1,580

2

3,2

51

1,6

26

2

3,414

1,707

1 353

733 -

1 76

8 893

Senio

r man

agers

Ba

sic Sa

lary

3

4,5

69

1,5

23

3

4,893

1,631

3

6,2

78

2,0

93

3

6,544

2,181

3

6,7

36

2,2

45

3

7,073

2,358

1 768

894 -

1 99

7 811

Senio

r man

agers

Ba

sic Sa

lary

1

1,8

53

1,8

53

1

1,985

1,985

1

2,5

46

2,5

46

1

2,654

2,654

1

2,7

31

2,7

31

1

2,868

2,868

2 887

238 -

3 26

7 130

Head

of de

partm

ent/ch

ief exe

cutive

office

r Ba

sic Sa

lary

1

3,1

87

3,1

87

1

3,413

3,413

1

4,0

04

4,0

04

1

4,364

4,364

1

4,6

97

4,6

97

1

4,932

4,932

102 8

74 - 1

21 91

1Ele

menta

ry occ

upatio

ns

Perfo

rman

ce Re

wards

-

65

-

-

70

-

-

78

-

-

77

-

-

78

-

-

78

-

121 9

12 - 1

45 75

8Ad

ministr

ative r

elated

Perfo

rman

ce Re

wards

-

114

-

-

122

-

-

13

6

-

-

136

-

-

13

9

-

-

139

-

145 7

59 - 1

75 02

3Ad

ministr

ative r

elated

Perfo

rman

ce Re

wards

-

228

-

-

24

4

-

-

272

-

-

27

3

-

-

278

-

-

27

8

-

175 0

24 - 2

16 08

4Ad

ministr

ative o

ffice w

orkers

Perfo

rman

ce Re

wards

-

264

-

-

28

3

-

-

316

-

-

31

7

-

-

323

-

-

32

3

-

216 0

83 - 2

68 33

8Ad

ministr

ative o

ffice w

orkers

Perfo

rman

ce Re

wards

-

944

-

-

1,0

11

-

-

1,202

-

-

1,207

-

-

1,229

-

-

1,229

-

268 3

39 - 3

27 12

6Ad

ministr

ative o

ffice w

orkers

Perfo

rman

ce Re

wards

-

1,120

-

-

1,200

-

-

1,338

-

-

1,343

-

-

1,367

-

-

1,367

-

327 1

25 - 5

32 27

7Fin

ancia

l and r

elated

profe

ssion

als

Perfo

rman

ce Re

wards

-

1,843

-

-

1,974

-

-

3,577

-

-

3,590

-

-

3,656

-

-

3,656

-

532 2

78 - 6

27 00

0Fin

ancia

l and r

elated

profe

ssion

als

Perfo

rman

ce Re

wards

-

5,719

-

-

6,125

-

-

6,713

-

-

7,449

-

-

7,605

-

-

7,605

-

627 0

01 - 8

19 12

5Fin

ancia

l and r

elated

profe

ssion

als

Perfo

rman

ce Re

wards

-

2,040

-

-

2,185

-

-

3,544

-

-

3,558

-

-

3,623

-

-

3,623

-

sdraweR ecnamrofreP sreganaM

209 469 - 621 918-

12

,509

-

-

11,12

7

-

-

9,3

61

-

-

10

,454

-

-

11,93

2

-

-

11,

932

-

964 9

03 - 1

181 4

69Se

nior m

anag

ers

Perfo

rman

ce Re

wards

-

2,677

-

-

2,867

-

-

3,653

-

-

3,667

-

-

3,735

-

-

3,735

-

1 181

470 -

1 35

3 732

Senio

r man

agers

Pe

rform

ance

Rewa

rds-

1,1

09

-

-

1,1

88

-

-

1,3

25

-

-

1,3

30

-

-

1,3

54

-

-

1,3

54

-

1 353

733 -

1 76

8 893

Senio

r man

agers

Pe

rform

ance

Rewa

rds-

1,3

41

-

-

1,4

36

-

-

1,6

01

-

-

2,6

00

-

-

2,6

37

-

-

2,6

37

-

1 768

894 -

1 99

7 811

Senio

r man

agers

Pe

rform

ance

Rewa

rds-

79

5

-

-

851

-

-

94

9

-

-

2,952

-

-

970

-

-

97

0

-

2 887

238 -

3 26

7 130

Head

of de

partm

ent/ch

ief exe

cutive

office

r Pe

rform

ance

Rewa

rds-

1,5

19

-

-

2,0

91

-

-

1,8

15

-

-

2,8

21

-

-

1,8

55

-

-

1,8

55

-

> 3 26

7 131

Finan

cial an

d rela

ted pr

ofessi

onals

Pe

rform

ance

Rewa

rds-

-

-

-

1,5

93

-

-

3,5

00

-

-

4,5

70

-

-

2,0

00

-

-

2,0

00

-

TOTA

L168

131,39

6

782

146

135,02

4

925

169

170,17

5

1,007

183

194

,290

1,0

62

195

205,29

1

1,053

195

213

,516

1,0

95

Audit

ed ou

tcome

sRe

vised

Estim

atePro

jectio

ns ov

er the

MTEF

81/710271/6102

61/510251/4102

41/310231/2102

NationalEmpo

wermen

tFun

d

Busin

essP

lanfor2

015/16

63

STOP Fraud, Corruption and Theft Contact Tip-Offs Anonymous on 0800 212 705 or email [email protected]

National Empowerment Fund Trust (established by Act 105 of 1998) IT: 10145/00www.nefcorp.co.za | www.nefbusinessplanner.co.za

How To Reach The National Empowerment Fund

Head Office Gauteng ProvinceWest Block, 187 Rivonia Road, Morningside 2057, PO Box 31, Melrose Arch, Melrose North 2076 Tel: +27 (11) 305 8000 | Fax: +27 (11) 305 8001 | Call Centre: 0861 843 633 | 0861 (THE NEF) [email protected] (Funding) | [email protected] (General Enquiries)

Eastern Cape Province7b Derby Road, Berea, East London 5241 Tel: (043) 783 4200 | 0861 NEF ECP (0861 633 327) | Fax: 0861 ECP NEF (0861 327 633) [email protected]

Free State Province34 Fountain Towers, Corner Zastron and Markgraaf Street, Westdene, Bloemfontein, 9300 Tel: (051) 407 6360 | 0861 NEF FSP (0861 633 377) | Fax: 0861 FSP NE F (0861 377 633) [email protected]

KwaZulu-Natal ProvinceSmart X - Change Building, 5 Walnut Road, Durban, 4001 Tel: (031) 301 1960 | 0861 NEF KZN (0861 633 596) | Fax: 0861 KZN NEF (0861 596 633) | [email protected]

Limpopo ProvinceSuite 8, Biccard Park, 43 Biccard Street, Polokwane 0699 Tel: (015) 294 9200 | 0861 NEF LIM (0861 633 546) | Fax: 0861 LIM NEF (0861 546 633) | [email protected]

Mpumalanga ProvinceTrust Building, 16 Brander Street, Nelspruit, 1200 Tel: (013) 754 9860 | 0861 NEF MPU (0861 633 678) | 013 754 9860 Fax: 0861 MPU NEF (0861 678 633) | [email protected]

North West Province 32B Heystek Street, Sunetco Office Park, Ground Floor, Rustenburg, 0299 Tel: (014) 523 9220 | 0861 NEF NWP (0861 633 697) | Fax: 0861 NWP NEF (0861 697 633) [email protected]

Western Cape ProvinceSuite 2818, 28th Floor, ABSA Centre, 2 Riebeek Street, Cape Town 8001 Tel: (021) 431 4760 | 0861 NEF WCP (0861 633 927) Fax: 0861 WCP NEF (0861 927 633) | [email protected]

KwaZulu-NatalFree State

Gauteng

Western Cape

Eastern Cape

Limpopo

Mpumalanga

North West

Northern Cape

Documents

BUSINESS PLAN 2015/16 - Department of Trade and Industry · National Empowerment Fund Business Plan for 2015/16 3 Acronyms and Abbreviations AMD : Asset Management Division APP :