South African Micro-finance Apex FundSouth African Micro-finance Apex Fund sasamafmaf

ANNUAL REPORTANNUAL REPORT2009/102009/10

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ContentsContents

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Acronyms

Mandate, Vision, Mission, Objectives & Values

Products and Services

2009/10 Performance

2009/10 Financial Performance

Auditor General Report

Governance Structures

Improving Effectiveness & Efficiencies

AcronymsAcronyms

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Acronym Definitionthe dti The Department of Trade and IndustryEDD Economic Development DepartmentEXCO Executive CommitteeFSC Financial Services Co-operativesMFI Micro-finance InstitutionRRSS Registration, Regulation, Supervision and StabilisationFI Financial IntermediaryGFIA Gobodo Forensic Investigation AccountantsPFMA Public Finance Management ActPAR Portfolio at risksamaf South African Micro-finance Apex FundSMS Senior Management Service

MandateMandate

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Contribute to Government’s poverty reduction goals by acting as a catalyst for the development of an effective micro-finance sector through:

Support for the establishment of sustainable micro-finance institutions that can reach deeper and broader to the enterprising poor;

Facilitating the establishment of an enabling environment for effective financial intermediation and creation of working markets for the enterprising poor; and

Building a strong, effective and efficient Apex Fund.

VisionVision

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Active participation of enterprising poor in economic activities is robust and bears fruit;

Reduction of financial troughs for a better livelihood;

Sustainable Financial Intermediaries (FIs);

Adoption of best practise models;

Competent employees;

Utilisation of systems in delivery of services; and

A financially sustainable samaf

samaf envisions a country in which a network of sustainable micro-finance institutions

broadens and deepens access to affordable financial services by the enterprising poor.

This is achieved when:

MissionMission

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Provide developmental financial and non-financial services to FI’s (MFI’s & FSC’s) through:  

The effective mobilisation and wholesaling of capital for micro-finance institutions with proven potential;

The development of human capital in the economic environment through capacity building and institutional development;

Contribute to policy development with respect to micro-finance to inform and support samaf staff, its partners, and stakeholders; and

The development of valuable partnerships between business, Government and the community.

ObjectivesObjectives

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1.Contribution to poverty alleviation goals through; Funding Intermediaries( Enterprise loans and poverty alleviation loans) Capacitating Financial Intermediaries Regulation and Prudential Standards

2. Exceed our stake holder expectation through; Improving outreach through expanded satellite network/offices Improving internal turnaround standards

3.Improvement of processes to achieve service delivery excellence through; Improving financial reporting and management Strengthening risk management Increased compliance of legal and other regulations

4. Leverage performance through capacity and people through; Organisational Development Balance Scorecard & Performance Management Organisational Design & Change Management

5. Building sustainable Apex Fund Improved quality of lending portfolio and internal control environment

ValuesValues

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The following values will underscore samaf’s behaviour as it strives towards the achievement of its mandate, vision and mission: 

Integrity - Dealing with stakeholders in an honest and ethical manner;

Transparency - Ensuring compliance to best practice on the dissemination and sharing of information with all stakeholders and consult with them to ensure comprehensiveness and buy-in to samaf activities;

Professionalism - Adhere to specific defined norms and setting standards of workmanship, respect, and communication;

Accountability - Taking responsibility for the decisions and actions, including allocation of powers and duties; and

High Performance - Excellent performance and satisfied customers that guarantee long term sustainability of the South African Micro-Finance Apex Fund.

Products and ServicesProducts and Services

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samaf offers three main products and services namely Financial Support and Non-

Financial support.

Financial Support:

Loans - samaf can provide loans to a maximum of R10 million to its FIs, who in

turn can provide loans to its clients up to a maximum of R10 000.

Capacity building fund - the following are the capacity building interventions

that samaf offer:

Loan linked grant: MFI’s receive a maximum of 50% of the total loan

amount approved whilst FSCs receive a maximum of 170% of the loan

approved.

Saving mobilisation and formalisation grant fund: This grant is not

linked to the loan and is given to FSCs up to a maximum of R200 000.

Non- Financial Support

Technical support: samaf staff provide technical support such as the

development of operational policy documents, training of FSCs, etc.

FSC Supervision: samaf is mandated to regulate and supervise all FSCs in

South Africa in terms of Exemption Notice 887 of the Banks Act.

2009/10 PERFORMANCE

Measure2009/10

CommentsTarget Actual

Development Impact

MFI’s 8 11 Target exceeded

FSC’s 10 4 Requirements not met

End Users supported by FI’s 3 120 6 170 Target exceeded

Household Impact (Family size of 5) 15 600 30 850 Target exceeded

End-user women profile 67% 86% Target exceeded

End –user rural profile 50% 75% Target exceeded

End –user semi-urban profile 50% 25% As a result of greater rural supportEnd-user service loans

Enterprise 40% 75% Target exceeded

Housing 25% 15% Target exceeded

Education 35% 10% Target exceeded

2009/10 PERFORMANCE

Measure2009/10

CommentsTarget Actual

Development Impact

FI loan repayment rate 50% 92% Target exceeded

Number of active savers 2 345 8 585 Target exceeded

Value of end-user savings book R3,9m R3,4m Substantially achieved

End-user satisfaction (interventions) 50% 50% Achieved

Customer and other Stakeholder expectations

Stakeholder satisfaction index 60% 60% Achieved

Customer retention 10% 60% Target exceeded

Client complaints 60% 60% AchievedProfile of services consumed by FI

Loans 40% 68% Target exceeded

Capacity Building 50% 31% Requirements not met by FIs

Savings Mobilisation 10% 1% Requirements not met by FIs

2009/10 PERFORMANCE

Measure2009/10

CommentsTarget Actual

Customer and other Stakeholder expectations

Loans disbursed R20m R13.1m Requirements not met by FIs

Grants disbursed R10m R6,3m Requirements not met by FIs

Stakeholder brand awareness 50% 40% Need to intensify awareness

FI improvement in service delivery 50% 40% Achieved

Number of accredited FSCs 60% 82% 27 of 33 accredited

Internal Business ProcessesCost per rand disbursed Dev .Tool None Tool not developed

% Service delivered within turnaround times 60% 30% FIs not meeting standardsReview and improve credit policy

Policy review 100% 100%Completion & implementation 100% 40% Credit comm. established lateFully imbedded 60% 100% Target exceeded

2009/10 PERFORMANCE

Measure2009/10

CommentsTarget Actual

Internal Business Processes

Implement due diligence 40% 100% Fully imbedded

Structure to fit strategy Approved Proposed Transfer to new department

Improve quality of capacity building interventions

Financial systems and controls 60% 55% New systems installed

FI Risk management 60% 80% Refers Pre & post due diligence

Loan monitoring & technical support 60% 60% Achieved

Learning & Growth% Achievement of work skills plan 100% 100% Achieved

% achievement of succession plan 100%Policy

prepared Take up to two yrs to finalise

Employee satisfaction index 20% 70%

Compliance with performance management 100% 61% 94% contracted on time

2009/10 PERFORMANCE

Measure2009/10

CommentsTarget Actual

Financial Perspective

Budget variance 20% 37% FI’s not meeting stds

Operating cost to total budget ratio 100% 94% FI’s not meeting stds

Cost to income ratio 58% 54% Achieved

samaf portfolio at risk 40% 31% Target exceeded

% write off 50% 17% Target exceeded

% attendance at advisory board meetings 100% 25%Quorum not achieved due to resignation of members

Corporate audit qualification Technical Accounting

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Yearly Performance ComparisonYearly Performance Comparison

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Disbursements - Provincial Split (R’m) as at 31 March 2010

2009/10 Performance by Province2009/10 Performance by Province

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2009/10 Financial Performance2009/10 Financial PerformanceStatement of Comprehensive Income

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2009/10 Financial Performance2009/10 Financial Performance

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2009/10 Financial Performance2009/10 Financial Performance

Auditor General ReportAuditor General Report

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Corrective actions taken on AG reportQualification

[1] Evidence to substantiate substantial value of the journals finalised (i.e. R1,

683m of the R1, 701m – R18k still being investigated) – evidence not audited yet.

[2] Disciplinary against one official finalised & the other currently being

processed.

Emphasis of Matter

[1] Monthly verification of has been implemented to prevent restatement of

figures.

[2] Disciplinary actions taken against two staff who were involved in the

irregular expenditure and another is outstanding.

[3] Improved controls in both disbursement and monitoring of FIs have been

implemented to curtail impairments. There will also be a continuous monitoring and

evaluation of the adequacy of these controls

[4] The non consolidation of FI’s has been resolved by amending the contracts.

Auditor General ReportAuditor General Report

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Corrective actions on AG report

Report on other Legal and Regulatory Requirements

[1] Processes have been implemented to manage performance information by

collectively setting targets. Progress also reviewed quarterly by management as a

collective through workshops, wherein verifiability of perform targets are confirmed

by the relevant managers.

[2] A mid-term review will be conducted by the internal auditors to confirm that

the performance adheres to require standards.

[3] Any changes to targets will follow the required approval processes.

[4] The non consolidation of FI’s has been resolved by amending the contracts.

Governance StructuresGovernance Structures

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The following governance structures are in existence at samaf

CommitteeName

Date Established Purpose

Advisory Board October 2007 To provide oversight & advise the departmentAudit Committee June 2007 Oversight role on the finances of the organisationCredit Committee December 2006 Review and approval of applications for funding

Risk Management Committee February 2008 Oversight to ensure risks are adequately managed

Rules, Registration, Supervision & Stabilisation Committee(RRSS) August 2008 Review and approval of applications for registration of FSCs

Executive Committee (EXCO) April 2007 Management of the operations of the organisation

Tender/Bidding Committee June 2007 Consider and approve all procurement over R500k

Internal Audit Function Outsourced to GFIA (Gobodo Forensic Investigation Accountants)

Implementation of weekly milestones on a 4 week rolling plan;

Conducting benchmarking for skills and systems gaps in FIs;

Implemented Quarterly FI Forums;

Currently reviewing products and services for developmental focus;

An intensified outreach program.

Investigating special products to support distressed FIs.

IMPROVING EFFECTIVENESS – Service DeliveryIMPROVING EFFECTIVENESS – Service Delivery

Quarterly performance reviews instead of half year reviews have been implemented;

Implemented improved internal controls in the finance unit;

Beefing-up performance monitoring measures with appropriate sanctions on non-performance;

Monitor turn-around times through IT system tracking mechanism;

Embarked on skilling samaf personnel on microfinance .

IMPROVING EFFICIENCIES – AdministrationIMPROVING EFFICIENCIES – Administration

Effective Use of New TechnologyEffective Use of New Technology

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Upgrade of Productivity Tools

The following productivity tools were implemented during the period under review:

Microsoft Office 2007

Symantec Anti-Virus

Symantec Back-Up Exec

ERP Implementation

A project was initiated to implement a ERP system with the following modules:

AccPac – Financial Management

Assetware – Asset Management

VRM – Vendor Relationship Management

eWorkflow – Automation of Procurement Process

Only AccPac was implemented during the year under review

PROVINCE CURRENT OFFICE

FSCs MFIs

FIs

LIMPOPO 1 3 6 9

MPUMALANGA 1 3 2 5EASTERN CAPE 1 4 1 5KWAZULA NATAL 1 3 1 4

GAUTENG 1 1 6 7

WESTERN CAPE 1 2 8 10

NORTHERN CAPE 1 0 1 1FREE STATE 1 1 2 3NORTH WEST 1 4 3 7Total 9 21 30 51

samaf NATIONAL FOOTPRINTsamaf NATIONAL FOOTPRINT

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