Maximizing Impact by Mobilizing Local Capital

Shared Interest’s “unflagging partnership — as necessary now as it was in 1994 — has helped us develop new strategies and tools to give substance and shape to the vision and energies of our people. We look forward to continuing that work, which is based on a shared interest.”

Nelson Mandela

2Archbishop Emeritus Desmond Tutu

The end of apartheid was Part 1 of the struggle.

Part 2 is more difficult: To make the miracle endure.

We asked you to disinvest.

Now we say to you “invest!”

Make South Africa succeed…

for the sake of the world.

3Apartheid’s Economic Legacy Continues

Inequality is still embedded in the economy and banking system

80% of the land is owned by whites (9% of the population)

45% of the black population is unemployed

1.3 million families are homeless

84% of the financial wealth is held in the four major banks

4Leveraging Local Capital

Entrepreneurs , Employees and Homeowners

Shared Interest

backs guarantees

Investors provide

capital

Thembani

performs due diligence, places and monitors

guarantees, provides TA

Banks / Commercial Lenders

lend to

Microfinance Institutions

lend to

Low-Cost Housing Organizations

lend to

Other Small & Growing Businesses

build wealth of

Agricultural Enterprises & Co-ops

benefit

donates to

reports to

5Building a Track Record

Capital deployed: more than $14 MM in guarantees

Leverage: Bank loans catalyzed > $100 MM for the impoverished “majority market”: 1:6 ($6 lent for every $1 guaranteed)

Losses to investors: $0

Impact: low-income black South Africans:

Launch 165,000 small & micro-enterprises

Build and improve 122,000 affordable homes

Create and fill 1,880,000 job

6Managing Risk

Risk Management Tools: Work through local partners to

structure collaboration; assist beneficiaries; report, mitigate risk

Share risk with local lenders and beneficiaries

Maintain a local currency reserve fund to protect investors’ capital

Adjust loss reserves quarterly to reflect portfolio risk

Secure subordinated debt to absorb losses that exceed reserves

Diversify the portfolio

7Leveraging Local Bank Loans

Build bankers’ capacity to lend to the “unbanked”

Assist with due diligence

Provide partial guarantees

Move banks to offer favorable interest rates

Incent bankers to make new loans to similar clients without guarantees

Signed agreements provide the framework for approval, risk-sharing, monitoring, reporting and recovery of individual loans

8Forging Local Value Chains

Work with companies to link local supply chains to small producers Help companies develop small producer contracts, training and credit Provide technical assistance to small producers (and lenders!)

Guarantee / leverage the companies’ loans Incent companies to extend future contracts and credit without guarantees

www.sharedinterest.org