National Empowerment Fund Presentation 28 August 2014 Mr. Bongani - PowerPoint PPT Presentation

National Empowerment Fund Presentation 28 August 2014 Mr. Bongani Qokose Regional Manager: Mpumalanga 0

Presenter Mr Bongani Qokose Regional Manager : Mpumalanga 1

NEF Mandate … Established by the National Empowerment Fund Act No 105 of 1998, the NEF is a driver and a thought-leader in promoting and facilitating black economic participation through the provision of financial and non-financial support to black empowered businesses, as well as by promoting a culture of savings and investment among black people 2

Unpacking the NEF Mandate … NEF Mandate Grow black economic participation Financial & non-financial support Culture of savings & investment Fund Management Asset Management 1. Fund black-empowered 1. Investor Education businesses 2. Public Share Offers 3. Enterprise Development 2. Business plan toolkit 3. Mentorship support 4. BEE Repository 4. Early-stage investments 3 3

Challenges / Market Failures facing black business Limited own capital, • • Access to affordable capital, Limited management skills, including financial, marketing and technical • expertise, Lack of accurate and reliable financial information, • Poor quality of business plans, • • Lower bargaining power and strong competition from established businesses with entrenched market dominance, and Lack of access to local international markets. • 4

NEF Funding R250 000 – R75 million  Start-up  Expansion  Equity Acquisition 5

NEF Funding Products in detail On average, the NEF’s business loans are repayable over 4 to 7 years, and up to 10 years where marked with an asterisk (*) be low: Product / Fund Description Funding amounts Entrepreneurship Finance For starting a new business R250 000 – R10 million Procurement Finance For tenders and contracts R250 000 – R10 million Franchise Finance For pre-approved franchise licenses R250 000 – R10 million For black investors acquiring a stake in medium to large Acquisition Finance R2 million – R75 million companies Expansion Capital For growing an existing business R250 000 – R75 million *Project Finance Participation in green-field projects R5 million – R75 million Capital Markets Listing on the JSE or its junior Altx markets R2 million – R75 million The NEF has Black Facilitator status, which can help black Liquidity and Warehousing shareholders and companies wishing to sell a stake while R2 million – R75 million keeping the shareholding black for agri-processing, tourism, mining & beneficiation, *Rural and Community Development Fund R1 million – R50 million manufacturing etc Venture-capital fund investing in early-stage projects for the purpose of developing strategic industrial capacity in poverty *Strategic Projects Fund R1 million – R75 million nodes, in renewable energy, business process outsourcing, tourism, manufacturing, mining and mineral beneficiation etc. 6

NEF Funding Criteria Each application is assessed in terms of the following criteria: minimum percentage of black ownership or interest,  black women empowerment,  black managerial and operational involvement,  commercial viability of the business,  specific product criteria,  job creation,  geographic location of the business (rural/urban/disadvantaged areas),  community involvement,  compliance with all the relevant laws and regulations,  return on investment, and  the possibility of co-funding with another public or private sector institution.  7

Performance Reporting 8

NEF Approved and Disbursed Deals by value 9

NEF Approved and Disbursed Deals by number 10

NEF Portfolio by Value 11

Business Planning? www.nefbusinessplanner.co.za Simple to use  Free to the public  Step by step question & answer  process Helps with financial projections  Formats into a Word document  Confidential (password-protected)  Download and print  Submit to any funder  12

Details of a Business Plan No. Heading Description 1 Executive Summary Brief description of the business? 2 Purpose of funding What do you need the money for? 3 Valuation of business If buying a business, how was its value calculated? 4 Products & Services What is the business going to sell? 5 Industry Analysis Trends, developments , opportunities, laws, outlook etc 6 Target Market Who are your customers? 7 Competitor Analysis How are you going to do better than your competitors? 8 Supplier Analysis Do you have the best suppliers, eg cost, delivery, quality etc 9 Operational Analysis Technology, quality-control, safety, costs & processes etc 10 Management & HR Experience, qualifications, number and race of employees etc 11 Internal & External Risks Do you have plans to address possible risks & problem areas? 12 Social-economic benefits What does your business offer to society, eg jobs, skills etc 13 Financial Analysis History & projections: Income & exp, balance sheet, cash-flow 13

Mentorship Ongoing mentorship support across the country  Globally, 30% of start-ups fail in the first 2 years,  Less than 50% survive beyond 4 years  Mentors across the country to help businesses  Expert advice on strategy and operations  Improve the chances of the business succeeding  Provided for free to NEF investees 14

SAVINGS AND INVESTMENT 15

Investor Education  National campaign and booklet to promote public understanding of:  How to save & invest  Tips on investing  Personal financial discipline  What are shares & dividends  What are bonds  Investing in property  The money-market  Terms & concepts

Enterprise Development …  Broad – Based Black Economic Empowerment Codes of Good Practice – Section 9(1) Series 600 provides that companies make monetary or non monetary contributions either recoverable or non recoverable for development, sustainability and financial and operational independence of beneficiaries. 17

Enterprise Development Measured Entity Returns  Proper appropriation Benefits of NEF as of funds FM  Risk sharing   Highly regulated BEE points Public Entity e . g .  Free from PFMA Enterprise legislative  Contribution Governance Fund Manager restraint Development Fund  Reporting  Free from operating risk Quasi Equity Equity 40 % Non Financial Support NEF Returns  Financial Returns  Independence Mandate Beneficiaries   Sustainability BEE ( NEF Investees & Beneficiaries  Increased Facilitator from Measured Entities Supply  quality / skills Co - Chain )  Guaranteed Funding off - take 60 %  Co - funding Vested equity 18

Come to the NEF today • Are you black? • Do you have a viable business idea and a business plan? • Does it have financial projections? • Do you need funding of between R250 000 and R75 million? • Have you registered a company? • Do you have a valid RSA ID? • Will you be directly, operationally involved? 19

Examples of NEF Funding 20

Turning Villagers into Shareholders The community owns this 4-Star hotel!  This is a R50 million project  The NEF invested R28,3 million  The Trust represents 22000 beneficiaries in the Jozini area (Northern Kwa-Zulu Natal)  Overlooks the third largest lake in South Africa  The hotel has 60 rooms  Accommodates 144 guests 21

A Sweet Deal for the People! CCT IDC NEF Technical Partner R14.8m R19.4m CR AMAJUBA R37m  60 HA raspberry farm in Amajuba district, KZN  Farm established on land secured through restitution process  Supply local and export markets (70% of production)  Tap into growing popularity of raspberries  Supplies berries to Europe  Supplies berries to Woolworths 22

Masiza Mussel Farm (R9.9 million, Western Cape) 23

Masiza Mussel Farm… Project Description • The commercialisation and an expansion of The Masiza Mussel Farm Pilot Project • Masiza produces 739 tons p.a. of black mussels in Saldanha Bay, Western Cape • Has a 100% off-take agreement with LaVie Seafood (the only processor of mussels in RSA) Shareholders Funding Structure • NEF 7 year Senior Loan of R4.95 million @ 8% Pre - NEF Investment interest with a 1 year interest and capital • Masiza Trust (6 farmers) & Blue Bay Aqua Farm moratorium • NEF 7 year Shareholders Loan of R4.95 million Pre - NEF Investment @ 8% interest with a 1 year interest and capital • Masiza Trust, Blue Bay Aqua Farm, LaVie and moratorium Blue Bay Workers Trust, Technical Partner • The NEF is targeting a minimum IRR of 8% (Mentor) and NEF • 62% owned by BEE and Located in poverty stricken area Investment • Supports economically sustainable and globally competitive marine aquaculture Rationale sector • Retention of 6 jobs and creation of 10 new jobs at primary farming level & 90 new jobs at processing plant 24

Qumbu Shopping Center t/a Aduma Trading (Pty)Ltd - Eastern Cape (R34 million ) Pr Projec oject t Salien Salient t Fea eatu tures es • Area: Eastern Cape, Qumbu • Sector: Retail Property • Deal type : Start-up • Community shareholding:  Aduma Trading (Pty) Ltd : 44%  Qumbu Community Trust : 37%  NEF: 19% (warehoused by NEF) • NEF investment: 34 million • Numbers of jobs created: 99 permanent and 151 temporary 25