1. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! 2015 ICT YOUTH CONFERENCE Financing of Small Businesses Patrick Mathoma 26 March 2015

2. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! About sefa Established as a DFI on 1 April 2012. Operate in terms of Section 3 (d) of the Industrial Development Corporation Act, No. 22 of 1940 (IDC Act) sefa is a wholly owned subsidiary of the Industrial Development Corporation It brings together the activities of the three previous structures: - Khula, - samaf, and - The IDC small business activities. Objective: To foster the establishment, development and growth of SMMEs and contributes towards poverty alleviation, job creation and economic growth. Activities: sefa provides finance to qualifying SMMEs as defined in the National Small Business Act of 1996, as amended in 2004, through a hybrid of wholesale and direct lending channels.

3. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! Mandate, mission and values Mandate: To be the leading catalyst for the development of sustainable Small, Micro and Medium Enterprises through the provision of finance. Mission: Our mission is to provide simple access to finance in an efficient and sustainable manner to SMMEs throughout South Africa by: delivering Wholesale and Direct Lending credit facilities or products; providing credit guarantees to SMMEs; supporting the institutional strengthening of Financial Intermediaries that share our development objectives so that they can effectively assist SMMEs; creating strategic partnerships with a range of institutions for sustainable SMMEs development and support; monitoring the effectiveness and impact of our financing, credit guarantee and capacity development activities; and developing (through partnerships) innovative finance products, tools and channels to reach more SMMEs with affordable finance in a sustainable manner. Values: Kuya sheshwa!” - Speed and urgency Passion for development: Solution-driven attitude, commitment to serve Integrity: Dealing with clients and stakeholders in an honest and ethical manner Transparency: Ensuring compliance with best practice on the dissemination and sharing of information with all stakeholders Innovation: Continuously looking at new and better ways to serve our clients

4. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! Distribution model

5. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! Portfolio of Products DIRECT LENDINGMICRO-FINANCE WHOLESALEPortfolio of Products CO-OPERATIVE FINANCIAL INSTITUTIONS (CFIs) CREDIT GUARANTEE SCHEME Working Capital Facilities Asset Finance Term Loans Revolving Loans Bridging Loans Short-term Trade Finance Land Reform - Land Reform Empowerment Facility for emerging black farmers. Tourism: iKwezi Tourism Facility (sefa /Tourism Enterprise Partnership (TEP)) Sugar Farming: sefa/ Hulett Sugar (THS) Facility Mining: sefa Anglo-American Mining Fund Youth: sefa/Awethu Youth Fund Designed to indemnify commercial banks and suppliers who extend credit to SMME. Supplier Credit Guarantee programme is in its pilot phase. Funding from R50 000 up to R5 million sefa has partnered with 16 Micro- Finance Intermediaries (MFIs) nationally sefa has partnered with 10 CFIs in across the country SECTOR- SPECIFIC SME WHOLESALE FINANCING PRODUCTS Small scale finance – between R500 and R50 000. Facilities from R500 up to R50 000

6. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! Target Market Survivalist, Micro, Small and Medium size businesses and Co-Operatives As defined in the National Small Business Act of 1996 and Co-Operatives Banks Act 2007 as amended Non-Sectorial (covers all sectors as per the Small Business Act) Manufacturing Retail and Wholesale Trade Transport and Logistics Electricity, Gas and Water Construction Agriculture (Cash Crops & Agro Processing) Mining and Quarrying (Small Scale) Services (Catering, Tourism, etc.) Finance and Business Services Targeted Group (Priority) 30% youth-owned enterprises. 45% priority rural provinces. 40% women-owned businesses. 70% black-owned businesses.

7. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! Provision of capital and/or interest moratorium (Payment Holiday) – informed by business cashflow Start-Up businesses – greenfield operations Addressing the financing gap perceived as loans below R500k Provision of pre and post loan business support (BDS) Adverse credit record is not an automatic rejection (clients must demonstrate willingness to remedy the situation – each case will be treated on merit) Lending not based on security backing – cashflow based lending Focus on youth, women and rural based enterprises Closing The Gap – Addressing Market Failure

8. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! We fund enterprises that… are owned by South African citizens and permanent residents are legally registered including sole traders with fixed physical address are within the required contractual capacity are registered and operating in South Africa comply with the generally accepted corporate governance practices appropriate to the client’s legal status have a written proposal or business plan that meets the requirements of sefa’s loan application criteria demonstrate the character and ability to repay the loan have provided personal and/or credit references (if available) have the majority shareholder as the owner manager of the business where available, can provide relevant securities/ collateral have a valid tax clearance certificate

9. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! Businesses we do not fund The following businesses fall outside the scope of enterprises that we fund: Manufacturing and selling of ammunition Tobacco, liquor, gambling and sex trade Non-profit organisations Political organisations Persons under debt review Un-rehabilitated insolvent shareholders and/or directors of applying entities Primary agriculture (except cash crops and the applicant must have an off take agreement) Speculative property development

10. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! What we need when applying Application forms Company profile Certified copies of identity documents of all affected individuals Marriage certificate (if applicable) Short CV of the key personnel Proof of residence – utility bill/sworn affidavit (not older than 3 months) Valid tax clearance certificate Valid company registration documents with CIPC Company’s financial statement (audited and unaudited) where applicable Bank statement (where applicable) Purchase order Loan utilization breakdown Supporting quotation(s) on supplier(s) letterhead(s) Personal income and expenditure schedule Personal assets and liabilities statement Proof of own contribution and source (if application) If a judgment, notice, default is issued against the applicant, a letter or document to prove that arrangement are made to settle the account or proof that the amount is settled must be provided.

11. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! Application Considerations Management Profile Business Operations Market Assessment Financial Analysis Legal Implications Development Impact

12. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! Pricing Formula Initiation fee = percentage of loan amount (once-off) Prime based interest rate Margin for risk Discount for developmental impact -Jobs -Youth -Gender -Rural

13. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! Initiation Fees (Guideline) Payment TermsMaximum Fee Less than 12 months5% 13 – 24 months4% 25 – 36 months3% 37 – 48 months2% 49 – 60 months1%

14. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people! sefa Contact Details sefa National Call Centre : 012 748 9600 E-mail: helpline@sefa.org.zahelpline@sefa.org.za www.sefa.org.za Limpopo : 015 294 0900

15. LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISM The heartland of southern Africa – development is about people!