1. Presentation to the Portfolio Committee on Trade and Industry ECIC Corporate Strategic Plan 2013/14 – 2015/16 Export Credit Insurance Corporation of South Africa SOC Limited (ECIC) 19 April 2013

2. 2 ECIC REPRESENTATIVES Mandisi Nkuhlu – Acting Chief Executive Officer Tel: 012 471 3812 or 082 906 3705 MNkuhlu@ecic.co.za Sedzani Mudau – Chief Financial Officer Tel: 012 471 3814 or 072 940 7132 Smudau@ecic.co.za Lesego Mosupye – Chief Risk Officer Tel: 012 471 3817 or 082 558 4106 Lmosupye@ecic.co.za

3. ECIC MANDATE ECIC’s mandate is to facilitate export trade and cross-border investments between South Africa and the rest of the world. ECIC’s enabling Act is the Export Credit and Foreign Investments Insurance Act, 1957, as amended. 3

4. LEGISLATIVE AND REGULATORY FRAMEWORK ECIC is subject to the Companies Act and is required to pay tax like any other normal corporation. ECIC is a state owned corporation subject to the Public Finance Management Act and is designated as a Schedule 3B entity. As an insurance company, ECIC is governed by the Short-Term Insurance Act. In order to protect the interests of its clients and ensure that it is actuarially sound, ECIC is subject to the supervision and regulation by the Financial Services Board (FSB). 4

5. ECIC’S VISION AND MISSION Vision To be leaders in the medium and long-term export credit and investment insurance business, focusing on customer needs and sound risk management. Mission The mission is to facilitate and encourage South African export trade by underwriting export credit loans and investments outside the country in order to enable South African contractors to win capital goods and services contracts in countries outside of South Africa. 5

6. KEY STRATEGIC GOALS In the effort to achieve its mission, the ECIC is driven by five (5) strategic goals: 1.Facilitate export trade and investments outside South Africa. 2.Strategic Alliances: build mutually-beneficial local, regional and global relations to advance South Africa’s trade and economic development objectives. 3.Promote a professional, competitive and customer focused workforce that ensures an effective and efficient service to our customers. 4.Fostering risk orientation: Create an enterprise wide risk awareness and effective corporate governance and risk management practices. 5.Effective stewardship: Consistently utilise sound business environment and social principles by applying international best practice. 6

7. ALIGNMENT WITH GOVERNMENT OBJECTIVES 7 Government MTSF PrioritiesGovernment Outcomes DTI Strategic Objectives Speeding up growth and transforming the economy to create decent work and sustainable livelihoods [Outcome 4] Decent employment, through economic growth Build mutually beneficial regional and global relations, to advance South Africa’s trade… Pursuing African development and enhanced international cooperation [Outcome 11] Create a better South Africa, a better Africa and a better world Building a developmental state, including improvement of public services and strengthening democratic institutions [Outcome 12] An efficient, effective and development orientated public service and an empowered, fair and inclusive Citizenship Promote a professional, competitive and customer focused working environment that ensures effective and efficient service delivery

8. 8 ALIGNMENT WITH GOVERNMENT OBJECTIVES DTI Strategic ObjectivesECIC Strategic Objectives Build mutually beneficial regional and global relations, to advance South Africa’s trade industrial policy and economic development objectives 1.Facilitate export trade and investments outside South Africa 2.Strategic Alliances: Build mutually-beneficial local, regional and global relations to advance South Africa’s trade and economic development objectives 3.Promote a professional, competitive and customer- focused workforce that ensures an effective and efficient service to our customers 4.Fostering risk orientation: Create an enterprise wide risk awareness and effective corporate governance and risk management practices Promote a professional, competitive and customer focused working environment that ensures effective and efficient service delivery 5.Effective stewardship: Consistently utilise sound business environment and social principles, applying international best practice

9. FACILITATE EXPORT TRADE AND INVESTMENTS GLOBAL TRADE OUTLOOK The economic slump in the EU and in the US highlights the strategic importance of facilitating our exports and investments into new markets. The overall landscape on the continent has become more competitive with many other international players and export credit agencies looking to the African continent for growth opportunities. KEY CHALLENGES Acts of political violence, terrorism and the outright outbreak of hostilities continue to plague a number of countries in sub- Saharan Africa. Most of what is produced in Africa is consumed beyond the continent. To strengthen intra- African trade, we have to address the existing shortcomings through infrastructure development, efficient border management and better regulation. 9

10. FACILITATE EXPORT TRADE AND INVESTMENTS EXPORT TRADE AND INVESTMENT OPPORTUNITIES The positive economic growth across many countries on the continent presents interesting business opportunities in mining, infrastructure, industrial projects, etc. Stronger collaboration and co-ordination between the public and private players will boost the overall competitiveness and effectiveness of S.A. Inc against international competition. On the whole the ongoing political risk issues serve to underscore the relevance and importance of our political risk insurance scheme as a risk mitigation tool for South African businesses seeking to expand beyond our borders. Improved collaboration among the BRICS countries and the BRICS business sector, including the Export Credit Agencies (ECAs) presents new opportunities for value added exports. 10

11. FACILITATE EXPORT TRADE AND INVESTMENTS SOUTH AFRICA’S COMPETITIVE ADVANTAGE ECIC’s capacity to underwrite large ticket exposures on a long-term basis. Interest Make-up support for competitive pricing. The competitive technologies and technical capability of South African businesses in mining, engineering. Strong balance sheets and African footprint of the South African financial institutions. ECIC paper being seen as South African government paper. 11

12. FACILITATE EXPORT TRADE AND INVESTMENTS SMALL TO MEDIUM TRANSACTIONS ECIC working in partnership with the IDC offers performance bond insurance for SMME exporters. The current initiative is to expand the rollout of this product. In line with the Industrial Policy Action Plan ECIC offers special products for the Boatbuilders: –Insurance for advance payments guarantees required by overseas buyers –Insurance for working capital facility offered by a bank during the boatbuilding phase Qualifying small to medium transactions receive enhanced commercial risk cover at 100% whereas normal cover is 85%. 12

13. FACILITATE EXPORT TRADE AND INVESTMENTS IMPACT OF ECIC ON THE SOUTH AFRICAN ECONOMY As part of the review of the Interest Make Up Scheme (IMU), the ECIC commissioned a study of the impact of ECIC support on the South African Economy. The study was commissioned in May 2012 and it covered a period of 6 years from 2005 to 2010. The study analysed the economic costs and benefits of transactions which have commercial and political risk insurance cover from the ECIC and attract IMU. Between 2005 and 2010, the ECIC facilitated funding for 21 export projects. Of the total project expenditure that was provided to South African companies, about R5.6 billion was spent locally on goods and services within South Africa. 13

14. FACILITATE EXPORT TRADE AND INVESTMENTS IMPACT OF ECIC ON THE SOUTH AFRICAN ECONOMY… Over this six year period, a total of R900 million was transferred to ECIC from the dti for the IMU in 2011 terms. 14 Source: Interest Make-Up exercise, KPMG May 2012

15. FACILITATE EXPORT TRADE AND INVESTMENTS IMPACT OF ECIC ON THE SOUTH AFRICAN ECONOMY… 15 Source: Interest Make-Up exercise, KPMG May 2012

16. FACILITATE EXPORT TRADE AND INVESTMENTS IMPACT OF ECIC ON THE SOUTH AFRICAN ECONOMY… 16 Source: Interest Make-Up exercise, KPMG May 2012 Benefits Costs

17. FACILITATE EXPORT TRADE AND INVESTMENTS Over the next three years, ECIC seeks to pursue and achieve substantial growth and diversification in its insurance portfolio. The significant rise in supported exports and cross border investments will result in positive economic impact and job creation in South Africa. The projected growth will bolster the financial sustainability of ECIC and enhance its capacity to underwrite more export transactions. This growth will be driven largely by infrastructure projects in rail, road and ports on the Continent. ECIC’s project pipeline over the next three years exceeds US3 billion and the availability of the IMU budget will be key to unlock this potential. 17

18. FACILITATE EXPORT TRADE AND INVESTMENTS 18

19. FACILITATE EXPORT TRADE AND INVESTMENTS 19 OUTPUTS TARGETS Link with the SONA 2013/142014/152015/16 The value of export credit/investment insurance applications approved by the ECIC Board $720m$864m$1,000m Tackle unemployment, drive local procurement and create decent work Government programmes to support small business The value of export credit/investment insurance policies signed by ECIC $240m$320m$400m The value of loans disbursed and/or investment insurance exposures declared under insurance policies signed by ECIC $216m$259m$300m Promote export capacity for SME – (number of applications) 51015 Percentage value of repeat business from exporters 25% Total Expense Budget (Rm) R40.6mR42.5mR44.4m

20. ENHANCE STRATEGIC ALLIANCES 20 OUTPUTS TARGETS Link with the SONA 2013/142014/152015/16 Meaningful co-operation agreements or arrangements with ECAs or DFIs in Africa, Middle East or other members of BRICS and other developing nations – (Number of agreements and training or cooperation initiatives) 2 Agree- ments Exponential growth of bilateral relations, diplomatically and economically between South Africa and other BRICS countries. Strengthening North-South relations remains central to our foreign policy agenda. 5 training Initiatives Established brokerage relationships for the sale of ECIC products (Number of agreements and the number enquiries received) 2 Agree- ments 4 enquiries 4 enquiries 4 enquiries Total Expense Budget (Rm) R3.8mR4.1mR4.4m

21. A PROFESSIONAL, COMPETITIVE AND CUSTOMER FOCUSED WORKFORCE 21 The ECIC will set out to consolidate the marketing campaign and have a targeted focus on potential and existing clients; Pursue active business development initiatives in collaboration with other DFIs, SOEs and the private sector; and Build in-house research capability and specialist knowledge with a strong focus on political and economic issues affecting Africa and other emerging economies in order to advance the economic impact of the ECIC activities.

22. A PROFESSIONAL, COMPETITIVE AND CUSTOMER FOCUSED WORKFORCE 22 OUTPUTS TARGETS Link with the SONA 2013/142014/152015/16 Raise awareness of ECIC and/or ECIC products by engaging with various export promotion agencies (such as export councils, business chambers, trade points) or economic development agencies or through conferences or client workshops in the various provinces in South Africa 15 sessions covering all provinces 18 sessions covering all provinces Engage business, labour and other social partners in pursuit of solutions. Research on export opportunities in Africa to stimulate ECIC business 2 reports Establish website links with other stakeholders 10 links12 links15 links Total Expense Budget (Rm) R6.8mR7.4mR7.8m

23. A PROFESSIONAL, COMPETITIVE AND CUSTOMER FOCUSED WORKFORCE 23 OUTPUTS TARGETS Link with the SONA 2013/142014/152015/16 Raise the profile of ECIC amongst BEE exporters so that they take advantage of the ECIC BEE policy incentives for SA Content BEE exporters are defined as majority black owned exporting companies. $25m of approvals $30m of approvals $35m of approvals Support for the development of black owned enterprises and black industrialists. Raise awareness of the ECIC and/or ECIC products through advertising campaigns and articles or interviews with media Coverage in 4 provinces Coverage in 6 provinces National coverage 4 articles / interviews 5 articles / interviews 6 articles / interviews

24. A PROFESSIONAL, COMPETITIVE AND CUSTOMER FOCUSED WORKFORCE 24 Grow the human capital of ECIC to enhance the capacity to implement the medium term growth strategy. –In November 2012 the ECIC approved 10 new positions which we are in the process of filling. Reinforce the business culture towards a stronger focus on customers and encourage innovation and quicker turnaround times. Consolidate the strong focus on effective performance management and align rewards accordingly. Increased access to training and development opportunities.

25. A PROFESSIONAL, COMPETITIVE AND CUSTOMER FOCUSED WORKFORCE 25 OUTPUTS TARGETS Link with the SONA 2013/142014/152015/16 Attraction and retention of a multi-skilled, representative and highly performing and customer focused workforce. 85% Staff retention Decent salaries and conditions of service will play an important role in attracting, motivating and retaining skilled workforce Training spend of 3% of payroll Identify critical skills and develop PDPs Review critical skills list and update PDPs

26. A PROFESSIONAL, COMPETITIVE AND CUSTOMER FOCUSED WORKFORCE 26 OUTPUTS TARGETS Link with the SONA 2013/142014/152015/16 Attraction and retention of a multi-skilled, representative and highly performing and customer focused workforce. 2 Corporate- wide team- building Decent salaries and conditions of service will play an important role in attracting, motivating and retaining skilled workforce Finalise Job Grading Review Job Grades Finalise the design of payscales Review payscales

27. A PROFESSIONAL, COMPETITIVE AND CUSTOMER FOCUSED WORKFORCE 27 OUTPUTS TARGETS Link with the SONA 2013/142014/152015/16 Attraction and retention of a multi-skilled, representative and highly performing and customer focused workforce. Perform- ance manage- ment Training Decent salaries and conditions of service will play an important role in attracting, motivating and retaining skilled workforce Implement Performanc e Reward Policy Review Peform- ance Reward Policy Staff Climate Survey

28. FOSTER RISK ORIENTATION 28 Integrate risk management with the business strategy using Own Risk Solvency Assessment framework (“ORSA”) to achieve better capital and risk management in line with the Solvency Assessment Management (SAM) requirements coming from the FSB. Prepare for and implement programmes to be fully compliant with SAM requirements. Grow the capacity of ECIC to continue supporting large high impact infrastructure projects on the Continent.

29. FOSTER RISK ORIENTATION INSURANCE EXPOSURE 29

30. FOSTER RISK ORIENTATION PORTFOLIO CONCENTRATION 30

31. FOSTER RISK ORIENTATION 31 OUTPUTS TARGETS Link with the SONA 2013/142014/152015/16 Reduction in the concentration of the ECIC insurance portfolio with reference to country exposure Below 32% Below 30% As the convener of the NEPAD Presidential Infrastructure Championing Initiative, South Africa continues to work with other champions to implement high impact infrastructure projects on the continent. Compliance with short term insurance legislation Pillar I and II readiness & Complete QIS3 Ready for full compliance with SAM --- Total Expense Budget (Rm) R15.4mR16.4mR17.5m

32. EFFECTIVE STEWARDSHIP 32 Enhance corporate citizenship by implementing the Corporate Social Investment Plan and the environmental and social policies. Enhance economic transformation by implementing new measures to facilitate the participation of BBBEE and SME players in the ECIC export credit scheme.

33. EFFECTIVE STEWARDSHIP 33 OUTPUTS TARGETS Link with the SONA 2013/142014/152015/16 The implementation of the Corporate Social Investment Plan for ECIC in the following focus areas education, skills development and welfare. Spend of 1% of NPAT State owned companies to provide apprenticeships and learnerships opportunities to address youth unemployment. Sponsorship of maths and science academies or Saturday schools. Support 3 programs Meet or exceed B-BBEE Score card target for ECIC and pay service providers within 30 days as required under the Public Finance Management Act (PFMA) 100% BBBEE spend Level 4 BBBEE score Level 1 BBBEE score Total Expense Budget (Rm) R2.9mR3.1mR3.3m

34. EFFECTIVE STEWARDSHIP 34 OUTPUTS TARGETS Link with the SONA 2013/142014/152015/16 Meet or exceed B-BBEE Score card target for ECIC and pay service providers within 30 days as required under the Public Finance Management Act (PFMA) Pay suppliers within 30 days Pay SMMEs within 30 days

35. APPROACH TO OUTPUTS AND TARGETS 35 In drawing up the new outputs and targets the Treasury Guidelines on SMART targets have been taken into account. In the 2012/13 financial year, based on the quarterly reports submitted to the dti which are reviewed by the internal auditors (Nkonki) and the Audit and Risk Committee, ECIC has been effective in achieving its targets. The substantial growth in the new approvals in 2012/13 and the overall phenomenal growth in the insurance portfolio (from R11 billion to R17 billion) demonstrates that ECIC has operating systems and internal controls to meet and exceed the targets in certain cases.

36. LINK WITH THE NATIONAL DEVELOPMENT PLAN (NDP) 36 NDP ObjectivesNDP ActionsECIC Objectives Intra-regional trade in Southern Africa should increase from 7 percent of trade to 25 percent of trade by 2030. South Africa's trade with regional neighbours should increase from 15 percent of our trade to 30 percent Implement a focused regional integration strategy with emphasis on: Road, rail and port infrastructure in the region Facilitate export trade and investments outside South Africa Using financial institutions to partner with businesses wanting to expand on the continent Strategic Alliances: Build mutually-beneficial local, regional and global relations to advance South Africa’s trade and economic development objectives

37. 37 NDP ObjectivesECIC Objectives Play a leading role in continental development, economic integration and human rights The strategic focus of ECIC is Africa with more than 75% of our exposure located on the continent. The nature of the projects benefits South Africa by way of exports and the host economies through infrastructure development and economic development in general. ECIC has been voted the best ECA in Africa by the readers of the Global Trade Magazine. Strong African growth also provides opportunities for South African firms and industries. ECIC's core work is to facilitate entry and competitiveness of South African business as they seek to take advantage of business opportunities on the continent by providing political and commercial risk cover and by utilizing the Interest Make ‑ up support which makes export credit loans to be priced at competitive rates. Boost private investment in labour intensive areas, raising competitiveness and export earning...targeting state support to specific sectors. ECIC's core business is to boost export trade and phenomenal growth in the insurance portfolio is testimony to this work. There is a targeted focus on the boat building industry and the production of rail locomotives and wagons as examples of labour intensive industries. LINK WITH THE NATIONAL DEVELOPMENT PLAN (NDP)

38. LINK WITH THE NATIONAL DEVELOPMENT PLAN 38 NDP ObjectivesECIC Objectives Steps by the state to professionalize the public service, strengthen accountability, improve coordination and prosecute corruption. ECIC's strategic objective number three emphasizes the importance of promoting a professional, competitive and customer focused workforce that ensures an effective and efficient service to our customers. Expand the role of state ‑ owned enterprises in training artisans and technical professionals. One of the key focus areas of the ECIC's Corporate Social Investment is skills development with a clear focus on artisans and technical professionals linked to the export industry. This is captured in strategic objective five targets. Provide full funding assistance covering tuition, books, accommodation and living allowance to students from poor families. ECIC's Corporate Social Investment includes a bursary scheme for students coming from poor families and the funding assistance covers all the mentioned elements.

39. BUDGET 2013/14 – 2015/16 39 ECIC, as a schedule 3B entity is run on a financially self- sustainable basis by generating its revenue stream from premiums and investment income. ECIC does not receive transfer payments from the Government to fund its operations. The Interest Make-up fund (an export incentive scheme) is a government scheme managed by ECIC on an agency basis. The projected growth in ECIC’s capital base will enhance its capacity to underwrite more insurance. The expansive approach in the budget such as the increase in operating costs and staff complement is to fund and enhance capacity to implement the growth strategy.

40. Earned premium anticipated to increase by 39% from R247 million to R343 million in 13/14 and 15/16 respectively. Operating expenses will average R73 million pa, which represents a growth of 11% over the budget period. Claims incurred is anticipated to improve by 383% mainly to positive claims outlook. Operating cash flows will increase by 9% to R305 million. Total assets will increase by 21% to R5.9 billion. 40 BUDGET 2013/14 – 2015/16

41. 41 CAPITAL EXPENDITURE Planned capital expenditure(CAPEX) amounts to R6 million over the budget period. CAPEX spend of R5 million is mainly on IT infrastructure to modernise and enhance operational effectiveness and ensure that we are able to comply with SAM requirements. With increased staff complement the ECIC’s is looking for new premises that will cater for its growth over the next 5 years and may opt to acquire an office building during the current year for occupation on 1 April 2014.

42. 42 CASHFLOW STATEMENT 2013/142014/152015/16 CASHFLOW STATEMENT Cash flows from operating activities Cash generated by underwriting activities471,050653,980643,375 Interest received(134,867)(144,134)(149,335) Interest received on cash and cash equivalents--- Dividends received(2,000)(1,807)(1,614) Interest paid--- Taxation paid(120,992)(170,664)(187,150) Net cash inflow from operating activities213,190337,375305,276 Cash flows from investing activities Acquisition of fixed assets(2,100)(2,000)- Net (acquisition)/disposal of investments226,607225,933263,773 Net cash (outflow)/inflow from investing activities224,507223,933263,773 Net increase in cash and cash equivalents437,697561,309569,050 Cash and cash equivalents at beginning of year1,689,7692,127,4662,688,775 Cash and cash equivalents at end of year2,127,4662,688,7753,257,824

43. 43 CONCLUDING REMARKS ECIC is committed to work towards a prosperous and equitable South Africa, a better Africa and a better world. Working together as South Africa Inc. we can achieve more exports and broader economic development.