sefa-TEP Ikwezi Tourism Facility Thakhani Makhuvha Chief Executive Officer Tourism Indaba Durban, KZN 09 May 2014

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sefa is a wholly owned subsidiary of the Industrial Development Corporation (IDC) and provides funding ranging from R500 to R5 million via the following product / channels: Direct lending (R50k – R5m) Wholesale SMME financing via retail financial intermediaries (RFIs) R50k – R3m Wholesale micro finance loans via micro finance institutions (MFIs) ranging from R500 to R50k Historic background The Small Enterprise Finance Agency (sefa) is a development finance institution established in 2012 with a mandate to provide access to finance to SMMEs

South Africa’s post-apartheid economic policies recognise and acknowledge the important role of small business development and promotion to job creation, alleviating poverty, stimulating competitiveness, building inclusive economic growth and economic transformation. It is estimated that South Africa has ± 5, 9 million SMMEs and the sector contributes to: between 36 – 45% of South Africa’s GDP; 56% - 61% of private sector employment; 25% of gross capital formation; 2% to exports. 4 SMME Landscape

Bridging the gap… 5

Government policy and support SMME support programmes through establishment of the following support agencies and national departments: 6 Government intervention

Funding for small business development is delivered through these various private and public sector channels: 1.Government 2.Development finance institutions 3. Commercial banking sector 4. Donors and Non-Governmental Organisations (NGOs) 7 Access to Finance by Small Businesses

8 sefa’s SMME value proposition

9 sefa’s Organisational Framework VALUES Kuya sheshwa!” Kuya sheshwa!” - Speed and urgency Passion for development Passion for development: Solution-driven attitude, commitment to serve Integrity: Integrity: Dealing with clients and stakeholders in an honest and ethical manner Transparency: Transparency: Ensuring compliance with best practice on the dissemination and sharing of information with all stakeholders Innovation: Innovation: Continuously looking at new and better ways to serve our clients MISSION Development of SMMEs throughout South Africa by: Providing finance to SMMEs on a wholesale and direct basis Providing business support services and capacity building Creating strategic partnerships for sustainable SMME development and support Monitoring the effectiveness and impact of finance provision and capacity development in the SMME sector MANDATE catalyst sustainable To be the leading catalyst for the development of sustainable Survivalist, Micro, Small and Medium enterprises through the provision of finance

10 Product mix DIRECT LENDING Working capital facilities Revolving loans Bridging Finance Term loans Asset finance WHOLESALE LENDING On-lending facilities Credit Indemnity Schemes Land Reform Empowerment Loan Equity Grant funding INSTITUTIONAL SUPPORT Institutional Strengthening Technical Support Rental Property NEW PRODUCTS UNDER CONSIDERATION Performance Guarantees Supplier Guarantees Loan payment facility guarantees

sefa’s target market consists of survivalist, micro, small and medium businesses as defined in Schedule 1 of the National Small Business Act of 1996 (as amended in 2004) with specific focus on: Services (including retailing, wholesaling and tourism); Manufacturing (including agro-processing); Agriculture (specifically land reform beneficiaries and micro-farming activities); Construction (small construction contractors); Mining (specifically small miners). 11 Target market Survivalists and microenterprises – loans of between R500 and R Small enterprises – loans between R and R Medium enterprises – loans between R and R

12 sefa’s distribution channels

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sefa-TEP Ikhwezi Tourism Facility PURPOSE OF FUNDING To fund SMMEs in the tourism sector Access to the tourism sector THE WHOLESALE FUNDING ALLOCATION The funding consists of R45 million business loans to entrepreneurs; Loan sizes of between R to R5 million offered for up to five years; R2 million business support e.g. mentoring and training support for the entrepreneurs R3 million Institutional strengthening support to enable TEP to set-up operational functionality for the facility.

Rational for the partnership  Leveraging the existing technical capacity and national footprint from TEP  Special lending rates offered to SMMEs prime plus 1.60% to prime plus 3.60%.  sefa needs to participate in different sectors and tourism is one of them.  Fill-in TEP’s funding gap to SMMEs. sefa / TEP

Rational for the partnership (cont…)  Leverage existing 3500 SMMEs on its database  Leverage TEP’s Intervention Model(skills, development, couching and mentoring)  TEP has existing processes to assess the technical SMME clients and provide practical solution thereof.  Fastest growth sectors for job creation  Long-term joint partnership

sefa’s role will be to:  Carry the credit and financial risk of each transaction funded.  Receive the applications and verify the technical due diligence performed by TEP.  Perform the financial and credit assessment of the client.  Present the applications to sefa Credit committee for approval.  Generate loan agreements to be signed-off by the client. The contracting will be between sefa and the client.  Pay out to the SMME based on cash flow projection requirements.  Fund Business Support required by the SMME.  Collect directly from the SMME. TEP will assist with the collections through the Co-ordinator, mentors and/or consultants interacting with the clients. 17 sefa’s role in the partnership

Targets for the facility The following targets have been set for the next five years of the facility; Target No. of Black SMMEs to be funded15 % of Women funded SMME45% % of Youth funded SMME30% Rural % coverage45% No. of Jobs created500

sefa Contact Details sefa National Call Centre :