Presentation to the Portfolio Committee on Agriculture and Land Affairs 27 March 2007

2006/07 F/Y Performance Review Provincial spread of the portfolio Portfolio mix: Mortgage vs Equity Sectoral mix: Agriculture vs Eco-Tourism New projects approved Rate Conversion: JIBAR to Prime-linked Banks and other RFI’s participation LREF BEE Scorecard RFI Margin Cap

2007/08 Business plan Grow loan book by R40m Grow projects numbers by 10 Emphasis in Free State, Limpopo, Northern Cape, Mpumalanga and Northwest Improve portfolio mix Facilitate beneficiaries training and capacity building Financial Review

Strategic initiatives Khula/Mafisa project Khula/TSB/ABSA project Khula/dti Eco-Tourism potential Funding Challenges Disbursements Loan size per project Dependence on LRAD Capacity building

New Projects Approved Name of ProjectChannel Partner Loan Amount PDI’s Shareholding ProvinceEnterpriseBeneficiaries MaleFemaleTotal Simile Farm TrustSTD2,880,000100%E.CapePoultry6-6 PennyBEE DairyFNB1,393,00050%E.CapeDairy Galaxtic DealsFNB3,400,00049%E.CapeCitrus31233 Inthaba FarmingABSA1,100,00055%E.CapeGoats13114 Evening FlameABSA3,700,00025%GautengPoultry8917 RZT ZelpyABSA2,800,00030%N.CapeGrapes Die EilandsABSA800,00030%W.CapeOstrich & Lucern VukanathiABSA4,700,00072%N.WestPoultry6814 BambananiSTD4,100,00025%GautengStone Fruit Endulini Sunday River FNB7,840,00040%E.CapeCitrus25 50 Total32,713,

RATE CONVERSION: JIBAR TO PRIME- LINKED All existing projects converted to prime-linked rates New projects approved on prime-linked rates Less Cumbersome admin process 3% margin Cap on Retail Financial intermediaries to projects

LREF BEE SCORECARD [a] DIRECT EMPOWERMENTWeight Ownership (shares) and control20% Participation in Decision Making [Average]20% Aggregate Weight & Score40% [b] HR DEVELOPMENT PLAN & EMPLOYMENT EQUITY Skills Development & Learnerships22.5% Gender Equity22.5% Aggregate Weight & Score45% [c] STAFF WELFARE Compliance to Minimum Wage Legislation5% Aggregate Weight & Score5% [d] RESIDUAL (including indirect empowerment) Enterprise and Rural Development.5% Procurement, Job Creation, etc.5% Aggregate Weight & Score10% Weighted Average Score100%

Prime = 12.5% RFI MARGIN CAP Project ScoreJibar RateEquivalentChg To RFIMax Chg To End User Up to 33Jibar – 0.65%Prime – 4.07%8.43%11.43% 34 To 67Jibar – 1.15%Prime – 4.57%7.93%10.93% 68 To 100Jibar – 1.65%Prime – 5.07%7.43%10.43%

FINANCIAL REVIEW FY March 2007 Budget Year-to-date actual February 2007 Budget March 2008 Operating Income6,869,2006,310,9778,797,676 Operating Expense3,881,1501,873,7424,647,702 Investment Income3,317,1508,140,6058,413,762 Total Net Income6,305,20012,613,84112,565,736

KHULA/MAFISA PARTNERSHIP Khula/Mafisa Agreement Production inputs Target: BEE farmers 100k – 300k per PDI Up to R100k: Fund 90%: Bank(10%) R100k-R200k: Fund 80%: Bank(20%) R200k-R300k: Fund 70%: Bank(30%) Interest rate to Prime(Max) 1% Indemnity Fee to RFI

Qualifying Criteria for MAFISA Off-take agreement for farmers produce Insurance for all crops Interest rate to farmers not more than Prime Assistance package to includeMechanisation for:  Soil preparation  Planting  Weed cultivation  Chemical application  Spraying  Harvesting Project management and farmer mentorship.

KHULA/TSB/ABSA Initiative to create a fund Size of the fund R50m Objective: settle at least 50 emerging farmers Enterprise: sugarcane Province: Mpumalanga(Malelane)

KHULA/DTI Khula in negotiations with the dti for funds to continue funding potential Eco-Tourism projects Khula is in the process of structuring a proposal to the dti

Challenges Disbursement bottlenecks Loan size per project Dependence on LRAD Capacity building The bulk of the applicants are still coming from the Western Cape and KZN

Thank You