1. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 1 Presentation The Purpose of this presentation is to present an overview Of the Apex Fund Implementation Strategy May 25th, 2005 “ Almost ten years after its liberation from white minority rule, our country still faces many challenges. Many of our people are unemployed. Many of our people continue to live in poverty …….. ” President Thabo Mbeki, State of the Nation Address February, 2004. “ Almost ten years after its liberation from white minority rule, our country still faces many challenges. Many of our people are unemployed. Many of our people continue to live in poverty …….. ” President Thabo Mbeki, State of the Nation Address February, 2004.

2. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 2 Contents DEFINITIONS Samaf Overview Economic Apex Poverty Distribution by Province Samaf target by Household Income Apex Rationale Samaf Pilot Project Plan Samaf Partner Organization Profile to date Samaf Partner Organizations by Province SAMAF Operational Model Re engineering current MCO / FSC to Partner Organizations PO capacity Levels of Capacity Building Implementation preparedness Financial Co-Operative Pilots Emerging Picture Capacity Building Philosophy APEX PROVINCIAL ROLL_OUT PLAN

3. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 3 DEFINITIONS Financial Services Co-operatives Partner Organization Retail Finance Institution Micro Credit Outlet Savings mobilization Institutional capacity building MICROFINANCE/ MICROCREDIT

4. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 4 SAMAF Overview To provide professional and customised services to developmental micro finance institutions, Through institutional capacity building, on-lending microcredit funds and savings mobilisation support for broadening and deepening access to financial services to the poor in order to facilitate their participation in productive economic activities and smoothing their financial troughs for better livelihoods. To provide professional and customised services to developmental micro finance institutions, Through institutional capacity building, on-lending microcredit funds and savings mobilisation support for broadening and deepening access to financial services to the poor in order to facilitate their participation in productive economic activities and smoothing their financial troughs for better livelihoods. MISSION To be a leader in developmental Microfinance outreach and best practice in South Africa. To be a leader in developmental Microfinance outreach and best practice in South Africa. VISION SAMAF strives to attain its vision through: Being an effective mobiliser of capital for developmental microfinance; Bringing innovative development products and services to market; Forging valuable development partnerships between business, government and the community; and Developing human capital in the micro-economic sphere through supporting appropriate capacity building. SAMAF strives to attain its vision through: Being an effective mobiliser of capital for developmental microfinance; Bringing innovative development products and services to market; Forging valuable development partnerships between business, government and the community; and Developing human capital in the micro-economic sphere through supporting appropriate capacity building.

5. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 5

6. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 6 Landscape – Poverty Distribution Source: van de Ruit, J. May, and B. Roberts (2001),

7. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 7 Landscape – Average Household income per month LSM 1 LSM 2LSM 3LSM 4LSM 5LSM 6LSM 7LSM 8LSM 9LSM10 Source: Futurefact Marketscape 2002 Samaf target

8. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 8 APEX RATIONALE WHY THE APEX: –Market failure to reach the poor and unemployed with appropriate financial services- OUTREACH & ACCESS –Ten year review of Khula by the Government and Khula regarding the Microfinance sector and current model- IMPACT –Repeated inputs about gap by Developmental Microfinance Sector, cost of capital and migration of services to the not- so-poor.-SUSTAINABILITY VS POVERTY ALLEVIATION –Challenges of Institutional and client capacity, as well as poverty focused microfinance.- CAPACITY

9. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 9 SAMAF Pilot Project Plan Phase I (Jan – December 2005) Short Term –Registration – Principa l –Board Selection and Management Appointments-Principal –Operational, H/Resources, Budgetary systems- Done –MCO/RFI/FSC capacity & funding-Selection done –Loan disbursements by June 2005 –Phase II (Jan – December 2006) – Medium Term –Deepening and widening of the APEX model outreach with emphasis on monitoring and evaluation – Detailed study of financial support systems dictated by unfolding micro-finance models Recommendations towards emerging financial institution, Phase III (2007 and beyond) – Long Term –Consolidate all data, experiences and research and recommendations into model

10. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 10 Assumptions –They know what they are doing, Apex wants to support their current outreach projections and monitor impact of Apex interventions. –Apex will study poverty targeting tools used by WDB and SEF as well as group formation methodologies used. Apex will identify poverty alleviation pilots using same. Apex will facilitate Beehive aspirations within Apex framework. Clear co-operation MOUs will have to be signed. –Apex will have a Poverty targeting expert on board, whether in-house or on contract. RFI Pilots (4)

11. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 11 MCO Pilots (16) Khula has 16 MCOs that have been inducted into the Apex – See provincial spread MCOs operational expenses as per Khula system have been budgeted for by Apex as notice to ensure integration by June 2005. –Apex Application package already given to MCOs as initial assessment information. –See Apex Operational Model, regarding accreditation process for selection as PO, Capacity building and on- lending funding –Apex advocates rationalization of MCO location to achieve outreach. MCOs in one locality were encouraged to open a dialogue among themselves, especially where one is weaker ( in outreach) than the other. –MCO capacity building assessments started in March Assumption: Consolidation to be explored as some may not qualify as stand-alone Apex partners.

12. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 12 Institutional Capacity Building Assessment for : –Saccol-MIS and human resource capacity –Ficosa-All round ICB –Safobs-All round ICB –Dtsacco-All round capacity –Independent Village banks- Financial management of savings, governance and microcredit management. Central Co-Operative Pilots

13. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 13 Hluma Africa-E.London Tsosologo-Pta Youth Co-op OPI Church Women-Daveyton Silverlining Domestics RFi- Mpumalanga Masisizane Womens’ Co-op,Ivory Park Ten others that are being assessed New APEX POs (15)

14. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 14 SAMAF Market Portfolio Slide 1 i) PO’s Per Type ii) PO’s Per Location

15. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 15 SAMAF Market Portfolio Slide 2 PO’s Per Type Per Location

16. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 16 Apex in the Provinces to date …. North West Province 5 Eastern Cape 9 Free State2 Gauteng5 KZN8 Limpopo6 Mpumalanga7 Western Cape2 Northen Cape1

17. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 17 SAMAF Operational Model Receive Application Review PO Application Preliminary appraisal Field Visit and inspection Declined Approved Capacity Building Intervention Fully accepted/ approval Loan agreement concluded Orientation course Funds disbursed Monitor and evaluate Loan Recovery Default Repay Partnerships for ICB Outreach

18. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 18 Re-engineering an MCO/ FSC for sustainability and Outreach Products Business Model Change Market Financing Capacities of People, process & systems Costs (fixed & variable) Management (policies, Strategy and Key performance Indicators Change SAMAF will provide capacity support on a target plan (customer outreach) only On-lending capital provided to support growth but repayment history is important Implemented 2 SAMAF products -Poverty Alleviation (b&c) -MED (b) Introduce new simplified Key performance indicators Simplify Monthly reporting Re-establish policies Grow market with new products Feedback to SAMAF with regards 2 product development Relook cost structures to achieve appropriate cost to income ratio, and Cost per client Replace internal systems Standarise all business processes Re-train people Mergers & Acquire (MCO) Mergers & Acquire (MCO)

19. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 19 Partner Organisation Capability People Processes Products Infrastructure PO Capability Maturity PO Capability Maturity Management Planning & Control Management Planning & Control SAMAF CAPACITY BUILDING IMPACT SAMAF Capacity Building interventions aims to have a Partner Organisation on a capability maturity level where the Partner Organisation can disburse retail finance products to its membership base within an acceptable level of risk and sustainability to SAMAF. This means that Capacity is addressed on all five dimensions of the Partner Organisation

20. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 20 Levels of Capacity Building BASIC CAPACITY BUILDING INTERVENTIONS & BASIC INFRASTRUCTURE INTERMEDIATE CAPACITY BUILDING FOR PO GOVERNANCE OPERATIONAL DELIVERY CB PO Employees Stakeholders & Customers PO Employees Stakeholders & Customers PO Board & Management PO Board & Management PO Operations Capacity Building Grants Capacity Building Grants Capacity Building Loans Capacity Building Loans Poverty Alleviation & Micro- enterprise Development Poverty Alleviation & Micro- enterprise Development

21. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 21 Limpopo Province –Mathabathe, Legwareng Village,Sikhukhune –Bakenburgh, Mokopane Mpumalanga –Matlerekeng Village, Moutse West –Masibelela Village, Umtfombo Wempilo –Fernie FSC, Gert Sibande District NWest –Motswedi, Bakgatla Bakgafela Tribal Office –Disaneng, Mafikeng Co-Operative Pilots

22. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 22 Free State –Poelong, Ratanang Complex,Mphatlalatsane Village –Makwane FSC, Qwaqwa E.Cape –Mt. Ayliff,Erf 188 Hlanekela Str, Behind Main Rd –Mqanduli, Municipality Bldng, –Pearston,25 Voortrekker Str. Co-Operative Pilots

23. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 23 KZN –Ingwavuma, Bambanani T-Junction, Ingwavuma Village –KwaMachi, Ezingolweni, Harding –Sizathina, Highflats, Ixopo Village,Next to Senzokuhle General Dealer Co-Operative Pilots (see profiles)

24. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 24 MCO’s (ex Khula) (16) On Lending : R 9 mil Provincial Spread: 6 # of Members: 16 000 # of Groups: Unknown Profile: Urban/Peri- Urban Avg loan: R500/customer Pilot Size: 16 FSC’s (DoA) (61) Total Savings: R5.7 mil Provincial Spread: 8 # of Members: 35 000 # of Groups: 61 Profile: Rural Avg savings: R162/customer Pilot Size: 15 Emerging Picture

25. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 25 Portfolio Institutional Capacity MCO ’ s RFI ’ s FSC ’ s +16 existing+ 10 existing+ 4 existing +10 new (Spread in four provinces) New SAMAF Pilot Portfolio ’ s Customer Segmentation SAMAF Pilot Portfolio ’ s Customer Segmentation Portfolio Manager +1 SAMAF Operations +4 SAMAF Portfolio ’ s Geographical Segmentation SAMAF Portfolio ’ s Geographical Segmentation Portfolio Manager +1 Portfolio Manager +1 Migration during Pilot phase to one Partner Organisation Model Poverty Tool Assessor +1

26. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 26 APEX ROLL-OUT PLAN April/ May launch in NorthWest Province- National & provincial launch (Motswedi Village.) June- Gauteng ( need to be close to NW & manage launch impact ) July- Limpopo & Mpumalanga August- Eastern Cape & Free State September- KZN & Northern Cape October- Western Cape & UN Year of Microcredit ?

27. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 27 HOW Introduction of Apex programme & pilots to Provincial Government with communities. Joint discussions regarding provincial new sites and profile (Apex/Province) Assessment of partnerships involved and evaluation of contributions if any ( Ledas/Seda) Discussion around Provincial launch and impact LAUNCH Post launch monitoring & evaluation co- operation

28. samaf south african micro-finance apex fund an initiative of the dti SAMAF Pilot Implementation Strategy 28 Thank You