1. TO LAND AND ENVIRONMENTAL AFFAIRS COMMITTEE
PRESENTATION
TO LAND AND ENVIRONMENTAL AFFAIRS COMMITTEE
01 APRIL 2003
Moeketsi Mofokeng

2. Khula Enterprise Finance
Main shareholder is DTI
Established in 1996
Independent board of directors; sub committees; internal and external auditors
Wholesale financier not retailer
Facilitates access to finance

3. To become a financing partner of first choice in SME finance.
Vision
To become a financing partner of first choice in SME finance.

4. Mission
To facilitate sustainable access to finance, by engaging with the private and public sector, through innovative products in order to promote SME growth.

5. General external objectives
Be responsive to the needs of clients and stakeholders
Facilitate mobilisation and flow of resources (public & private sector) for SMME development
Support the promotion of a conducive legislative environment for the SMME sector

6. Key strategic objectives
To achieve a return on investment that ensures retention of the capital base
To offer sustainable credit and capital through a network of efficient network of distribution intermediaries
To acquire,retain and develop the Human resources to meet the short,medium and long term needs of Khula
To develop and implement an integrated business marketing strategy

7. Khula offers assistance through
Credit Guarantees – Banks
Must be South African
Owner/ Manager
Business must be in SA
Must be economically viable
Technical skills essential
10% own contribution recommended

8. Khula assists through Business Loans – RFI’s & MCO’s Equity Funds
Capacity Building grants
Low interest loans
Equity Funds
JV, Equity Stakes
Land Reform Credit Facility
Transfer of land PDIs
Significant shareholding
Transfer of skills

9. Loans Representation in S.A.
Limpopo
2 RFI’s; 2MCO’s
North West
1 RFI; 1 MCO
Gauteng
7 RFI’s; 1 MCO
Mpumalanga
3 RFI’s; 5 MCO’s
Freestate
1 RFI; 0 MCO’s
KwaZulu Natal
Northern Cape
Eastern Cape
2 RFI’s; 4 MCO’s
Western Cape
2 RFI’s; 0 MCO’s

10. Mentorship Mentorship – 8 Regional Offices
BUSINESS PLANS
Loans up to R Client Contribution 25% Khula 75%
Loans above R – R5 m
Client Contribution 50% Khula 50%
Free mentorship for up to 3 months after loan is granted

11. SEGMENTATION OF KHULA PORTFOLIO
Small (upper end)
– Equity Funds
Small (lower end)
– Credit Guarantees
Very small-RFI’s /
KhulaStarts/Portfolio Guarantees/ Sizabantu
Micro-KhulaStarts/
RFI’s, Survivalist

12. Image of Khula or its agents Unisa Study, 2001
Khula Programs
% who would recommend Khula
KhulaStart 88
RFI
94.3
CGS Individuals
84.5
CGS Portfolio
76.8
Thuso Mentorship
80.6

13. HDE Awareness of organisations UCT Study, 2002

14. HDE Knowledge of assistance UCT Study 2002

15. Have been assisted UCT Study

16. Problems Faced By Entrepreneurs
Education and training
Technology
Infrastructure and competition
Crime
Access to markets/ Lack of demand
Access to finance

17. Obstacles to finance Collateral Refusal to use own collateral
Own contribution
Blacklisting
Financial records & Business Plans
High risk entrepreneurs

18. Way Forward

19. Growth Strategies Mobilise banks for mass or scale delivery.
Training workshops with bankers and marketing
Mainstream and roll-out a credible mentorship
To stimulate the provision of venture [start-up] and small scale equity finance.
To research and package innovative products that can mobilise and attract the financial industry participation in Khula mandate.
Build on nation wide communication campaign

20. Growth Strategies
Segment the market and design a suitable product mix and structure accordingly.
Emerging and matured markets
To support the distribution network in line with market needs.
capacitate and develop to serve the all market segments [from under-banked to bankable enterprises]
To improve outreach and efficiency of emerging market network
Improve market access through business linkage initiatives

21. Growth Strategies
Continue to engage government on issues relating to the mandate of Khula
exploring the retail option

22. Key Performance Indicators/Targets - Credit Guarantees
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
R180m
R182m
R258m
R310m
R341m
R375m
Individual
R241m
Portfolio
R10m
TTGF
R6m
Rehab
R0.5m

23. Key Performance Indicators/Targets Regional Equity Funds
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
Nil
R7mil
R14mil
R21mil
R23mil
R27mil

24. Key Performance Indicators/Targets

25. Thank You For Your Support