A SUMMARY OF KHULA OUTPUTS

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A SUMMARY OF KHULA OUTPUTS TO THE PORTFOLIO
COMMITTEE 25 March 2003
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High-level Objectives

• To make an impact on the transformation of the
  South African economic landscape by contributing
  towards the DTI strategic objectives
• Facilitate mobilization and directing of
  resources (public private sector funding)
  towards SME development.

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Core Strategic Objectives

• To achieve a return on investment that ensures
  retention of the capital base. (Finance)
• To offer sustainable credit and capital through a
  network of efficient distribution intermediaries.
  (Customers)

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Core Strategic Objectives

• Scaling and growing the operations, through
  managed risk, to achieve impact and outreach.
  (Finance)
• To acquire, develop and retain the human talent
  to meet the short, medium and long-term needs of
  Khula. (People)
• To develop and implement an integrated business
  marketing strategy. (Process)

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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

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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

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Where are we ? 1996 2003 year ending 2003
28/02
Corporate Objectives Cumulative 1996 - 2003 Target 2003 Actual 2003 Rating 2003
Approved Business Loans R363,6m R70,0m R77,8m ü
Committed Guarantees R348,2m R258,0m R145,0m ?
Approved LRCF Loans R56,9m R20,0m R20,8m ü
Approved Equity deals R12,9m R14,0m R9,6m ?
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Where are we ? 1996 2003 year ending 2003
28/02
Corporate Objectives Cumulative 1996 - 2003 Target 2003 Actual 2003 Rating 2003
Approved -RFI Cap, Seed loans Capacity Build R173,7m R22,9m R27,7m ü
Approved -MCO Seed loans on-lend ops Capacity Build R28,3m R16,1m R10,1m ?
Thuso Mentorship Business Plans After-care visits R67,9m 994 R24,0m 210 R23,0m 341 ? ü
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Where are we ? 1996 2003 year ending 2003
28/02
Impact Stats Property Income Cumulative 1996 - 2003 Targets 2003 Actual 2003 Rating 2003
Total Gross Jobs Created All Programmes 1 064005 124 498 126 764 ü
No of Guarantees Committed 2544 1 290 496 ?
Thuso B Plans 306 120 97 ?
Property Income R8,3m R7,6m R8,3m ü
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Credit GuaranteesNumbers
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Credit GuaranteesRands
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Khula Equity Funds

• Rand value of deal approved R 18m
• Number of deal approved 11
• Jobs created 492
• Investee Companies
• 83 Male 17 Female
• 17 Rural 83 Urban
• 100 PDI

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Land Reform Empowerment Facility

• Funds loaned out to Date R57 m
• Number of projects 16
• Number of PDI (Shareholders) 794
• Male 360 Female 434
• Job created 1,261
• Males 592 Females 669

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Retail Financial Intermediaries

• Funds loaned out to Date R338 m
• Number of RFIs 16
• Number of RFI Clients 165 880
• Male 30 Female 70
• Black 96 White 4
• Urban 70 Rural 30
• Job creation estimate 948 466

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Khula-starts

• Funds loaned out to Dec 2002 R17 m
• Number of Khula-starts 17
• Number of Khula-starts Clients 26 041
• Males 13 Females 87
• Black 100 White 0
• Rural 95 Peri-Urban 5
• 6 Provinces (Excl WC,NC,FS)
• Jobs created 50 000 (Approx)

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Loans Representation in S.A.

• Limpopo
• 2 RFIs 2MCOs
• North West
• 1 RFI 1 MCO
• Gauteng
• 7 RFIs 1 MCO
• Mpumalanga
• 3 RFIs 5 MCOs
• Freestate
• 1 RFI 0 MCOs
• KwaZulu Natal
• 3 RFIs 5 MCOs
• Northern Cape
• 1 RFI 0 MCOs
• Eastern Cape
• 2 RFIs 4 MCOs
• Western Cape
• 2 RFIs 0 MCOs

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Summary of Assumptions

• Required capital is obtained
• Seed activities are inherent risk mitigation
  mechanisms of Khula balance sheet. network and
  capacity support of RFIs and quality mentoring
• Investment levels are necessary to off-set the
  price shortfall results.
• A stable and committed human resource especially
  at senior level is achieved.

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Summary of Assumptions

• Political support is unwavering all government
  levels and based on sound corporate
  administration.
• Access to markets becomes sensitive to SMME
  needs. Government and state enterprise
  procurement systems adapt
• Financial institutions including insurance
  houses do come to the party

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Thank you for your Support

• Sizwe Tati
• Managing Director
• Khula Enterprise Finance (Pty) Ltd
• 25/03/03