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first floor, block b (entirweni),mapungubwe – the dti group campus77 meintjies street, sunnysidetel: 012 394 1703 fax: 012 394 2703www.samaf.org.za

2008/9 BUDGET AND STRATEGY PRESENTATION TO PORTFOLIO

COMMITTEE ON TRADE AND INDUSTRY

SITHEMBELE MASECHIEF EXECUTIVE OFFICER: samaf 012 394 1722/ 012 394 1116

CONTENT

1. MANDATE

2. ACHIEVEMENTS TO DATE

2.1 Facts and Figures2.2 Staffing and HR2.3 National Footprint/ Distribution Network

3. CHALLENGES

4. STRATEGIC GOALS AND OBJECTIVES

4.1 To increase access to microfinance through wholesale funding to developmental Financial Intermediaries;4.2 Increasing support of capacity building and sustainability to Financial Intermediaries that provide savings and/ or credit;

4.3 To support the development of effective microfinance networks, strategic alliances and partnerships;4.4 To participate in policymaking and create a Centre of Learning for microfinance;4.5 To build a strong and capable Apex Fund towards the establishment of samaf as an independent legal entity.

5. 2008/ 9 BUDGET

FI = Financial IntermediariesCB = Co-operative BankFSC = Financial Services Co-operativeMFI = Micro Financial IntermediariesIFC = International Finance CorporationSACCOL = Savings and Credit Co-Operative LeagueAMFISA = Alliance of Micro Finance Institutions of South Africa

DEFINITIONS

1. MANDATE

Contribute to reduction of poverty and unemployment by:

• Acting as a catalyst for the development of an effective microfinance sector;

• Supporting the establishment of sustainable Financial Intermediaries that can reach deeper and broader to the enterprising and working poor;

• Facilitating the establishment of an enabling environment for effective financial intermediation for the enterprising and working poor; and

• Building a strong, effective and efficient Apex Fund.

OPERATIONAL MANDATE

samaf is a wholesale fund that works through community based FI’s to deliver financial services to the working and enterprising poor communities in deep rural and peri-urban areas;

samaf therefore provides loan funds for on- lending by FI’s;

samaf also provides support funding to build capacity and technical expertise within the FI’s.

2. ACHIEVEMENTS

2.1 FACTS AND FIGURES:

Loans Disbursed vs Loans Approved

Loans Disbursed

24,245,000.00 32%

Loans Approved

52,530,000.00 68%

Loans Disbursed Loans Approved

Capacity Building Disbursed vs Capacity Building Approved

Capacity Building Disbursed,

14,907,100.00 , 27%

Capacity Building Approved,

40,452,120.00 , 73%

Capacity Building Disbursed Capacity Building Approved

Approvals Allocated per Province

Limpopo 10,692,120.00

11%

Kw azulu Natal 9,000,000.00

10% Gauteng 25,200,000.00

28%

Free State 3,900,000.00

4%

North West 6,900,000.00

7%Western Cape 12,590,000.00

14%

Eastern Cape 3,900,000.00

4%

Mpumalanga 20,800,000.00

22%

Gauteng Free State North West Western Cape

Eastern Cape Mpumalanga Limpopo Kwazulu Natal

Borrowers vs Savers (Value & Numbers)

Borrowers 20,666.00

45%

Savers 25,392.00

55%

Borrowers Savers

2.1 FACTS AND FIGURES (cont.):

Numbers of Borrowers (Value & Numbers)

Men 2,774.00

20%

Disabled 81.00

1%

Youth 1,831.00

13%Women

9,412.00 66%

Women Youth Disabled Men

Appointments (Male vs Female)

Female61%

Male39%

Male Female

2.2 STAFFING AND HR:

Equity Profile (Male)

White10%

Indian0%

Coloured10%

African80%

African Coloured Indian White

Equity Profile (Female)

White9%

Indian3%

Coloured9%

African79%

African Coloured Indian White

MARCH 2007

47 Filled positions28 Vacancies

FEBRUARY 2008

54 Filled 21 Vacancies

NETT INCREASE/ (DECREASE)

7 Post Filled(7) Vacancies reduced

2.3 NATIONAL FOOTPRINT/ DISTRIBUTION NETWORK:

National Footprint/ Distribution Network

Kwazulu Natal7

Limpopo9

Mpumalanga6

Eastern Cape3

Western Cape9

Free State3

North West6

Gauteng6

Gauteng Free State North West Western Cape

Eastern Cape Mpumalanga Limpopo Kwazulu Natal

3. CHALLENGES IN ESTABLISHMENT AND RAPID EXPANSION OF THE DISTRIBUTION NETWORK AND INFRASTRUCTURE

• Provincial staff and management appointment in the Northern Cape was delayed for twelve (12) months due to a contracted employee taking samaf to the CCMA.

• The capacity of FI’s to disburse funds to clients is a key constraint due to poor financial reporting. This results in slow drawdown of approved funds.

• High failure rate of funded institutions is a key constraint to rapid growth and expansion of the delivery network. Seven (7) FI’s amounting to R1,4m have already defaulted and closed down.

• The launching of the fund in 2006/ 7 without an established delivery network has created some challenges.

4. STRATEGIC OBJECTIVES

4.1 To increase access to microfinance through wholesale funding to developmental Financial Intermediaries;

4.2 Increasing support for capacity building and sustainability to Financial Intermediaries that provide savings and/ or credit;

4.3 To support the development of effective microfinance networks, strategic alliances and partnerships;

4.4 To participate in policymaking and create a Centre of Learning for microfinance;

4.5 To build a strong and capable Apex Fund towards the establishment of samaf as an independent legal entity.

Key Objective (s) Target 2008/ 9

4.1.1 Increase financial support to Financial Intermediaries

for on-lending

Disbursements 23 FI’s

Disbursement amount of R13,5m

4.1.2 Manage portfolio quality Repayment rate 60% on average

Portfolio at risk 25%

Loan loss rate 15%

4.1.3 Strengthen operational self- sufficiency 5% budget variance

50% operational costs vs 50% program costs

4.1 To increase access to microfinance through wholesale funding to developmental Financial Intermediaries:

Key Objective (s) Target 2008/ 9

4.2. Capacity Building and Technical Support Technical assistance and training R3m

Funding support as per business plan R16,2m

MIS acquisition R7,2m

Number of FI’s trained and supported 31

Number of FI staff trained and supported 62

Quality of training and support programme 100%

4.2 Increasing the capacity and sustainability of Financial Intermediaries which provide savings and/ or credit:

Key Objective (s) Target 2008/ 9

4.3. Safety and soundness of the CB sector Develop sound prudential policy environment

Establish registration process for CB’s and FSC’s

Establish an examination and supervision section for CB’s FSC’s

Conduct training for exterminations and registration

Conduct examinations of all FSC’s and CB’s

4.3 To support the development of effective microfinance networks, strategic alliance and partnerships:

4.4 To participate in policy making and create a Centre of Learning for microfinance:

Key Objective (s) Target 2008/ 9

4.4.1 Improve risk management and reporting systems Loan agreement and credit policy 90% effective

Corporate and operational risk improved from level 1 to level 2

50% Compliance with prudential regulations, NCA and other

Improvements in Financial Management and reporting by FI’s

Unqualified audits

4.4.2 Develop and improve policies and procedures Reporting standards adhered to 100%

Documented and approved policies

4.4.3 Facilitate establishment of samaf as a legal entity Performance audit by September 2008

Approval for legal status

4.5 To build a strong and capable Apex Fund towards the establishment of samaf as an independent legal entity:

Key Objective (s) Target 2008/ 9

4.5.1 Improve customer service delivery One client/ customer satisfaction survey

20% Improved customer relationships

96 Days turnaround from application to disbursement

4.5.2 Improve internal customer service delivery 50% Improvement on inter-departmental communication

50% Consistency and standardisation of information

50% Of understanding and execution of mandate at all

levels

4.5.3 Support the development of micro finance networks

(SACCOL, AMFISA and other)

1 Strategic partnership and special project

Improved positive image and increased interaction

4.5 To build a strong and capable Apex Fund towards the establishment of samaf as an independent legal entity (cont.):

Key Objective (s) Target 2008/ 9

4.5.4 Develop a competent capable workforce Audits and skills assessment report

Skills gap and inventory profile

In-house and specialized training programs

4.5.5 Build a positive organizational culture Learning organization (exchange programs, field visits and discussion forums)

Improved work standards and efficiencies

Employee satisfaction survey report

4.5.6 Develop strong management capability Improved management decision making

Improved quality of analytical and due diligence reports

Improved general management an leadership skills

5. 2008/ 9 BUDGET

Budget2008/ 9R’000

Budget2009/ 10

R’000

Budget2010/ 11

R’000

RECEIPTS

Receipt from the dti (88,093) (92,445) (97,991)

Loan repayments

Interest received (880) (1160) (1,276)

Other

Total receipts (88,973) (93,605) (99,267)

EXPENDITURE

Compensation of employees 20,163 23,135 24,000

Goods and services 15,710 15,670 16,187

Payments for capital assets 8,500 4,800 5,080

Transfer to partner organizations 42,600 50,000 54,000

Transfer to Deferred account

Total expenditure 88,973 93,605 99,267

SURPLUS/DEFICIT 0 0 0

THANK YOU

QUESTIONS…?