1 rural housing loan fund strategic plan 2005/06
TRANSCRIPT
1
RURAL HOUSING RURAL HOUSING LOAN FUNDLOAN FUND
Strategic plan 2005/06Strategic plan 2005/06
2
RHLF’s Vision Statement
RHLF is a world class rural social venture capital fund that creates new financial arrangements and opportunities for rural families to improve their housing, economic and living environments.
3
RHLF implementation RHLF implementation strategystrategy
4
RHLF’s contribution to “Peoples Contract to Create Work and
Fight Poverty”
• Establish credit histories & repeated access to credit
• PPP with intermediaries creating jobs within housing finance value chain
• Stimulate local economic development using local builders in construction
• Enable access to public utilities• Supporting the BMS industry create jobs in
the industry and related industries
5
STRATEGIC INSTITUTIONAL POSITIONING OF RHLF
Key National Departments >
DEPT. OF AGRIC &
LAND AFFAIRS
DEPT. OF HOUSING
DEPT. OF LOCAL GOVT.
NATIONAL TREASURY
DEPT. OF PUBLIC
SERVICE & ADMIN.
DEPT. OF TRADE &
INDUSTRY
Wholesale finance & purpose
> MAFISALAND BANK
Other Housing
InstitutionsNHFC RHLF DBSA IDC Khula
Micro-business DFI
(APEX)
Agriculture
Nurcha, HLGC, NHBRC,
Servcon, SHF, Thubelisha,
PHPT
Social Housing, IH, Home
Ownership
Rural & peri-urban
incremental housing
Infrastructure development /
Capacity building
Industrial development
Small business
Other strategic partners >
Finmark Trust
Bank SetaBuilding Material
SuppliersITC
Commercial Banks & Post
Bank
Private Venture Capital
CABINET
6
RHLF’s contribution to “New Comprehensive Housing
Strategy”
• Contribution to job creation• Informal settlement upgrading• Increase household income limit in line with new subsidy
rules to R 7 500• Contribute to Specific Programme Thrusts:
– Financial Services Market– Incremental Housing– Rural Housing
7
RHLF’s contribution to “New Comprehensive Housing
Strategy”Financial Services Market:• Access to micro-loans for incremental housing and
fixed home improvements for the rural working poor
• RHLF will use its venture capital investments to leverage additional debt funding from banks:– Clients reaching maximum RHLF exposure of R
25 m– Constructive discussions with two banks;
application to co-fund Norufin submitted to Std Bank
– Bayport’s relationship with Brait• Borrower education – revised Building Advice
Handbook now available in 3 languages & include chapter on household budgeting
8
RHLF’s contribution to “New Comprehensive Housing
Strategy” (cont…)
Incremental Housing:• Existing core financing opportunity
for RHLF business• Informal settlement upgrading –
post occupancy• Disburse 200 loans to subsidy
beneficiaries in Northern Cape with monthly income below R 1 500
9
RHLF’s contribution to “New Comprehensive Housing
Strategy” (cont…)
Rural Housing:• Farm worker housing – 200 loans to
emerging farmers and farm-workers in Mpumalanga
• Provision of loans for improving traditional houses in communal land and support indigenous housing (maximizing housing choices)
10
Status of RHLF approved business strategy
• Continue to fund profitable and adequately capitalised established entities– Two new clients, Izwe & Bayport– New facilities to current clients Blue Dot & Indlu– Increase in facility to Norufin– Received application from Lendcor (including pilot
loan for emerging contractors)– Received application from new client; African Dawn
Capital (emerging farmer and farm worker housing)• RHLF will continue to use its venture capital
investments to leverage additional debt funding from banks
• Financial sustainability and development impact– Bayport phase 2, SAPO savers & rural lending– Izwe’s expansion to secondary towns
11
T otal Cumulative Commitments
-50,000,000
100,000,000150,000,000200,000,000250,000,000300,000,000350,000,000400,000,000450,000,000
1998 1999 2000 2001 2002 2003 2004 2005 2006
Rand
Equity and investmentsLoan facilities
RHLF: FINANCIAL YEAR TARGETS Performance Indicators Description For 2005/2006
RHLF as lender of loans to intermediaries. 1 Number of loans approved The number of new loans approved. 5
2
Value of loans approved (R million) The value of new loans approved. 62,000,000
3 Number of loans in place The total number of managed loans in place 22
4 Value of loans in place The total value of loans in place 119,756,670
5 Number of houses financed by loans granted Number of end user loans financed 20,000
6 Income from loans and related activities
Interest earned and other income derived from all loans. 16,972,183
7 Average interest on the loans granted
Average interest rate charged on new loans. 15.43%
8 Losses on loans (non-performing)
Losses due to borrowers not performing on their loans. 5,830,000
9 Number of financial intermediaries operating
Number of financial intermediaries which are using RHLF funding. 6
10 Number of financial intermediaries in distress
Number of financial intermediaries which are likely not to perform on their loans. 1
Finance
11 Income from core business Income earned on core business investments and activities. 16,972,183
12 Income from other activities/investments
Income earned on investments and other non core business activities. 856,651
13 Expenditure As indicated in the Income statement. 10,669,355
14 Profit / Loss (Operating surplus / deficit) As indicated in the Income statement. 1,329,480
15 Total capital As indicated in the Balance statement. 153,922,760
16 Capital used in operations.
Value of the Total capital, used in guarantees, loans and other business operations. 112,925,448
17 Capital used in other investments
Value of the Total capital, used in other non-business related investments. -
12
T otal Cumulative Commitments
-50,000,000
100,000,000150,000,000200,000,000250,000,000300,000,000350,000,000400,000,000450,000,000
1998 1999 2000 2001 2002 2003 2004 2005 2006
Rand
Equity and investmentsLoan facilities
Total Cumulative Commitments
-50,000,000
100,000,000150,000,000200,000,000250,000,000300,000,000350,000,000400,000,000450,000,000
2000 2001 2002 2003 2004 2005 2006
Ran
d
Equity and investments
Loan facilities
13
Number of facilities approvedand active clients
3844
52 52
59
6974
3338
45 4550
6066
17 18
10 94 6 6
-
20
40
60
80
2000 2001 2002 2003 2004 2005 2006
Cumulative number of facilitiesapproved
Cumulative number of facilitiesdisbursed
Number of active clients
14
Annual Disbursements
-
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
2000 2001 2002 2003 2004 2005 2006
Ran
d
Equity investments
Loan facilities
15
Commitment to BEE
• Four distinct strategic thrusts– Demand driven developmental
needs of end-users– Funding black owned and
managed companies– Warehouse RHLF shares for future
acquisition– Employment equity
16
Gender distribution of end-user loans
45%
55%Male
Female
17
RHLF Empowerment Clients(Both MDF Grants and Loans)
15 15 15 16 16 17 18
12 13 16 16 18 19 19
05
10152025303540
2000 2001 2002 2003 2004 2005 2006
Other clients
Empowerment clients
18
Cumulative number of end-user loans financed
17,99229,114
34,66745,203
53,209
67,519
87,519
-
20,000
40,000
60,000
80,000
100,000
120,000
2000 2001 2002 2003 2004 2005 2006
19
Warehouse RHLF shares
• RHLF owns shares in the following number of clients: – Protea Financial Services Group– Norufin Housing– Lendcor– Indlu Finance– Izwe– Bayport
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Organogram Willem van Emmenis
Managing Director
Client Relation-
ships
Business Develop-
ment
Risk Manage-
ment
Financial Manage-
ment
Xoliswa Bebula
Client Executive
Katleho
Nchapa
Client Executive
Tsaliko
Ntoampe
Client Executive
Jabulani Fakazi
Business Relations Manager
Makgala-borwa Maila
Risk Manager
Andrew Jager
Chief Financial Officer
Corinthia Ndatsa
Business Relations
Officer
William Mlatsji
Risk Analyst
Porche Knauf
Book- keeper
Myriam Kheza
Program Admin-istrator
Rhona Mokhele
Office Assistant
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Employment Equity
African Coloured Asian White Total
Grade F M F M F M F M
5 2 2
4 3 4 7
3 1 1 2
2
1 1
Total 5 4 1 2 12
% 42% 33% 8% 17%
% 75% 0% 0% 25%
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RHLF Development Impact: Some key RHLF Development Impact: Some key findingsfindings
• Loan usage: 69% (vs 70% RHLF target for 2003/04 FY)
of the loans are used for developmental purposes
– 54% housing
– 14% education
– 1% working capital for in micro/survivalist
enterprises
• Satisfaction: 61% of the end-users said they were
satisfied with the outcome of the loan use, and
• 68% said they would recommend their retail lender to
friends and relatives.
• 55% of the end-users are females
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RHLF Development Impact: Some key RHLF Development Impact: Some key findings (cont…)findings (cont…)
• Direct correlation between end-users receiving consumer
education and those who are up-to-date with payments;
– But only 19% report having received consumer
education
• 11% of end-users live in RDP housing, and 3% used the
loan to top up subsidy at acquisition
• End-users live in the RDP house an average of 24 months
before borrowing to improve or extend the RDP house
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RHLF Development ImpactRHLF Development Impact: Some key : Some key findings (cont…)findings (cont…)
• On average end-users who built new space on the RDP
house or existing dwelling, added 22 m2 to the house at
cost effective amount of R617 per square metre
• 7% of the end-users are informally employed
• RHLF currently has small exposure of 3.6% of loans
surveyed in 3 ISRDP nodes in Eastern Cape and
Limpopo/Mpumalanga
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Key Environmental Factors
Financial Sector
Charter
Land & Agric. Policy
Changing Laws &
Regulations
Debit Order
Monopoly
DFI Traffic
Jam
R Pearson 2003: Updated Retreat March 2005
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RHLF’s response to Key RHLF’s response to Key Environmental factorsEnvironmental factors
• Financial Sector Charter – Constructive engagement with
banks, funding of 2 clients reaching RHLF’s maximum
exposure limits
• Land and Agricultural Policy – Share experiences in micro-
finance for housing with Mafisa
• Debit order monopoly – RHLF made representations to
SARB and PASA
• DFI mandates reviewed and confirmed with
implementation gaps to be addressed
• New National Credit Bill – bigger loans and longer terms at
lower cost to borrower
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Rural Housing Loan Fund ForecastKey objectives and indicators Full Year Full Year YTD YTD
Actual Budget Actual Budget31-Mar-04 31-Mar-05 31-Mar-05 31-Mar-06 Variance
Cumulative number of facilities approved number 59 63 69 74 7.2%
Cumulative number of facilities disbursed number 50 55 60 66 10.0%
Average interest rate charged on loans % 15.35% 15.46% 14.03% 15.43% 10.0%
Cumulative number of clients 34 35 36 37 2.8%
Cumulative number of BEE clients 16 16 16 17 6.3%
Number of active clients number 4 6 6 6 0.0%
Number of clients in distress number 0 0 1 1 0.0
Total cumulative commitments R 287,539,496 343,004,496 353,189,496 415,189,496 17.6%Cumulative loan facilities committed since inception R 270,284,701 325,284,701 335,434,701 397,434,701 18.5%
Cumulative equity investments committed R 17,254,795 17,719,795 17,754,795 17,754,795 0.0%
Total cumulative disbursements R 260,974,871 335,739,871 330,120,386 436,120,386 32.1%Cumulative loan amounts disbursed R 251,144,826 325,444,826 319,744,826 425,744,826 33.2%
Cumulative equity investments disbursed R 9,830,045 10,295,045 10,375,560 10,375,560 0.0%
Total disbursements as percentage of total commitments % 91 98 93 107 14.6%
Total new commitments p.a. R 76,999,750 55,465,000 65,650,000 62,000,000 -5.6%New loan facilities committed p.a. R 74,830,000 55,000,000 65,150,000 62,000,000 -4.8%
New equity investments committed p.a. R 2,169,750 465,000 500,000 0 -100.0%
Total disbursement p.a. R 38,520,000 74,765,000 69,145,515 106,000,000 53.3%Loan amounts disbursed p.a. R 38,070,000 74,300,000 68,600,000 106,000,000 54.5%
Equity investments disbursed p.a. R 450,000 465,000 545,515 0 -100.0%
Average size of end user loans R 4,720 5,000 4,736 5,300 11.9%
Number of new end user loans financed number 8,006 14,860 14,310 20,000 39.8%
Cumulative number of end user loans financed number 53,209 68,069 67,519 87,519 29.6%
Potential number of end user loans number 66,466 81,326 79,759 99,759 25.1%
MDF grant amounts disbursed per annum R 1,153,995 800,000 100,000 - -100.0%
Cumulative MDF grant amounts disbursed R 6,628,580 7,428,580 6,728,580 6,728,580 0.0%
Cumulative number of MDF grants number 50 54 50 50 0.0%
Average MDF grant size R 132,572 137,566 134,572 134,572 0.0%
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Audited Budget Actual Budget %Sustainability indicators 31-Mar-04 31-Mar-05 31-Mar-05 31-Mar-06 Variance
Total capital 132,950,500 184,768,164 132,482,124 153,922,760 -13.9%
Loan capital - 51,225,000 - 20,510,000 0.0%
Capital utilised in operations 61,397,280 92,082,550 99,810,840 112,925,448 -11.6%
Capital utilised in other investments - - - - 0.0%
Operating costs excluding MDF grants R 9,522,635 11,180,820 10,259,821 10,669,355 -3.8%
Interest income R 17,620,865 14,076,025 14,550,348 17,828,834 -18.4%Interest Income on Advances 11,855,794 11,142,958 10,221,287 16,972,183 -39.8%Interest Income on Investments (after funding costs) 5,765,071 2,933,067 4,329,061 856,651 405.3%
Losses on loans and investments 17,803,920 3,343,500 5,796,895 5,830,000 -0.6%
Costs to income ratio % 54.04 79.43 70.51 59.84 17.8%
Net surplus/(deficit) before tax and MDF grants R (12,006,612) (448,295) (468,376) 1,329,480 -135.2%
Advances book outstanding before impairment R 56,800,641 87,628,750 101,041,905 119,002,671 -15.1%
Equity investments before impairment R 5,450,878 6,052,058 5,235,889 5,235,889 0.0%
Impairments as % of advances % 9.0% 6.2% 11.8% 14.9% -21.0%
Total impairments as % of advances and investments % 16.0% 11.9% 15.5% 17.9% -13.6%
Cash 71,553,220 41,460,614 32,671,284 40,997,312 -20.3%
Audited Budget Actual Budget %Sustainability indicators 31-Mar-04 31-Mar-05 31-Mar-05 31-Mar-06 Variance
Total capital 132,950,500 184,768,164 132,482,124 153,922,760 16.2%
Loan capital - 51,225,000 - 20,510,000 #DIV/0!
Capital utilised in operations 61,397,280 92,082,550 99,810,840 112,925,448 13.1%
Capital utilised in other investments - - - - #DIV/0!
Operating costs excluding MDF grants R 9,522,635 11,180,820 10,259,821 10,669,355 4.0%
Interest income R 17,620,865 14,076,025 14,550,348 17,828,834 22.5%Interest Income on Advances 11,855,794 11,142,958 10,221,287 16,972,183 66.0%Interest Income on Investments (after funding costs) 5,765,071 2,933,067 4,329,061 856,651 -80.2%
Losses on loans and investments 17,803,920 3,343,500 5,796,895 5,830,000 0.6%
Costs to income ratio % 54.04 79.43 70.51 59.84 15.1%
Net surplus/(deficit) before tax and MDF grants R (12,006,612) (448,295) (468,376) 1,329,480 383.8%
Advances book outstanding before impairment R 56,800,641 87,628,750 101,041,905 119,002,671 17.8%
Equity investments before impairment R 5,450,878 6,052,058 5,235,889 5,235,889 0.0%
Impairments as % of advances % 9.0% 6.2% 11.8% 14.9% 26.5%
Total impairments as % of advances and investments % 16.0% 11.9% 15.5% 17.9% 15.7%
Cash 71,553,220 41,460,614 32,671,284 40,997,312 25.5%
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INCOME STATEMENT RURAL HOUSING LOAN FUND Mar-05 Mar-06 Mar-07 Mar-08 Mar-09
Full Full Full Full FullYear Year Year Year Year
Interest Received Advances 10,221,287 16,972,183 18,631,201 20,415,206 21,531,996 Interest Paid - (1,870,000) (2,040,000) (2,040,000) (2,040,000)
10,221,287 15,102,183 16,591,201 18,375,206 19,491,996 Provision for bad debts (5,796,895) (5,830,000) (5,907,000) (6,138,000) (6,105,000)
4,424,392 9,272,183 10,684,201 12,237,206 13,386,996 Other income 816,619 - - - -
5,241,011 9,272,183 10,684,201 12,237,206 13,386,996 Interest received surplus funds 4,329,061 2,726,651 2,628,594 2,533,822 2,441,489
9,570,072 11,998,835 13,312,795 14,771,029 15,828,485 Operating Expenditure 10,259,821 10,669,355 11,404,488 12,202,802 13,056,998
(689,749) 1,329,480 1,908,307 2,568,226 2,771,487 Exchange Gain / Loss 221,373 - - - -
(468,376) 1,329,480 1,908,307 2,568,226 2,771,487 MDF Grants - - - - -
(468,376) 1,329,480 1,908,307 2,568,226 2,771,487 Taxation - Current Taxation - (1,710,594) (1,901,567) (2,151,518) (2,205,071) - Deferred Taxation 1,311,750 1,329,075 1,381,050 1,373,625
(468,376) 930,636 1,335,815 1,797,758 1,940,041
Bad Debts 5.5%Interest paid 10.2%
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BUDGETED BALANCE SHEET RURAL HOUSING LOAN FUND
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09ASSETS
Gross Advances 101,041,905 119,002,671 127,825,213 136,965,158 139,013,028 Impairments (11,899,593) (17,729,593) (23,636,593) (29,774,593) (35,879,593) Net Advances 89,142,312 101,273,078 104,188,620 107,190,565 103,133,435
Investment in Associates 754,019 754,019 754,019 754,019 754,019
Fixed Assets 885,815 557,907 89,163 470,419 1,675
Deferred Tax 9,822,590 11,134,340 12,463,415 13,844,465 15,218,090
Current Assets33,201,291 41,527,319 39,087,260 36,120,768 41,213,058
Deposits 52,765 52,765 52,765 52,765 52,765 Sundry Debtors 75,300 75,300 75,300 75,300 75,300 Receiver of Revenue 401,942 401,942 401,942 401,942 401,942 Accompanying Measure - - - - - Bank Balances 32,671,284 40,997,312 38,557,253 35,590,761 40,683,051
133,806,027 155,246,662 156,582,477 158,380,236 160,320,277
EQUITY AND LIABILITIES
Grant Capital 154,762,590 154,762,590 154,762,590 154,762,590 154,762,590 Distributable Reserves (22,280,466) (21,349,830) (20,014,015) (18,216,257) (16,276,216)
132,482,124 133,412,760 134,748,575 136,546,333 138,486,374
Long Term LiabilitiesSoft Loan 20,510,000 20,510,000 20,510,000 20,510,000
Current Liabilities1,323,902 1,323,902 1,323,902 1,323,902 1,323,902
Sundry provisions 790,729 790,729 790,729 790,729 790,729 Accompanying Measure 305,787 305,787 305,787 305,787 305,787 Receiver of Revenue - - - - - Sundry Creditors 227,386 227,386 227,386 227,386 227,386
133,806,026 155,246,662 156,582,477 158,380,235 160,320,276
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CASHFLOWS Mar-06 Mar-07 Mar-08 Mar-09RURAL HOUSING LOAN FUND
Cash balances
Std Jersey 11,631,958 12,472,833 13,374,495 14,341,338 Std Bank Curr 1 866,929 866,929 866,929 866,929 Std Bank Curr 2 + Sal 132,642 132,642 132,642 132,642 SCMB Notice Deposit 185,838 197,792 210,514 224,054 Investec Call 28,179,945 24,887,058 21,006,181 25,118,087
40,997,312 38,557,253 35,590,761 40,683,051
Liquidity ratioCash expensesTotal expenses 10,669,355 11,404,488 12,202,802 13,056,998 Expenses excl Bad debt Less: Depreciation (457,908) (468,744) (468,744) (468,744) Less: Bad Debt provision plus recoveries
10,211,447 10,935,744 11,734,058 12,588,254
Cash movement
Investec CallOpening balance 20,649,334 28,179,945 24,887,058 21,006,181 Disbursements (106,000,000) (107,400,000) (111,600,000) (111,000,000) Receipts 105,011,418 117,208,658 122,875,261 130,484,126 Cash expenses (10,211,447) (10,935,744) (11,734,058) (12,588,254) Transfer from offshore / current / soft loan 18,640,000 (2,040,000) (2,040,000) (2,040,000) Adjustment / Prov tax / Capex (1,840,594) (1,901,567) (3,001,518) (2,205,071) Capital for interest calculation 26,248,711 23,111,292 19,386,743 23,656,982
Interest @ 6.75% 6.75% 1,931,234 1,775,766 1,619,438 1,461,105 10.00%
Closing balance 28,179,945 24,887,058 21,006,181 25,118,087
SCMB Notice Deposit
Opening balance 174,607 185,838 197,792 210,514 Interest @ 8% 6.25% 11,231 11,953 12,722 13,541
Closing balance 185,838 197,792 210,514 224,054
Offshore Funds - Domestic Currency
Opening balance 10,847,772 11,631,958 12,472,833 13,374,495 Interest earned 7.00% 784,186 840,875 901,662 966,843 Transfers outTransfers inClosing balance 11,631,958 12,472,833 13,374,495 14,341,338
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Rural Housing Loan FundINCOME STATEMENTAUDITED 2004, FORECAST MARCH 2005 AND BUDGET MARCH 2006
Audited Unaudited Budget %2004 2005 2006 ChangeYTD YTD YTD
Interest earned 17,620,865 14,550,348 19,698,835 35%Interest paid - - (1,870,000) #DIV/0!Gross Margin 17,620,865 14,550,348 17,828,835 23%Bad debts (17,803,920) (3,384,895) (5,830,000) 72%Net Margin (183,055) 11,165,453 11,998,835 7%Other Income (2,300,922) 816,619 - -100%Total Income (2,483,977) 11,982,072 11,998,835 0%
Less: Expenses ** 9,522,635 10,259,821 10,669,355 4%Audit Fees 277,590 345,016 326,040 -6%Bank Charges 20,731 21,894 24,000 10%Computer Expenses 30,876 10,873 18,000 66%Conferences 27,831 35,911 87,996 145%Consulting Fees 628,045 329,138 588,504 79%Courier & Postage 44,381 25,909 30,000 16%Depreciation 229,737 276,302 457,908 66%Directors Fees 23,000 270,828 368,004 36%Donations 15,000 27,899 Entertainment Expenses 30,248 17,441 36,000 106%Insurance 86,085 89,019 102,420 15%IT Hosting & ASP Rentals 415,506 323,755 130,476 -60%Legal Fees 823,452 284,133 570,000 101%Levies 68,281 76,742 80,076 4%Office Equipment Rentals 474,798 547,126 21,791 -96%Office Minor Purchases 10,755 9,257 14,196 53%Marketing & Promotions 992,965 1,235,124 875,004 -29%Office Plants 11,923 11,931 12,576 5%Payroll & HR Costs 47,649 68,592 159,384 132%Penalties - - Photocopy charges 8,578 9,615 15,600 62%Printing 23,986 11,084 42,996 288%Rent Paid 437,520 485,197 455,604 -6%Repairs & Maintenance 53,502 44,639 18,600 -58%Salaries & Wages 4,198,519 4,887,356 5,228,904 7%Sponsorships - 140,004 #DIV/0!Staff Training 116,296 148,785 184,044 24%Staff & Client Refreshments 20,877 34,753 39,996 15%Stationery 45,999 39,869 66,000 66%Subscriptions 21,365 47,360 38,832 -18%Telephone & Fax 107,489 84,240 86,400 3%Travel & Accommodation 229,651 460,033 450,000 -2%
Net Profit/(Loss) before Tax (12,006,612) 1,722,251 1,329,480
Add. Protea FSG Impairment (2,412,000) * * = Excludes MDF grants (689,749)
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Thank You