1

BRIEFING ON THE NEF STRATEGY AND ANNUAL PERFORMANCE PLAN 2017/18

Presentation to the Select Committee on Trade & International Relations

Ms Philisiwe Mthethwa21 June 2017

Contents

Section Slide

1 About the NEF 3

2 Strategic Planning Framework & Objectives 5

3 Provincial Dynamics 14

4 NEF Annual Performance Plan 2017/18 24

5 Life to Date Performance Milestones 36

6 Key Priorities 38

7 Empowering Farmworkers to Become Entrepreneurs

49

8 Organisational Structure 59

2

About the NEF

3

NEF Mandate…Established by the

National Empowerment FundAct No. 105of 1998, the NEF is a driver and

a thought-leader in promoting andfacilitating black economic participation through the provision of financial and

non-financial support to black owned and managed businesses, as well as by promotinga culture of savings and investment

among black people.

The NEF is an agency of the dti and is the only DFI exclusively mandated to grow

B-BBEE

4

Broad Based Black Economic EmpowermentThe Codes of Good Practice

55

The Strategic Planning Framework…

NEF

Act

:O

bjec

tives

The

dti

Obj

ectiv

es Government Priorities:

1) Acceleration of economic growth and transformation, creating decent work and sustainable livelihoods;

2) Infrastructure development to achieve social and economic goals and rural development;

3) Skills and human resource development;4) Build a developmental state and improve public

service.

SectorsNEF• Tourism; Biofuels; Construction;

Agri-processing; Transport; ICT & Media;

Mining services; FranchisingIndustrial Policy Action Plan:• Automotives, components, medium

andheavy commercial vehicles

• Plastics, pharmaceuticals and chemicals

• Biofuels• Strengthening linkages between

culturalindustries and tourism

• Business process servicing

NEF Sectors in line with national industrial objectives

6

NEF MandateGrow black economic participation

Fund Management

1. Fund black-empowered businesses

2. Business plan toolkit

3. Mentorship support

4. Early-stage investments

5. TWR services

Asset Management

1. Investor Education

2. Public Share Offers

3. Enterprise Development

4. BEE Repository

Unpacking the NEF Mandate …

Culture of savings & investmentFinancial & non-financial support

7

Challenges/ Market FailuresMARKET FAILURES NEF SOLUTIONS

Limited own capitalFunding of between R250 000 and R75 million for start-up, expansion and equity transformation purposes as well as use of concessionaryfacilities. Non-descriptive on % of own contribution.

Limited management skills, including financial, marketing and technical expertise

Entrepreneurship Development tools and dedicated mentorship support.

Access to affordable capitalCompetitive cost of finance with a higher risk appetite as well as requirement for operational involvement (sweat-capital) reduces the need for collateral payment.

Lack of accurate and reliable financial information

Dedicated pre-investment mentorship support and technical assistance with our partners.

Poor Quality Business Plans Collaboration with other Government agencies like seda, incubation, entrepreneurial training and general pre-investment support and NEF Online Business Plan-Tool Kit.

Lower bargaining and strong competition power from established businesses with entrenched market dominance

Linkages and emphasis on the implementation of the codes of good practice (B-BBEE).

Wholesale Franchisor Facilities (Engen, Nandos, etc.)Lack of access to local and international markets

Linkages with off-takers. Relationships with franchisors and corporates for access to markets.

8

8

SEDA to provide NFS to co-opsLand Bank – Agri focused

Sefa – Overlap R250k to R5milOther DFI’s & banks as above

SETAs

As aboveDepartment of Labour

IDC – Higher value thresholdSefa – Lower value thresholdDBSA – Infrastructure focusedLand Bank – Agri focusedBanks – Security focused

OTHER DFI’s & BANKS

Rural & Community Development Funding- “Contribution Beneficiaries”

Start up and Expansion Capital: Procurement Contracts FundingStart up and Expansion Capital establishes “Beneficiary Entity”

Indirect: All products via approval process

Acquisition FinanceIndirect: Capital Markets; Start up; Expansion Capital

Acquisition FinanceCapital Markets FundLiquidity and Warehousing FundStrategic Projects FundIndirect: Start up; Expansion Capital

NEF FUNDING PRODUCT

Socio-Economic Dev.Weighting 5 points

Enterprise & Supplier DevelopmentWeighting 40 points

Skills DevelopmentWeighting 20 points

Management ControlWeighting 15 points

OwnershipWeighting 25 points

CODE OF GOOD PRACTICE

NEF Positioning as a B-BBEE Funder…“The NEF provides the funding solutions for the implementation of the B-BBEE Codes of Good Practice.”

Funding Across the Economic Spectrum

5specialist

funds

9

Fund Focus Threshold

1 iMbewu Fund (SMEs)

SME Fund providing Entrepreneurship, Procurement & Franchise Finance

R250 000 –R15 million

2 Women Empowerment

Fund (WEF)

Achieve minimum 40% of enterprises owned and managed by black women

R250 000 –R75 million

3 Rural & Community

Development Fund

Supporting rural economic development through New Ventures,Acquisition, Expansion & Greenfields Finance

R1 million –R50 million

4 uMnotho Fund Funding of New Ventures, Acquisition, Project Finance, Expansion, Capital Markets, Liquidity & Warehousing

R2 million –R75 million

5 Strategic Projects Fund

Early-stage investment inindustrial / manufacturingtransactions

Up to R75 million

Non-Financial SupportPre-investmentAs the first-point-of-contact the unit provides product advisory services, manages the online business-plan solution, manages the administration of applications, incubation and entrepreneurial training.

Socio Economic DevelopmentEmpower black people in existing NEF transactions and other broad based groups through various social development interventions such as social facilitation, entrepreneurial training, investor education, corporate governance training and market access for the acceleration of meaningful participation.

Post-investment supportMonitor investments, provide ongoing portfolio management, manage mentorship support and collections as well as legal compliance

Turnarounds, Workouts and RestructuringRehabilitate distressed transactions and reduce impairments Through a combination of measures including balance sheet restructuring, equity and /or working capital injection, operational restructuring, introduction of a strategic equity partner and / or turnaround specialist and business rescue.

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11

Key Strategic Objectives…

• Promote and support business ventures established and managed by black people;

• Promote the understanding of equity ownership among black people;

• Provide black people with direct and indirect opportunities to acquire share interests in State Owned and private business enterprises;

• Encourage and promote investments, savings and meaningful economic participation among black people.

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1. To provide finance to business ventures established and managed by black people.

2. Invest in black empowered businesses that have high employment creating opportunities

3. Support the participation of black women in the economy

4. Facilitate investment across all provinces in South Africa

5. Encourage and promote savings, investment and meaningful economic participation by black people

6. Advance black economic empowerment through commercially sustainable enterprises

7. Establish the NEF in the South African economy as a credible and meaningful DFI

8. Establish the NEF as a sustainable DFI.

The NEF’s strategic outcome oriented goals are to:

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“The Empowerment Dividend”

• Broad Based Black Economic Empowerment

• Ownership, management control, employment equity etc.

• Black Women Empowerment

• Job Creation

• Growth Sectors

• Geographic Spread

• Investment Return

The assessment of impact is not driven only by financial returns but by measurement in terms of “The Empowerment Dividend”

made up as follows:

NEF’s Performance and Investment Criteria…

Provincial Dynamics Striving for growth across all provinces

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Invested growth across all provinces

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1. As a national Development Finance institution (DFI) the NEF is committed to ensuring that its products and services reach the entire nation.

2. Since the launch of the NEF Asonge Share Scheme in July 2007 the NEF has implemented various measures and interventions to strive towards an even, representative and equitable distribution of its services across the country.

3. As a result, the NEF’s invested presence in Gauteng has come down from above 60% of total disbursed funds in 2006, to 44% by March 2017.

4. This is not as a result of a reduction of funding in Gauteng, but is a direct consequence of planned, targeted and increased funding in the other 8 provinces because they are integral to South Africa's economy, comprising 76% of the population.

Reasons for growth across all provinces

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Year Intervention Outcome

1 2006 -2017

Local community & stakeholder workshops

Every year present & exhibit in a growing number of local community workshops hosted by national, provincial and municipal governments, as well as various business and civic stakeholders.

2 2007 –2017 Investor Education

Reached over 30 000 participants through 138 community seminars on how to save and invest, personal financial discipline, shares, dividends, bonds, the property and money markets, in villages, townships and cities countrywide.

3 2007 NEF Asonge Share Scheme

Attracted 87 000 investors (47% in GP, 16% in KZN, 9% in WC, 7% in LP, 6% each in NW & MPu, 4% each in EC & FS, and 1% in NC).

4 2007 –2017

Strategic Projects Fund

Venture capital fund responsible for driving the NEF’s contribution to industrialisation by increasing participation of black people in early-stage projects, especially in poverty nodes.

5 2008 –2017

Rural & Community Development Fund

Establishment of the Fund with the aim of unlocking the economic value that resides in our Rural Communities, through the provision of Funding to identified rural and community entrepreneurs, arranged as co-operatives..

6 2007 -2017

Advertising & media coverage Placement of adverts and stories in local, regional and national media countrywide.

7 2009 Business Plan & Mentorship launch

Workshops in every province raising awareness on the online solution for developing own business plans with financial projections. Over 24 000 registered users have accessed the tool.

8 2009 –2010

Eyethu Sonke Le BEE!

4 destinations in each province promoting understanding of B-BBEE, funding & access to government & private-sector procurement & enterprise development opportunities.

9 2009 -2017 Regional offices Opened regional offices in all provinces.

10 2011 –2017

Incubation &entrepreneurial training

Business skills training provided to over 2 898 beneficiaries who attended 109seminars to date, countrywide.

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Geographic spread of investments

GDP Source: Statistics South Africa; Gross Domestic Product, Fourth quarter 2016.

EC8%

FS2%

GP44%

KZN16%

LP6%

MP5%

NC2%

NW4% WC

13%

NEF Invested Portfolio by region by value since inception - 31 March 2017

WC

NW

NC

MP

LP

KZN

GP

FS

EC 7.8

5.1

34.1

16.0

7.2

7.5

2.1

6.5

13.6

GDP Contribution by Province - 2015

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Geographic spread of Rural & Community Development Fund (RCDF)

Widely represented in all the Provinces, though still low in FS and NC, but evenly concentrated in other provinces, with EC, KZN and MP predominantly sharing a significant % of businesses funded, principally because of tourism in KZN, with agro-processing (dairy & feedlot) and shopping complexes. The rest of the investment is spread across other Provinces but very low.

Limpopo4% Mpumalanga

5% Gauteng15%

North West11%

KwaZulu-Natal38%

Free State5%

Northern Cape1%

Eastern Cape19%

Western Cape3%

Geographical Spread of Investment by RCDF to date

Province % No of deals R000sLimpopo 3.72% 2 24 800

Mpumalanga 5.06% 4 33 703Gauteng 14.63% 7 97 542

North West 11.03% 5 73 500

KwaZulu-Natal 38.02% 13 253 469

Free State 5.42% 4 36 150

Northern Cape 0.54% 1 3 612Eastern Cape 19.04% 8 126 913

Western Cape 2.54% 2 16 900Total 100% 46 666 589

RCDF Investment Spread by Province

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Geographic spread of Strategic Projects Fund (SPF)

The SPF portfolio by value is spread almost evenly in KZN, WC, FS and GP. The NEF is making progress in increasing funding in other provinces with more projects as indicated by the portfolio by number in Mpumalanga. Regional offices are working extensively in increasing participation in other provinces.

SPF Investment Spread by Province

Province No of deals R000s %

Limpopo 2 12 000 1%

Mpumalanga 4 90 800 10%

Gauteng 7 78 336 9%

North West 3 52 216 6%

KwaZulu-Natal 4 242 900 28%

Free State 1 162 357 18%

Eastern Cape 2 131 957 15%

Western Cape 4 108 000 12%

Total 27 878 566 100%

Limpopo1%

Mpumalanga

10%Gauteng

9%

North West6%

KwaZulu-Natal28%

Free State18%

Eastern Cape15%

Western Cape12%

Geographic Spread of Investment by SPF

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iMbewu Investment Spread by Province

Province No of deals R000s %

Limpopo 24 143 665 10%Mpumalanga 27 113 191 8%

Gauteng 197 678 858 47%North West 13 41 420 3%

KwaZulu-Natal 40 168 205 12%Free State 22 32 802 2%

Northern Cape 1 8 750 1%Eastern Cape 24 120 072 8%Western Cape 51 142 607 10%

Total 399 1 449 570 100%

Geographic spread of iMbewu

Limpopo10% Mpumalanga

8%

Gauteng47%North

West3%

KwaZulu-Natal12%

Free State2%

Northern Cape1%

Eastern Cape8%

Western Cape10%

Geographic Spread of Investment by iMbewu

The iMbewu Fund portfolio by value is spread almost evenly in the EC, WC, LP and MP with GP being dominant. The NEF is making progress in increasing funding in other provinces with Gauteng at less than 50%. Regional offices are working extensively in increasing participation in other provinces.

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uMnotho Investment Spread by Province

Province No of deals R000s %

Limpopo 6 167 983 6%Mpumalanga 7 73 346 3%

Gauteng 87 1 678 448 59%North West 2 110 402 4%

KwaZulu-Natal 23 312 275 11%Free State 1 20 704 1%

Northern Cape 3 95 237 3%Eastern Cape 11 199 215 7%Western Cape 12 171 369 6%

Total 152 2 828 979 100%

Geographic spread of uMnotho

Limpopo6%

Mpumalanga3%

Gauteng59%

North West4%

KwaZulu-Natal11%

Free State1%

Northern Cape3%

Eastern Cape7%

Western Cape6%

Geographic Spread of Investment by uMnotho

uMnotho’s strategic intent is to drive black participation in medium to large enterprises, the majority of which are domiciled in Gauteng, which is reflected in this slide with the province comprising 59% of the Fund’s portfolio.

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Regional Offices1. The NEF has regional office presence in all

provinces. In the last financial year, approximately 65% of the number of approved transactions emanated from the regional offices and Pre-Investment Unit

2. This national presence ensures that the NEF reaches every area of the country including the remotest rural areas, where the poorest of the poor mostly reside.

3. The NEF always takes part in national (the dti, DED & DSBD), provincial and local government roadshows, as well as various other stakeholder events, to take its message to the people.

4. It is as a result of this that the NEF has successfully funded business ventures through its Rural and Community Development Fund, whose objective is to unlock value in rural and township communities.

Geographic Spread – Investor Education

Investor Education campaign has been rolled out in the Eastern Cape, Northern Cape, Free State, Limpopo, Western Cape,

North West, KZN, Mpumalanga and Gauteng with 4 seminars per province. Attendees: over 30 000 participants.

z

NORTHERN CAPE

FREE STATE

LIMPOPO

KZN

EASTERN CAPE

MPUMALANGA

NORTH WEST

GP

WESTERN CAPE

23

Mahikeng, Lichtenburg, Rustenburg,

Hammanskraal, Vryburg, Taung

Klerksdorp, Potchefstroom,

Vuselela

Kimberley, Prieska,Kakamas, Keimoes,Upinton,

Kathu, Barkley West, Kuruman

Saldanha, Langa, Bellville Nyanga, Mannenburg / Gugulethu, Worcester, Caledon, Cornville –

George, Kwanonqaba-Mossel Bay, Kraaifontein, Saldanha, Malmesbury,

Paarl (Wellington)

Port Elizabeth, East London, King Williams Town, Mount Frere, Butterworth, Umtata,

Fort Beaufort, Grahamstown

Bloemfontein, Botshabelo, Welkom, Thaba Nchu, Qwaqwa,

Kroonstad, Ladybrand, Bethlehem

Seshego, Lebowakgomo, Lephalale, Bela-Bela, Thohoyandou, Giyani, Phalaborwa, Tzaneen,

Madzivhandila Agricultural College

Newcastle, Dundee, Ladysmith, Estcourt,

Pietermaritzburg, Port Shepstone, Newlands

East, Chatsworth, Umlazi. Kwa Mashu, Ulundi, Richards Bay,

Umfolozi

Springs, AlexanderSoweto, Diepsloot Ext 2, Soshanguve, Mamelodi

West, Krugersdorp Kagiso2, Sebokeng, Ekurhuleni,

Bronkhorstspruit, Tsakane, Katlehong,

Tembisa

Delmas Botleng,Secunda,

Ermelo, Piet RetiefEmalahleni, Middleburg,

Mbombela, Hazyview, MRTT Hotel Academy

NEF booklet on how to save and invest

NEF Annual Performance Plan

2017/18

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NEF Strategic Plan 2017/2018

Growing Black

Economic Participation

Advance B-BBEEApproval Targets:

2017/18 = R0.950bn2018/19 = R1.046bn2019/20 = R1.331bn Maximise Empowerment

DividendNew & existing jobs to be

supported:2017/18 = 4 0642018/19 = 5 6292019/20 = 7 170

Fund a Woman, Fund a Nation

40% of funding to be disbursed each year to women led enterprisesPromote a Culture of

Savings & Investment Host 32 Investor

Education seminars per year countrywide, in

villages & townships, on shares, dividends,

bonds, property & money markets etc

Creating Black Industrialists

Commercialise strategic projects geared to support

over 85 000 jobs

Financial Efficiency & Sustainability

Impairment Provisions 18%ROI between 9% – 10%

Collections ratio up to 80%

Other ImperativesObjective Outcome

1 GeographicSpread Grow investments across all provinces

2SustainableBlack Businesses

Provide ongoing business-planning & mentorship support, business & corporate governance training & incubation support

3 Reputation management

Entrench commitment to integrity among staff, investees and suppliers 25

Strategic Objective 1:

Provide finance to business ventures established and managed by black people

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Approvals & Disbursements

27

Targets over strategic Period in RmYear Approvals Commitments Disbursements

2017/18 950 745 6602018/19 1,046 839 9152019/20 1,331 1,065 1,165

Moratorum

749 749

1162

1332

418

895

1248

1067

0

200

400

600

800

1000

1200

1400

NEF Approvals by Value (R million)

424377

597

704636

562

819

699

0

100

200

300

400

500

600

700

800

900

NEF Disbursements by Value (R million)

28

Strategic Objective 2: Invest in black empowered businesses that have high employment creating opportunities.

Maximizing the Empowerment Dividend

28

Job-Creation since inception

29

31 March 2011

25 500 jobs

31 March 2012

28 624 jobs

31 March 2013

44 179jobs

31 March 2014

47 800 jobs

31 March 2015

81 618 jobs

Targeted number of jobs expected to be created or supportedYear No. of jobs

2017/18 Support 4 064 new or existing job opportunities2018/19 Support 5 629 new or existing job opportunities

2019/20 Support 7 170 new or existing job opportunities

31 March 2016

86 859jobs

31 March2017

92 189jobs

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Strategic Objective 3: Support the participation of black women in the economy

Maximizing the Empowerment Dividend

Targeted women ownershipYear Percentage of (Annual)

Portfolio Disbursed2017/18 40%

2018/19 40%

2019/20 40%

2016/17Performance

34% of portfolio disbursed is owned

by women

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Strategic Objective 4: Facilitate investment across all provinces in South Africa

Maximizing the Empowerment Dividend

Targeted Disbursements in under-represented provinces (NC, NW, FS,

LP, MP &EC)Year Percentage of Annual

Disbursements2017/18 25%2018/19 25%2019/20 25%

EC8%

FS2%

GP44%

KZN16%

LP6%

MP5%

NC2%

NW4%

WC13%

NEF Invested Portfolio by region by value since inception - 31 March 2017

32

Strategic Objective 5: Encourage & promote savings, investment & meaningful economic participation by black people

Optimising Non-Financial Support

Targeted number of investor education seminars held across the country

Year No. of Seminars per year2017/18 322018/19 322019/20 32

2016/17 Performance

48 investor education seminars were held

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Strategic Objective 6: Black economic empowerment is advanced through commercially sustainable enterprises

Optimising Non-Financial Support

Indicators 2016/17 Performance

2017/18 2018/19 2019/20

6.1 Number of Business Today Training Sessions provided

21 18 18 18

6.2 Number of entrepreneurs who successfully complete business incubation

30 15 15 15

6.3 Number of Social Facilitation sessions for NEF investees

42 18 18 18

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Strategic Objective 7: Establish the NEF in the South African economy as a credible and meaningful DFI

Optimising Non-Financial Support

Targeted brand awareness levels (*biennial survey)

Year Brand awareness levels2017/18 N/A*2018/19 75%2019/20 N/A*

2014/15 Performance

81% Brand awareness2016/17 Performance

Target = 70%86% Brand awareness

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Strategic Objective 8: Establish the NEF as a sustainable DFI.

Financial Efficiency And Sustainability

Indicators 2016/17 Performance

2017/18 2018/19 2019/20

8.1 Percentage of Portfolio Impaired

17.60% 18% 18% 18%

8.2 Targeted ROI 8.03% 9%-10% 9%-10% 9%-10%8.3 Collections Ratios

101.79% 80% 80% 80%

Life to Date Performance MilestonesOutput Achievements

1 Approvals Benefited black entrepreneurs through approval of 852 transactions worthmore than R8.6 billion across the country.

2 Disbursement Approximately R5.8 billion has been disbursed to these companies since inception.

3 Integrity Secured unqualified external audit opinions for 11 years running.

4 Supporting jobs To date the NEF has supported in excess of 92 189 jobs (new jobs 63 989 ).

5 Industrialisation 27 strategic and industrial projects worth R28.67 billion, with the potential to support over 85 000 jobs.

6 A culture of savings & investment

In a transaction worth over R1 billion the NEF Asonge Share Scheme madeavailable more than 12 million MTN shares to over 87 000 investorscomprising black individuals and groups. 49% of investors were women.

7 Investor educationReached over 30 000 people in villages and townships through 138community seminars on how to save and invest, personal financial discipline,shares, dividends, bonds, the property and money markets.

8 Entrepreneurship training / incubation

Business skills training provided over 2 898 potential entrepreneurs who attended 109 seminars from 2012 to date.

9 National footprintRegional offices in all provinces. Approximately 65% of the number ofapproved transactions emanated from the regional offices and Pre-InvestmentUnit, year to date as at 31 March 2017.

10 Collections Over R2.3 billion has been repaid by investees.36

Cash Collected

37

Over R2.3 billion collected cumulatively from loans disbursed across the country, in black-owned and managed businesses across virtually all sectors of the economy.

Portfolio Receipts (Rm)

Key Priorities

38

1. RECAPITALISATION:• IDC

o The business combination process with the IDC has been approved by the

Minister of Trade & Industry and the Minister of Economic Development. The

process is now moving through the requisite legal and regulatory processes.

o As part of the business combination process, the Ministers have recommended

that the IDC grants the NEF a bridging facility effective 1 April 2017 to continue

its operations pending finalisation of the business combination process. The IDC

has since granted a facility of R500 million. However the terms of the facility are

still being negotiated.

• PIC

o An application for a PIC facility of R1 billion is currently in progress. The PIC has

concluded a due diligence process and the application is going through to its

relevant approval structures.

• UIF

o The NEF has applied for subsidies for non-financial support. An application for

R50 million has been submitted to UIF’s Labour Activation Programme which

promotes programmes that create/preserve jobs.

Projected unencumbered cash position

39

Notes:

• Actual cash at 31 March R1.35 billion

• R369 million uncommitted cash at hand

• To discharge 2017/18 strategy, at least R500 million would be required as cash injection

Key Priorities (cont…)

2. CREDIT RISK:

• Due to the high-risk mandate of the NEF, credit risk is considered a

critical-to-high exposure area.

• The tough economic conditions and low growth rates have negatively

impacted on businesses supported by the NEF, subsequently resulted in

an increasing number/value of transactions in distress. The recent

downgrade in credit ratings could aggravate economic conditions

• Initiatives to ensure the sustainability of the portfolio include:

o Enhanced screening, due diligence and credit risk assessment

processes.

o Increased focus on distressed clients through closer Post-Investment

monitoring and portfolio management.

o Improved credit collection processes.

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Key Priorities (cont…)

3. CONTINUED ALIGNMENT TO NATIONAL PRIORITIES:

• Harnessing economic growth potential & job creation – Explore growth

sectors and identify possible opportunities for the NEF.

• Black Industrialists Programme – to continue the development of black

industrialists through the Strategic Projects Fund.

• A lack of funding will negatively impact on the successful implementation of the

mandate.

4. PEOPLE RISK:

• The NEF could lose key personnel and specialist skills due to uncertainty

regarding the impact of the business combination processes.

• Interventions may be required in order to quell uncertainty and stabilise attrition

levels.

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5. Advocacy:

Alignment with government objectives – support is required to

promulgate legislation to effect new industries, allowing us to invest in

strategic sectors in support of key government initiatives and job

opportunities creation (See Mabele and Kenako Medical Case

Studies)

Key Priorities (cont…)

43

Alignment with government Objectives –Mabele Fuels Case Study:

Location Bothaville, Free State

Project Development Stage Pre-Financial Close

NEF Investment to date R62.35 million

NEF Equity 20.22%

Project Promoter Mabele Fuels Pty Ltd

Projected Financial Close Requirement R2.2 billion

Jobs 16 700

• The project intends to develop a circa 154 million litre per annum fuelgrade bioethanol plant in Bothaville, in the Free State Province.

• The plant feedstock is grain sorghum and the production methodologyinvolves a process utilising grain milling through starch conversion tosucrose as well as fermentation and drying that ultimately culminates inthe production of saleable bioethanol.

Mabele Fuels Case Study /cont…

Development impact of the project:• A high job creator with an estimated cost per job relatively low at

approximately R149,700;• Use of agricultural outputs in project creates opportunities for

community ownership through community trusts and/oremployee ownership schemes;

• Opportunity for rural socio-economic development;• A green environmentally friendly alternative to the conventional

use of fossil fuels;• Provides for greater fuel security in countries such as South

Africa with no oil reserves.

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Mabele Fuels Case Study /cont…

Support needed for the project:

• Financial close was reached in late 2012 with the expectation for fund

drawdown in 2013; plant should have been operational by October 2015.

• A key Condition Precedent to fund drawdown post Financial Close was the

finalisation of the Government’s Biofuels sector subsidy mechanism, which

unfortunately currently remains oustanding.

• The project is therefore still on hold pending a response from the

Department of Energy regarding the subsidy mechanism to be adopted for

the Biofuels Industry.

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Kenako Medical Case Study

Location Coega IDZ, Eastern Cape

Project Development Stage Financial Close

NEF Investment to date R75 million

NEF Equity 70%

Project Promoter Kenako Medical Pty Ltd

Projected Financial Close Requirement R180 million

Jobs 108

• Kenako intends to develop the sole manufacturing plant of normal and safety syringesin the SADC region.

• The plant will initially produce a total of 250 million syringes and 200 millionhypodermic needles per annum.

• The NEF commenced with a R7.2 million feasibility study funding in 2013 and gave ahands on approach in assisting the Black Industrialist in bringing the project tobankability.

• Earlier this year the NEF made a further commitment towards the construction of theplant bringing the NEF’s total investment to R75million.

Kenako Medical (cont…)

47

Development impact of Project

Specialised skills transfer for the operation and maintenance toKenako staff;

Import Replacement: Kenako will be the sole manufacture ofsyringes and needles in South Africa replacing 20% of imports intothe South African and SADC syringe markets;

NEF’s equity to be warehoused for the future benefit of B-BBEEentities; Kenako is currently 100% black owned;

Strategic Sector Alignment with IPAP2, NGP etc. Furthermorethe investment will be supporting a capable black industrialist;

Geographic Diversification: The project will be based at theCoega IDZ in the Eastern Cape, increasing investment in thiseconomically depressed region.

Support needed for the Project

• Partial Designation of government procurement of syringes by Department of health in order to secure sales for Kenako;

• Allow for exceptions to the generic requirements for designation by ITAC in projects of strategic nature such as Kenako;

• Expedite SAHPRA Regulation for medical devices in particular syringes to lower influx of poor quality imports;

• Assistance in obtaining grant funding for international product certifications i.e. FDA, CE etc.

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Kenako Medical (cont…)

Empowering farm workers to become entrepreneurs

49

Background

• The NEF and DRDLR concluded an MOU in January 2016 to partner in

implementing some DRDLR programs.

• The Honourable Minister Nkwinti requested the NEF to pilot 10 projects

under the “Strengthening of Relative Rights” programme (“SRR”) to

benefit mainly farm workers and communities to acquire economic

interests in the agricultural land and businesses where they are

working and/or living.

• The SRR policy entails the farmer acquiring 50% of the business, farm

workers acquiring 50% (of which 5% will be allocated to NEF) to be

operated under NEWCO. The land is then acquired by the state and

leased back to the business for 30 years.

• The NEF and DRDLR concluded a Service Level Agreement in

February 2016 to implement the SRR Pilot projects, which pilot, as

outlined below, was successful.

• DRDLR handed 30 SRR projects to the NEF for implementation by 31

March 2017.

50

Background Cont…

51

• The NEF scope of work is to:

o Undertake high level due diligence investigations after

receiving valuation reports from the Valuer General;

o Negotiate business and asset prices on behalf of DRDLR;

o Propose commercially sound transaction structures;

o Draft investment reports for submission to the Ministerial

Technical Task Team (MTTT) and the Ministerial Co-

ordinating Committee (MCM);

o Conclude legal agreements;

o Disburse committed funds;

o Facilitate the establishment of NEWCO’s and B-BBEE

structures;

o Act as an implementing agent for SRR on behalf of DRDLR;

o Provide social facilitation and Post Investment support.

Scope of NEF Work

• Due Diligence• Price negotiations• Transaction agreements

• Employee lists• Warehousing• Implementation

• Social facilitation• NEF 5% shareholder• Monitoring and mentorship

52

Milestones to dateName of

FarmProvince Number of

beneficiariesAmount

ApprovedIndustry Status

Dubchick Limpopo 6 R21 000 000 Game Farming Partly Disbursed

KleinmondenRivier

Eastern Cape

40 R10 500 000 Pineapple farming & Processing

Fully Disbursed

Sun Orange Farms

Eastern Cape

58 R38 067 000 Citrus Farm Agreements to be signed

Solms Delta Eastern Cape

45 R65 000 000 Vineyards for wine production

Fully Disbursed

BirburyFarming

Eastern Cape

29 R5 320 903 Pineapples Fully Disbursed

Westcliffe Farm

KwaZulu-Natal

55 R33 000 000 Vegetables, sugar cane, Timber

Partly Disbursed

Hoogland Western Cape

18 permanent180 Seasonal

R 75 100 000 Table Grapes, vegetables slice &dice

PartlyDisbursed

Louie Meyer North West 10 R55 238 000 Cattle farming PartlyDisbursed

Marolien Gauteng 102 R30 433 000 Herb Farm Agreementssigned

Saamstaan Western Cape

56 R160 492 000 Wine Grape Farming Agreements to be signed

JurgensBoedery

Limpopo 42 R44 000 000 Game Farm Agreements to be signed

Gannahoek Free State

253 R52 444 310 Nuts, Sheep, Crop & game

Approved

Zuurefontein WC 12 employees R 59 296 935 Potatoes & Onions Approved

Total R649 892 148

53

Milestones

Better prices negotiated

Going concern principle

Unlocking hidden value

30 farms worth over R1 bn

13 transactions approved R649 million

54

Milestones cont…

Strict disbursement terms

Retention of IP, trademarks, markets & goodwill

Pioneering a new approach in land restitution

55

Negotiations in progressName of

FarmProvince Beneficiaries Amount Industry

Bergstroom KZN 192 employees R 360 000 000 Maize, Cattle Farming

Bos Blanco FS 80 employees R 400 000 000 Game, cattle, grains

Masisweni EC 56 employees TBC Livestock, crop, processing

Morgenzon FS TBC TBC Cattle, sheep, game

Slagterskop NC 3 employees R 8 500 000 Sheep farming

Fremax Farms MP TBC R 410 000 000 Potato, maize, feedlot

Siyakhathamela KZN TBC TBC Sugar, Tannery, livestock

Thumamina KZN TBC TBC Sugar, Tannery, livestock

Seven Oaks KZN 100 employees TBC Sugar, timber, livestock

Mikon Farming MP 187 employees R 62 000 000 Poultry

Karsten Group NC TBC TBC Table grapes

TOTAL R 1 240 500 000

56

Developmental Impact

Social cohesion

Revitalisingrural economy

Security of tenure

OneHousehold

One Hectare

Farmworkers are

entrepreneurs

57

Plan Going Forward• To ensure the sustainability and efficient operation of all these business by

actively monitoring progress.• To establish corporate governance structures.• To promote more similar transformation partnerships with other

interested farmers in all provinces.• To empower through skills development, and capacity building of the

workers for active participation in the operation and management ofthese business.

• To develop Social development & empowerment plans from spin offopportunities.

• To Link the businesses to more international markets and createmarket linkages amongst them.

• To ensure the land tenure rights are realised by the beneficiaries.• To ensure that proper housing structures are built for the beneficiaries.• Implement the one household one hectare programme for more

economic activities.• Create smaller businesses on the household hectares and link them to

market.

58

Organizational Structure …

Executive (member of Exco)

Senior manager

Manager

STRATEGY & PLANNING

SYSTEMS & IT

CHIEF FINANCIAL OFFICER

FINANCE

SUPPLY CHAIN MANAGEMENT

COMPLIANCE & RISK

INTERNAL AUDIT

SECRETARIAT

CHAIRMAN

BOARD OF TRUSTEES

AUDIT COMMITTEE

RISK MANAGEMENT COMMITTEE

HUMAN CAPITAL & REMUNERATION COMMITTEE

BOARD INVESTMENT COMMITTEE

CHIEF EXECUTIVE OFFICERCHIEF EXECUTIVE OFFICER

LEGAL SERVICES

DIV EXECSMEs and Rural Development

iMBEWU FUND

PRE-INVESTMENT BUSINESSSUPPORT

EXEC CORPORATE SERVICES

HUMAN RESOURCES

FACILITIES MANAGEMENT

MARKETING & COMMS POST-INVESTMENT BUSINESSSUPPORTRURAL & COMMUNITY DEV.

STRATEGIC PROJECTS

FUND

UMNOTHO FUND

DIV EXEC :Venture Capital and

Corporate FinanceGENERAL COUNSEL

REGIONAL OFFICES

SOCIO-ECONOMICDEVELOPMENT UNIT

& ASSET MANAGEMENT

TURNAROUND, WORKOUTS &

RESTRUCTURE UNIT

SOCIAL AND ETHICS COMMITTEE

Headcount: 157Optimal/budgeted headcount: 195

59

60

Thank youContact Details

www.nefcorp.co.za

WHERE TELEPHONE1 Head Office,

Johannesburg011 305 8000 or 0861843 633 / 0861 THE NEF

2 Eastern Cape 0861 633 327 / 0861 NEF ECP3 Free State 0861 633 377 / 0861 NEF FSP4 KwaZulu Natal 0861 633 596 / 0861 NEF KZN5 Limpopo 0861 633 546 / 0861 NEF LIM6 Mpumalanga 0861 633 678 / 0861 NEF MPU7 Western Cape 0861 633 927 / 0861 NEF WCP8 North West 0861 633 697 / 0861 NEF NWP9 Northern Cape 0861 633 627 / 0861 NEF NCP