Annual Integrated Report for year ended 31 March 2016 Presentation to: Portfolio Committee on Human Settlements Jabulani Fakazi, CEO and Bruce Gordon, CFO

Outline RHLF mandate Service delivery model How we create value for people in our mandate Business environment 2015/16: Performance information Strategic Oriented Outcomes Statement of Financial Position Statement of Financial Performance Governance: The Board Structure Concluding remarks

Mandate and Core Business People Facilitate access to incremental housing finance for low income households in rural areas Rural Communal land, rural towns and small towns Monthly Income Maximum R15 000 Focus remains on people earning under R3 500

Business model Loan requirements Cost of borrowing Wholesale Lending Facilities approved for intermediaries Empowers people to decide what they need/want Must be repaid Intermediaries Carry credit risk Market and lend to clients / end users Commercial or non-profit (CBOs) Loan requirements Unsecured, so can never lose homes Ideally disbursed through building merchants Must be used for housing in rural areas Cost of borrowing In accordance with the National Credit Act RHLF discounts to those who charge less

Creating value for people in RHLF’s mandate Mission: To empower people in rural areas to maximise their housing choices and improve their living conditions through access to housing credit.

Used savings and borrowings Matlosana Municipality RDP Inherited as Earns under R10,000 Used savings and borrowings Matlosana Municipality

Ga-Malokela Village, Tubatse Local Muni. 3 July 2015 Ga-Malokela Village, Tubatse Local Muni. 15 June 2016

Business Environment Weak economic growth High unemployment Market overindebteness Interest rate

Strategic Outcome Orientated Goals (MTSF) Performance against MTSF Targets: 2014-2019

Strategic Outcome Orientated Goals (2015/16) Stakeholder Perspective – Broaden and deepen the reach of rural housing finance

Strategic Outcome Orientated Goals Financial Perspective: Real capital preservation

Strategic Outcome Orientated Goals Business process

Strategic Outcome Orientated Goals Learning and growth

Statement of Financial Position

Statement of Financial Performance

Cash flow statement

Governance: The Board Structure DIRECTORS BOARD OF REMUNERATION COMMITTEE HR ETHICS and CREDIT AND DEVELOPMENT COMMITTEE AUDIT AND RISK MOI provides for a maximum of 8 directors (7 NEDs & 1 ED) Currently only four Non-Executive Directors Vacancies are not being filled because of pending merger

Governance: Audit Report Opinion   In our opinion, the financial statements present fairly, in all material respects, the financial position of the Rural Housing Loan Fund SOC NPC as at 31 March 2016 and its financial performance and cash flows for the year then ended, in accordance with Generally Recognised Accounting Practices and the requirements of the Public Finance Management Act of South Africa and the Companies Act of South Africa. Emphasis of Matter   Without modifying our opinion we draw your attention to note 3 of the annual financial statements. This note indicates the merger of the Rural Housing Loan Fund SOC NPC with two other Development Finance Institutions, note 3 also indicates that this condition indicates the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.

Challenges Challenges: Decrease in affordability by end users as shown by lower borrowing, though there seems to be a slight turnaround happening here Over 70% of loans issued by a single intermediary. Measures to address challenges: RHLF is assisting with affordability by helping intermediaries reduce interest charged to retail borrowers RHLF is developing 3 start-ups in: Maluti-a-Phofung Makhuduthamaga Mahikeng

Performance Q1 2016/17

Concluding Remarks RHLF achieves its mandate within the constraint of its funding resources as well as the challenges faced by the economy Target market is huge and more needs to be done to significantly increase market coverage Tough market conditions and high level of indebtedness pose a challenging outlook RHLF business model resonates with active citizenry advocated in the NDP—people drive their building process and improvement of their living conditions