1 RURAL HOUSING LOAN FUND Strategic 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 strategy

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

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 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

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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

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19 Warehouse RHLF shares RHLF owns shares in the following number of clients: –Protea Financial Services Group –Norufin Housing –Lendcor –Indlu Finance –Izwe –Bayport

20 Organogram

21 Employment Equity

22 RHLF Development Impact: Some key findings 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

23 RHLF Development Impact: Some key 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

24 RHLF Development Impact : Some key findings (cont…) On average end-users who built new space on the RDP house or existing dwelling, added 22 m 2 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

25 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

26 RHLF’s response to Key Environmental 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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33 Thank You