A SUMMARY OF KHULA OUTPUTS TO THE PORTFOLIO COMMITTEE 25 March 2003

High-level Objectives  To make an impact on the transformation of the South African economic landscape by contributing towards the DTI strategic objectives  Facilitate mobilization and directing of resources (public & private sector funding) towards SME development.

Core Strategic Objectives  To achieve a return on investment that ensures retention of the capital base. (Finance)  To offer sustainable credit and capital through a network of efficient distribution intermediaries. (Customers)

Core Strategic Objectives  Scaling and growing the operations, through managed risk, to achieve impact and outreach. (Finance)  To acquire, develop and retain the human talent to meet the short, medium and long-term needs of Khula. (People)  To develop and implement an integrated business marketing strategy. (Process)

Growth Strategies  Mobilise banks for mass or scale delivery. –Training workshops with bankers and marketing –Mainstream and roll-out a credible mentorship  To stimulate the provision of venture [start-up] and small scale equity finance.  To research and package innovative products that can mobilise and attract the financial industry participation in Khula mandate.  Build on nation wide communication campaign

Growth Strategies  Segment the market and design a suitable product mix and structure accordingly. –Emerging and matured markets  To support the distribution network in line with market needs. –capacitate and develop to serve the all market segments [from under-banked to bankable enterprises] –To improve outreach and efficiency of emerging market network  Improve market access through business linkage initiatives

Where are we ? 1996 – 2003 & year ending 2003 [28/02] Corporate Objectives Cumulative Target 2003 Actual 2003 Rating 2003 Approved Business Loans R363,6mR70,0mR77,8m Committed Guarantees R348,2mR258,0mR145,0m  Approved LRCF Loans R56,9mR20,0mR20,8m Approved Equity deals R12,9mR14,0mR9,6m 

Where are we ? 1996 – 2003 & year ending 2003 [28/02] Corporate Objectives Cumulative Target 2003 Actual 2003 Rating 2003 Approved -RFI Cap, Seed loans; Capacity Build R173,7mR22,9mR27,7m Approved -MCO Seed loans on-lend & ops; Capacity Build R28,3mR16,1mR10,1m  Thuso Mentorship:  Business Plans  After-care visits  R67,9m  994  R24,0m  210  R23,0 m  341 

Where are we ? 1996 – 2003 & year ending 2003 [28/02 ] Impact Stats & Property Income Cumulative Targets 2003 Actual 2003 Rating 2003 Total Gross Jobs Created: All Programmes No of Guarantees Committed  Thuso B Plans  Property Income R8,3mR7,6mR8,3m

Credit Guarantees “Numbers”

Credit Guarantees “Rands”

Khula Equity Funds  Rand value of deal approved = R 18m  Number of deal approved = 11  Jobs created = 492  Investee Companies: 83% Male17% Female 17% Rural83% Urban 100% PDI

Land Reform Empowerment Facility  Funds loaned out to Date = R57 m  Number of projects = 16  Number of PDI (Shareholders) = 794 –Male 360Female 434  Job created =1,261 –Males 592Females 669

Retail Financial Intermediaries  Funds loaned out to Date = R338 m  Number of RFI’s = 16  Number of RFI Clients = –Male 30%Female 70% –Black 96%White 4% –Urban 70%Rural 30%  Job creation estimate =

Khula-starts  Funds loaned out to Dec 2002 = R17 m  Number of Khula-starts =17  Number of Khula-starts Clients = –Males 13%Females 87% –Black 100%White 0% –Rural 95%Peri-Urban 5% –6 Provinces (Excl WC,NC,FS) Jobs created = (Approx)

Loans Representation in S.A.  Limpopo  2 RFI’s; 2MCO’s  North West  1 RFI; 1 MCO  Gauteng  7 RFI’s; 1 MCO  Mpumalanga  3 RFI’s; 5 MCO’s  Freestate  1 RFI; 0 MCO’s  KwaZulu Natal  3 RFI’s; 5 MCO’s  Northern Cape  1 RFI; 0 MCO’s  Eastern Cape  2 RFI’s; 4 MCO’s  Western Cape  2 RFI’s; 0 MCO’s

 Required capital is obtained  Seed activities are inherent risk mitigation mechanisms of Khula balance sheet. [network and capacity support of RFI’s and quality mentoring]  Investment levels are necessary to off-set the price shortfall results.  A stable and committed human resource especially at senior level is achieved. Summary of Assumptions

 Political support is unwavering [all government levels] and based on sound corporate administration.  Access to markets becomes sensitive to SMME needs. [Government and state enterprise procurement systems adapt]  Financial institutions [including insurance houses] do come to the party

Sizwe Tati Managing Director Khula Enterprise Finance (Pty) Ltd 25/03/03 Thank you for your Support