1 first floor, block b (entirweni), mapungubwe – the dti group campus 77 meintjies street, sunnyside tel: fax: /9 BUDGET AND STRATEGY PRESENTATION TO PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY SITHEMBELE MASE CHIEF EXECUTIVE OFFICER: samaf /

CONTENT 1.MANDATE 2.ACHIEVEMENTS TO DATE 2.1Facts and Figures 2.2Staffing and HR 2.3National Footprint/ Distribution Network 3.CHALLENGES 4.STRATEGIC GOALS AND OBJECTIVES 4.1To increase access to microfinance through wholesale funding to developmental Financial Intermediaries; 4.2Increasing support of capacity building and sustainability to Financial Intermediaries that provide savings and/ or credit; 4.3To support the development of effective microfinance networks, strategic alliances and partnerships; 4.4To participate in policymaking and create a Centre of Learning for microfinance; 4.5To build a strong and capable Apex Fund towards the establishment of samaf as an independent legal entity / 9 BUDGET

FI=Financial Intermediaries CB=Co-operative Bank FSC=Financial Services Co-operative MFI=Micro Financial Intermediaries IFC=International Finance Corporation SACCOL=Savings and Credit Co-Operative League AMFISA=Alliance of Micro Finance Institutions of South Africa DEFINITIONS

1.MANDATE Contribute to reduction of poverty and unemployment by: Acting as a catalyst for the development of an effective microfinance sector; Supporting the establishment of sustainable Financial Intermediaries that can reach deeper and broader to the enterprising and working poor; Facilitating the establishment of an enabling environment for effective financial intermediation for the enterprising and working poor; and Building a strong, effective and efficient Apex Fund. OPERATIONAL MANDATE samaf is a wholesale fund that works through community based FI’s to deliver financial services to the working and enterprising poor communities in deep rural and peri-urban areas; samaf therefore provides loan funds for on- lending by FI’s; samaf also provides support funding to build capacity and technical expertise within the FI’s.

2.ACHIEVEMENTS 2.1 FACTS AND FIGURES:

2.1 FACTS AND FIGURES (cont.):

2.2STAFFING AND HR: MARCH Filled positions 28 Vacancies FEBRUARY Filled 21 Vacancies NETT INCREASE/ (DECREASE) 7 Post Filled (7) Vacancies reduced

2.3 NATIONAL FOOTPRINT/ DISTRIBUTION NETWORK:

3.CHALLENGES IN ESTABLISHMENT AND RAPID EXPANSION OF THE DISTRIBUTION NETWORK AND INFRASTRUCTURE Provincial staff and management appointment in the Northern Cape was delayed for twelve (12) months due to a contracted employee taking samaf to the CCMA. The capacity of FI’s to disburse funds to clients is a key constraint due to poor financial reporting. This results in slow drawdown of approved funds. High failure rate of funded institutions is a key constraint to rapid growth and expansion of the delivery network. Seven (7) FI’s amounting to R1,4m have already defaulted and closed down. The launching of the fund in 2006/ 7 without an established delivery network has created some challenges.

4.STRATEGIC OBJECTIVES 4.1To increase access to microfinance through wholesale funding to developmental Financial Intermediaries; 4.2Increasing support for capacity building and sustainability to Financial Intermediaries that provide savings and/ or credit; 4.3To support the development of effective microfinance networks, strategic alliances and partnerships; 4.4To participate in policymaking and create a Centre of Learning for microfinance; 4.5To build a strong and capable Apex Fund towards the establishment of samaf as an independent legal entity.

Key Objective (s)Target 2008/ Increase financial support to Financial Intermediaries for on-lending Disbursements 23 FI’s Disbursement amount of R13,5m Manage portfolio qualityRepayment rate 60% on average Portfolio at risk 25% Loan loss rate 15% Strengthen operational self- sufficiency5% budget variance 50% operational costs vs 50% program costs 4.1To increase access to microfinance through wholesale funding to developmental Financial Intermediaries:

Key Objective (s)Target 2008/ Capacity Building and Technical SupportTechnical assistance and training R3m Funding support as per business plan R16,2m MIS acquisition R7,2m Number of FI’s trained and supported 31 Number of FI staff trained and supported 62 Quality of training and support programme 100% 4.2Increasing the capacity and sustainability of Financial Intermediaries which provide savings and/ or credit:

Key Objective (s)Target 2008/ Safety and soundness of the CB sectorDevelop sound prudential policy environment Establish registration process for CB’s and FSC’s Establish an examination and supervision section for CB’s FSC’s Conduct training for exterminations and registration Conduct examinations of all FSC’s and CB’s 4.3To support the development of effective microfinance networks, strategic alliance and partnerships:

4.4To participate in policy making and create a Centre of Learning for microfinance: Key Objective (s)Target 2008/ Improve risk management and reporting systemsLoan agreement and credit policy 90% effective Corporate and operational risk improved from level 1 to level 2 50% Compliance with prudential regulations, NCA and other Improvements in Financial Management and reporting by FI’s Unqualified audits Develop and improve policies and proceduresReporting standards adhered to 100% Documented and approved policies Facilitate establishment of samaf as a legal entityPerformance audit by September 2008 Approval for legal status

4.5To build a strong and capable Apex Fund towards the establishment of samaf as an independent legal entity: Key Objective (s)Target 2008/ Improve customer service deliveryOne client/ customer satisfaction survey 20% Improved customer relationships 96 Days turnaround from application to disbursement Improve internal customer service delivery50% Improvement on inter-departmental communication 50% Consistency and standardisation of information 50% Of understanding and execution of mandate at all levels Support the development of micro finance networks (SACCOL, AMFISA and other) 1 Strategic partnership and special project Improved positive image and increased interaction

4.5To build a strong and capable Apex Fund towards the establishment of samaf as an independent legal entity (cont.): Key Objective (s)Target 2008/ Develop a competent capable workforceAudits and skills assessment report Skills gap and inventory profile In-house and specialized training programs Build a positive organizational cultureLearning organization (exchange programs, field visits and discussion forums) Improved work standards and efficiencies Employee satisfaction survey report Develop strong management capabilityImproved management decision making Improved quality of analytical and due diligence reports Improved general management an leadership skills

5.2008/ 9 BUDGET Budget 2008/ 9 R’000 Budget 2009/ 10 R’000 Budget 2010/ 11 R’000 RECEIPTS Receipt from the dti(88,093)(92,445)(97,991) Loan repayments Interest received(880)(1160)(1,276) Other Total receipts(88,973)(93,605)(99,267) EXPENDITURE Compensation of employees20,16323,13524,000 Goods and services15,71015,67016,187 Payments for capital assets8,5004,8005,080 Transfer to partner organizations42,60050,00054,000 Transfer to Deferred account Total expenditure88,97393,60599,267 SURPLUS/DEFICIT000

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