1. KHULA STRATEGY PRESENTATION TO THE PORTOLIO COMMITTEE 22 May 2002

2. Corporate Governance Main shareholder is DTI Independent board of directors; sub committees; internal and external auditors Directors endorse the code of “Corporate Practices and Conduct” Compliance with the laws of the country and other regulations

3. Value statements The group subscribes to a rigorous code of ethics which fosters honesty, transparency, accountability, responsibility and integrity to our stakeholders.

4. Vision To become a financing partner of first choice in SMME’s finance.

5. Mission To facilitate sustainable access to finance, by engaging with the private and public sector, through innovative products in order to promote SME growth.

6. General external objectives  Be responsive to the needs of clients and stakeholders  Facilitate mobilisation and flow of resources (public & private sector) for SMME development  Support the promotion of a conducive legislative environment for the SMME sector

7. General internal objectives  Procure and maintain a professional, skilled, effective, motivated & dynamic workforce within affordable levels  Practice the enshrined values of the organisation  Ensure proper and efficient support structures in areas such as finance, admin, marketing  Ensure adherence to Khula policies and operational guidelines  Effectively manage the business risks

8. Key strategic objectives  To achieve a return on investment that ensures retention of the capital base  To offer sustainable credit and capital through a network of efficient network of distribution intermediaries  To acquire,retain and develop the Human resources to meet the short,medium and long term needs of Khula  To develop and implement an integrated business marketing strategy

9. Key Corporate Objectives  Scaling and growing the operations to achieve impact.  Resource committed, competent and capable people.  Implement effective financial and risk management.

10. Income Statement highlights

11. Employment features By Province as at 31/03/2001 KhulaStart % RFI % CGS Individual % CGS Portfolio % Total % Gauteng 1.4728.9236.1716.5828.24 North West 0.014.187.071.034.15 Mpumalanga 9.26.682.474.166.65 N. Province 16.288.560.6812.968.63 Free State 8.183.39.555.183.58 KZN 58.7916.4823.8310.3717.84 Western Cape 015.748.4712.9615.12 Eastern Cape 4.798.213.3007.98 Northern Cape 00.793.848.810.86 Unknown 07.154.6227.956.96 Total 22,800746,21517,0562,623788,694

12. EMPLOYMENT FEATURES Average employment: KhulaStart1.92 RFI’s8.34 Credit Guarantee Scheme(Individual)12.01 Credit Guarantee Scheme (Portfolio)8.34 Total new jobs since 1996 (66% of total direct jobs)521,307 Total direct jobs (new and sustained)788,650 Indirect jobs created and sustained=394,325 Assumed multiplier of 1.5X788,650 Total jobs direct and indirect = 1,182,975

13. Gender of enterprise customers

14. Spacial Composition

15. Estimated number of people financially benefiting from business Type of BusinessAverage per business Estimated total for all businesses KhulaStart 6.2373,981 RFI 15.861,417,154 CGS Individual 17.9525,489 CGS Portfolio 9.046,888 TOTAL 1,523,512

16. Image of Khula or its agents Khula Programs% who would recommend Khula KhulaStart88 RFI94.3 CGS Individuals84.5 CGS Portfolio76.8 Thuso Mentorship80.6

17. New Directive from DTI  Khula’s original mandate too broad  Special circumstances in servicing sector  Servicing of Micro and small enterprise sector to be moved new institution  Move will affect 10% of Khula employees  Exact parameters of separation unclear

18. Various scenarios considered  Scenario 1 –Retention of the status quo - everything remains unchanged.  Scenario 2 –All MCOs and some RFIs (non-sustainable) 10% staff affected.  Scenario 3 –All MCOs and RFIs move across [30% staff impact]  Scenario 4 –Scenario 2 plus Retail option. Open the discussion and further research.

19. HISTORICAL SEGMENTATION OF KHULA PORTFOLIO Micro-KhulaStarts/ RFI’s, Survivalist Very small-RFI’s / KhulaStarts/Portfolio Guarantees/ Sizabantu Small (lower end) – Credit Guarantees Small (upper end) – Equity Funds

20. PROPOSED SEGMENTATION OF KHULA PORTFOLIO Micro-KhulaStarts/RFI’s Survivalist Very small-RFI’s /Portfolio Guarantees/Sizabantu Small (lower end) – Credit Guarantees Small (upper end) Medium – Equity Funds

21. 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

22. 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

23. Key Performance Indicators/Targets

24. Key Performance Indicators/Targets - Credit Guarantees 2000/012001/022002/032003/042004/052005/06 R180mR182mR258mR310mR341mR375m IndividualR241m PortfolioR10m TTGFR6m RehabR0.5m

25. Key Performance Indicators/Targets Regional Equity Funds 2 existing Funds 3 rd Fund operational 2002/3 2000/012001/022002/032003/042004/052005/06 NilR7milR14milR19milR23milR27mil

26. Key Performance Indicators/Targets

27.  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

28.  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

29. Presented by Brendan Mbatha Marketing Executive Khula Enterprise Finance (Pty) Ltd 22/05/02 Thank you for your Support