1. INCA: CURRENT EXPERIENCE, INNOVATIONS AND OPPORTUNITIES IADF Conference, Washington DC 30 September 2004

2. Rationale for INCA Municipal sector has significant capital requirements to address the infrastructure backlog Institutional investors are not prepared to invest directly in the municipal sector INCA financial intermediary AA- rating Expert credit and risk assessment Diversified basket of municipal loans Buffer: equity, subordinated debt

3. INCA’s total advances >ZAR 5,5 billion (>US $ 809 million) Very low default rate Perceived by investors as a “mature bond issuer” –INCA issued the 2 nd corporate bond in South Africa in 1997 Good reputation with municipalities and international finance institutions Exit strategy by international shareholders facilitated increased local black economic empowerment participationExperience

4. –Improved financial position of municipalities –Improved regulatory environment of municipalities –Increased interest from banks in the municipal sector –Increased interest from institutional investors in the municipal sector  Government continues to encourage spending on infrastructure – Direct interaction between Metropolitan Municipalities and institutional investors  Johannesburg bond issue (1 st municipal bond issue) Changes in business environment

5. –INCA success: –INCA played a key role in stabilising the municipal funding sector –INCA demonstrated to investors that municipalities are an acceptable asset risk class –INCA will remain a funder of municipalities that cannot access the capital markets directlyResults

6. –Discounting of rental and lease contracts in statutory market  Larger spread of borrowers  Lower volumes and shorter terms  Higher margins – Providing capacity-building support to the municipal sectorInnovations

7. –Leverage of INCA’s knowledge of municipal credit and finance: Facilitation of foreign direct investment into the municipal sector Facilitation of involvement of institutional investors in the municipal sector Active participation in the secondary market for municipal bonds Provision of value-added services to the municipal sectorOpportunities

8. –Leverage of INCA’s relationship network and reputation: Funding of non-municipal statutory market (parastatals, provinces, etc) Identification of projects in Africa: outside of South Africa Involvement of international financing institutions Opportunities (continued)

10. INCAstructure Finance Contact details: Attie van Zyl, CEO +27 11 202 2211 attie.vanzyl@inca.co.za Dirkje du-Pont-Bouma, Treasurer +27 11 202 2215 dirkje.du-pont-bouma@inca.co.za