1. South African Micro-finance Apex Fund samaf ANNUAL REPORT 2011/12 1

2. Presentation Outline Mandate, Vision, Mission, Values & Objectives Operating Model 2011/2012 Performance Highlights samaf National Footprint 2011/12 Financial Performance Auditor General Report Way forward 2

3. Mandate samaf’s mandate is to create work opportunities and sustainable livelihoods through the facilitation and provision of affordable access to finance to micro, small and survivalist businesses for the purpose of growing their income and asset bases. It is also required to act as a catalyst in the development of a vibrant micro-finance industry in South Africa. The primary purpose is: To facilitate the provision of affordable access to finance by micro and survivalist businesses; To extend financial and non-financial services to reach deeper and broader into the rural areas, informal settlement and peri-urban settlement of South Africa; To contribute towards the reduction of poverty and unemployment; To build a strong, effective and efficient wholesale (Apex) Fund; To contribute to better quality of life; and To contribute towards a sustainable and vibrant micro financial industry in South Africa. 3

4. Vision & Mission Mission “ To be a leader in developmental micro finance” (in South Africa ) To provide developmental finance and non- financial services to financial intermediaries through: Mobilization of financial intermediaries Wholesaling of funds Development of institutional capacity Lobbying and advocacy towards policy development Development of valuable partnerships (between government, businesses and communities) Vision 4

5. Values & Objectives 1. Contribution to poverty alleviation goals through;  Funding Intermediaries( Enterprise loans and poverty alleviation loans)  Capacitating Financial Intermediaries  Regulation and Prudential Standards 2. Exceed our stake holder expectation through;  Improving outreach through expanded satellite network / offices  Improving internal turnaround standards 3. Improvement of processes to achieve service delivery excellence through;  Improving financial reporting and management  Strengthening risk management  Increased compliance of legal and other regulations 4. Leverage performance through capacity and people through;  Organisational Development  Balance Scorecard & Performance Management  Organisational Design & Change Management 5. Building sustainable Apex Fund  Improved quality of lending portfolio and internal control environment Objectives Values  Integrity: Dealing with staff and stakeholders in an honest and ethical manner.  Transparency – ensuring compliance with best practice on the dissemination and sharing of information with all stakeholders and consulting with them to ensure comprehensiveness and buy-in to samaf activities.  Professionalism: adhere to specific defined norms and setting standards of workmanship, respect and communication.  Accountability: taking responsibility for the decisions and actions, including allocation of powers and duties.  High Performance: excellent performance and satisfied customers that guarantee long term sustainability of the South African Micro-Finance Apex Fund. 5

6. samaf Operating Model DIRECTOR GENERAL IT FIN SC HR Strategic Oversight FI’s SAMAF Internal Audit ExternalInternal CB Education Selection Research Primary / Core Support MARKET OPERATIONS External EDD REG PR & COMS 6

7. Disbursements of R58.3m were made to FI’s in respect of loans and grants. 14 Micro Finance Institutions, 23 Financial Services Cooperatives and 24 stokvels were supported. The total number of borrowers increased by 53% from 40 726 to 62 459. 68% of loans by the FI to end users were in rural communities and 93% were micro-enterprise loans. The number of end user savings increased by 15 % from 31 129 to 35 719 Installment repayments by FIs average 95% 272 individuals from 68 institutions nationally participated in capacity building workshops. samaf received an unqualified audit report 2011/12 Performance Highlights 7

8. Approved Funding (R’m) An increase of 21% as compared to the previous financial year was achieved 8

9. Total Disbursements (R’m) Capacity building decreased by 32% as compared to the previous financial year On lending funds increased by 104% as compared to the previous financial year 9

10. On- lending per Province (R) 10 ProvincesOn-lending ECR2,500,000 NCR 0 WCR 5,000,000 MPR 1,812,500 NWR 2,095,000 LPR 22,450,000 GPR 5,686,340 FSR 0 KZNR 6,099,168

11. Capacity Building per province (R) 11 ProvincesCapacity Building ECR1,126,488 NCR 0 WCR3,348,665 MPR862,500 NWR1,940,000 LIMR1,642,001 GPR 450,070 FSR 0 KZNR3,298,443

12. samaf NATIONAL FOOTPRINT M=4 F=4 M=0 F=4 M=0 F=3 M=1 F=6 M=0 F=5 M=2 F=6 M=3 F=3 M=2 F=1 M=3 F=5 12  M= Micro Finance Institutions  F= Financial Services Co-operatives

13. 2010/11 Financial Performance Statement of Comprehensive Income 13

14. 2011/12 Financial Performance Expenditure 2011/122010/11 Compensation26,324,70630,568,885 Goods & Services15,461,32317,085,896 Total Operating Expenditure41,786,02947,654,781 Grants paid12,668,16718,388,755 Loans written off3,693,7451,047,923 Less: Reversal of Impairment(1,896,240)(8,727,675) Total Expenditure56,251,70158,363,784 Operating expenditure 14

15. Administration expenses (R’m) 15

16. Impairments as a % of Financing 16

17. Assets for the last 5 years (R’m) 17

18. Auditor General Report OPINION An unqualified opinion was expressed, however issues were raised as part of emphasis of matter. EMPHASIS OF MATTER Going concern The Economic Development Department is re-organising its small lending business institutions by merging samaf, Khula and small business activities of the Industrial Development Corporation (IDC). Material write-off and Impairments Material losses to the amount of R 3 693 745 were incurred as a result of the write off of loans provided to financial intermediaries. In addition, material impairments to the amount R 2 899 287 were incurred on loans provided to Financial Intermediaries. 18

19. Auditor General Report (cont…) 19 REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS Usefulness of information Predetermined objectives The reported performance information was deficient in respect of the following criterion: Measurability : Indicators are not well defined. Reliability of information The reported performance information was deficient in respect of the following criterion: Accuracy: the amounts, numbers and other data relating to actual performance have not been recorded and reported appropriately. Completeness: All actual results and events that should have been recorded have not been included in the reported performance information. 19

20. As of the 1 st of April 2012, Khula was merged with the South African Micro Finance Apex fund (samaf) as well as the business operations of the Industrial Development Corporation’s (IDC) small business funding portfolio. The new entity is called the Small Enterprise Finance Agency (sefa). Way Forward 20

21. THANK YOU 21