Overview of the Strategic Plan

2008 - 2011Presentation to the Portfolio Committee on Trade and Industry5 March 2008

1

Presenters

Ms Philisiwe ButheleziChief Executive Officer(Telephone +27 11 305 8000/ 8147 (Manager in the CEOs Office: Emma Riley)

Mr. Andrew Wright Chief Operating Officer (COO)

Mr. Frencel GillionChief Investment Officer (CIO)

Mr. Moemise MotsepeManager: Marketing & Communications

Ms Hlengiwe MakhatiniPre-Investment Manager

2

“The National Empowerment Fund(NEF) is the catalyst of

broad- based Black Economic

Empowerment in South Africa.

3

Mission Statement

We enable, develop, promote and implement innovative investment and transformation solutions to advance sustainable Black economic participation.”

NEF Mandate

Main objective To be a catalyst in facilitating economic equality and transformation

Development focus Maximise the empowerment dividend

Driven by

Current market needs Broad-based empowerment charters Government policy and sectoral charters (Industrial Policy) Addressing past failures of BEE structures Broad Based BEE Codes of Good Practice

4

Key Objectives of the NEF

5

Promote and support business ventures pioneered and run by black people;

Promote the understanding of equity ownership among black people;

Provide black people with direct and indirect opportunities to acquire share interests in State Owned and private business enterprises;

Encourage and promote investments, savings and meaningful economic participation among black people.

Key Objectives of the NEF Strategic Plan

6

To create a prudently and effectively managed fund with a time horizon of at least 10 years;

To ensure broad-based and sustainable empowerment; To act as a catalyst to stimulating Broad Based BEE and hence

economic growth; To avoid duplicating existing offerings by other operating Development

Finance Institutions (DFIs); To work in partnership with both public and private sectors; To maximise the empowerment dividend in lieu of the financial

dividend; To protect the capital base of the NEF and provide a real return.

7

“The Empowerment Dividend”

Broad Based Black Economic EmpowermentOwnership, management control, employment equity, skills etc

Black Women Empowerment

Job Creation

Growth Sectors

Geographic Spread

Investment Return

The assessment of impact is not driven only by financial returns but by measurement in terms of “The Empowerment Dividend” made up as follows:

NEF’s Performance Criteria –

Provincial Roundtables

With effect from October 2007, NEF has launched Provincial Roundtables with stakeholders in the following provinces:

KZN North West Limpopo

The NEF has so far participated in Provincial Roundtables in Northern Cape (12 December 2007) and North West (7 March 2008)

Objective is to optimise regional invested portfolio through intensive local interaction and communication

Stakeholders include: MECs for Finance & Economic Affairs, as well as MECs for Agriculture, to encourage rural and community development Constituency Members of Parliament Local Development Finance Institutions (DFIs) Local entrepreneurs and co-operatives Mass Media

Mpumalanga Northern Cape Free State

8

9

Strategic Initiatives

NEF, in 2006/7, reached two significant and strategic milestones in its history since its establishment:

On-going track record achieved in the Fund Management Division, with approvals to date now exceeding R600m;

Asset Management Division was able to obtain the overall approval for the NEF’s first BEE Retail Product, Asonge, subsequently launched on 25 June 2007.

10

NEF work in progress: 55 transactions worth R 993 million

NEF Invested Process Report31 January 2008

ENQUIRIES

Approx.28,664

APPLICATIONS

5,908

NEW DEALS ACCEPTED

24worth

R 344m

DUE DILIGENCE

18worth

R 404m

APPROVED

13worth

R 245m

DISBURSED (INCL. UNDRAWN CAPITAL)

102worth

R 631m

11

NEF Approved & Disbursed Deals by Value1 April 2007 - 31 January 2008

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

Apr-07

May-07

Jun-0

7Ju

l-07

Aug-07

Sep-07

Oct-07

Nov-07

Dec-07

Jan-0

8

R 363m

R 135m

Accumulative Value of Deals Approved Accumulative Value of Deals Disbursed

12

NEF Approved & Disbursed Deals by Number1 April 2007 - 31 January 2008

0

5

10

15

20

25

Apr-07

May-07

Jun-0

7Ju

l-07

Aug-07

Sep-07

Oct-07

Nov-07

Dec-07

Jan-0

8

23

16

Accumulative Value of Deals Approved Accumulative Value of Deals Disbursed

13

FMD Portfolio by Sector by Value31 January 2008

ICT & Media14.3%

Engineering1.5%

Manufacturing8.3%

Transportation5.2%

MiningServices

7.4%

PrintingServices

2.5%

MotorIndustry

1.8%

Tourism & Entertainment

7.4%Wood & Paper

Industry2.0%Chemicals &

Pharmaceuticals5.4%

Construction25.6%

FinancialServices

1.1%

Other0.1%

Food & Agro Processing

12.9%

Services3.1%

Textile Industry1.8%

14

Asset Management Division

Through its Asset Management Division, the NEF: Promotes the understanding of equity ownership among black people Provides black people with direct and indirect opportunities to acquire

shares in State Owned and private business enterprises Encourages and promote investments, savings and meaningful

economic participation amongst black people

It is specifically to address the above objectives that the NEF Asonge Share Scheme was conceived, designed, launched, implemented,

subscribed for and now allocated to its beneficiaries.

Asset Management Division

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Subscriptions by Value

16

100%R 889,058,857.00100% 85,314

4.61%R 40,988,400.000.48% 410 90001 to 100000

0.05%R 446,000.000.01% 5 80001 to 90000

0.18%R 1,641,220.000.02% 21 70001 to 80000

0.24%R 2,147,282.000.04% 37 50001 to 60000

0.12%R 1,102,484.000.02% 16 60001 to 70000

39.77%R 353,604,161.008.31% 7,091 40001 to 50000

4.30%R 38,256,743.001.17% 998 30001 to 40000

8.34%R 74,163,562.003.18% 2,717 20001 to 30000

12.57%R 111,795,894.007.38% 6,297 10001 to 20000

12.84%R 114,196,042.0014.81% 12,637 5001 to 10000

16.95%R 150,717,069.0064.57% 55,085 2000 to 5000

%age TOTAL VALUE %age TOTAL APPLICANTS INVESTMENT

“The NEF Asonge Share Scheme”

Asset Management Division –Enabling Legislation

17

NEF Act (No.105 of 1998) – Objects of the NEF Trust

Policy Framework for an Accelerated Agenda for the Restructuring of State-owned Enterprises (August 2000) – requirement of the NEF to broaden empowerment with State Owned Commercial Enterprise (SOCE) allocations through individual & collective share ownership

Cabinet Memorandum No. 32 of 29 November 2000, which was adopted on 6 December 2000 – SOCE equity allocations nominated for transfer to NEF

Asset Management Division – Designated State Allocated Investments

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Asset Shareholding % Status

1. MTN Group 1.5 received by NEF

2. Telkom 5 not yet received3. SAA 5 not yet

received4. ACSA 10 not yet received5. Connex Travel 10 received by

NEF6. Viamax 10 not yet received7. Syncat 10 not yet received8. Transwerk Perway 10 not yet

received9. Sentech 10 not yet received10. Uthingo 5 received by NEF11. SAFCOL 10 in discussion

Ensure that new products are aimed at accessible subscription levels and structures so that lower income groups are not excluded

Address geographic access to product offerings through targeted communication campaigns, engagement with provincial government and existing Asonge share register

Capitalise on the Asonge share register with future offers allowing investors to diversify and extend the reach of future offers through this channel

19

Key Strategic Interventionsfor NEF Asset Management

On-going track record achieved in the Fund Management Division, with approvals to date now exceeding R600m.

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Fund Management Division

21

Fund Management Strategy– Strategic Drivers

PROCESSES MARKETING HUMAN CAPITAL• Streamline investment reports

• Refine investment processes

• Establish post investment as separate unit – freeing resources

• Strengthen due diligence processes

• Compile Investment Manual

• Coordinated marketing strategy

• Develop partnership

• Pro-active Business Development

• Enhance NEF brand awareness

• Deepening skills base

• Encourage team work

• Build sector expertise

• Key recruitments

• Performance management focus

• Retention strategy

• Ongoing training

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Fund Management Strategy– Strategic Drivers contd

RISK MGMT PARTNERSHIPS PORTFOLIO MGMT• Strengthen due diligence

process

• Restructure post investment

• Establish portfolio limits to reduce over exposure

• Institutionalize investment process – Investment

Manual

• Refine investment products / Criteria

• Build partnerships with banks, DFI’s, Private Equity firms

• Explore non-financial support partnerships

• Explore co-funding opportunities in large transactions

• Enterprise Development partnerships with corporates

• Portfolio allocation to reduce risk

• Portfolio Management Committee

• Dedicated Portfolio Management Unit

• Mentorship programmes

• Work-out Unit

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FMD Portfolio by Stage of Investment31 January 2008

(R) Value

R138mR103mR390m

R631m

% By Value

21.9%16.2%61.8%

100%

By Number

552918

102

% By Number

53.9% 28.4% 17.6%

100%

Early Stage

Development Stage

Later Stage

Budget 2008/9

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Consolidated Budgetfor the years 2007 - 2011

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R1 042m R 1 377m R1 632mR 1 970mR 315mTOTAL SURPLUS

R1 377m R1 632m R1 970m

Including

proceeds of the Asonge

Share Scheme

R 1 631mR 290mSurplus brought

forward

(R 335m) (R 255m) (R 338m) R 339mR 25m

Surplus/ (Application of

Surplus)

R765m R123m R 685m R 114m R 650mR107m R 270mR 75mActual/Budgeted

Spending

R 430mR 123mR 430mR 114mR 312mR 107mR 609mR 100mBudget Approved

CapitalOperationsCapitalOperationsCapitalOperationsCapitalOperations

2010/11 (MTEF)2009/10 (MTEF)2008/9 (MTEF)2007/08 (actual)

We thank you for your attention.

www.nefcorp.co.za

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Appendices

Fund Management Activity Reports for the year to date 2007/8

27

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NEF work in progress: 55 transactions worth R 993 million

NEF Invested Process Report31 January 2008

ENQUIRIES

Approx.28,664

APPLICATIONS

5,908

NEW DEALS ACCEPTED

24worth

R 344m

DUE DILIGENCE

18worth

R 404m

APPROVED

13worth

R 245m

DISBURSED (INCL. UNDRAWN CAPITAL)

102worth

R 631m

29

FMD Invested Process Report31 January 2008

iMbewu Fund

Corporate Fund

Since inception to31 January 2008

INFORMATION MANAGEMENT

SYSTEM

NEW DEALS ACCEPTED

24worth

R344m

14worth

R 132m

10worth

R 212m

DUE DILIGENCE

18worth

R 404m

11worth

R 140m

7worth

R 264m

APPROVED

13worth

R 245m

8worth

R 85m

5worth

R 160m

WORK IN PROGRESS

55worth

R 993m

33worth

R 357m

22worth

R 636m

iMbewu Fund Disbursed

Corporate Fund Disbursed

DISBURSED(INCLUDING UNDRAWN

CAPITAL)

102worth

R 631m

70worth

R 158.7m

32worth

R 472.5m

iMbewu Fund - Work in Progress

Corporate Fund - Work in Progress

30

FMD Approved & Disbursed Deals by Value31 January 2008

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

900,000,000

1,000,000,000

Mar-03

Jun-0

3

Sep-03

Dec-03

Mar-04

Jun-0

4

Sep-04

Dec-04

Mar-05

Jun-0

5

Sep-05

Dec-05

Mar-06

Jun-0

6

Sep-06

Dec-06

Mar-07

Jun-0

7

Sep-07

Dec-07

R 943m

R 631m

Accumulative Value of Deals Approved Accumulative Value of Deals Disbursed

31

FMD Portfolio by Stage of Investment31 January 2008

(R) Value

R138mR103mR390m

R631m

% By Value

21.9%16.2%61.8%

100%

By Number

552918

102

% By Number

53.9% 28.4% 17.6%

100%

Early Stage

Development Stage

Later Stage

32

FMD Portfolio by Product by Value

Entrepreneurship Fund14.1%Expansion

Capital0.0%Capital

Market10.2%

Franchise3.9%

Liquidity & Warehousing

13.8%

Procurement8.5%

Rural &Community

3.3%

ProjectFinance

3.8%Acquisition Funding42.4%

31 January 2008

33

FMD Portfolio by Sector by Value31 January 2008

ICT & Media14.3%

Engineering1.5%

Manufacturing8.3%

Transportation5.2%

MiningServices

7.4%

PrintingServices

2.5%

MotorIndustry

1.8%

Tourism & Entertainment

7.4%Wood & Paper

Industry2.0%Chemicals &

Pharmaceuticals5.4%

Construction25.6%

FinancialServices

1.1%

Other0.1%

Food & Agro Processing

12.9%

Services3.1%

Textile Industry1.8%

34

FMD Portfolio by Region by Value31 January 2008

Gauteng46.6%

Limpopo0.5%

Western Cape22.7%

Mpumalanga4.2%

Eastern Cape17.3%

Kwa-ZuluNatal9.0%

FreeState0.0%

35

FMD Portfolio by Region by Number31 January 2008

Kwa-ZuluNatal10.3%

Gauteng59.8%

Free State1.0%

Eastern Cape8.8%

Mpumalanga2.0%

Western Cape15.7%

Limpopo2.9%

36

Job Creation Statistics31 December 2007

Existing Jobs

New Jobs

RandPer Job

Number of Jobs

RandInvested

2,210 1,402 808 121,248

4,507 4,444 63 14,220

1,079 265 814 82,275

267,957,806

64,087,480

88,774,575

286 70 216 86,825

1,172 892 280 74,386

947 265 682 56,585

24,832,020

87,180,000

53,586,432

891 274 617 27,071

807 0 807

24,120,130

20,819,000

Acquisition Funding

Capital Market

Entrepreneurship Fund

Franchise

Liquidity & Warehousing

Procurement

Project Finance

Rural & Community

11,899 7,612 4,287 53,060 631,357,443

64% 36%

TOTAL PORTFOLIO: