2019/20 – 22STRATEGIC PLAN
Strategic Plan For the years 2019/20 – 22
31 January 2019
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 2
1. Table of Contents
1. Table of Contents ......................................................................................................... 2
2. Acronyms and Abbreviations ..................................................................................... 3
3. Overview by the Chairman .......................................................................................... 4
4. Official Sign-Off ............................................................................................................ 5
5. Strategic Overview ....................................................................................................... 6
6. Products and Services .............................................................................................. 17
7. Key programmes aligned to Government Priorities ................................................ 29
8. Financial Plan ............................................................................................................. 47
9. Risk Management and Fraud Prevention Plan ............................................................ 50
Appendix A: Financial Projections ................................................................................. 50
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 3
2. Acronyms and Abbreviations
APP : Annual Performance Plan
Approved : Final committee approval obtained, legal agreements not signed
B-BBEE : Broad-Based Black Economic Empowerment
BFS : Bankable Feasibility Study
Commitments : Legal agreements signed. (Deals may have been approved in current and previous financial periods.) All Conditions Precedent may not have been met yet.
CPs : Conditions Precedent
DFIs : Development Finance Institutions
Disbursements : Total cash advancements made against all approved deals (deals may have been approved in current and previous financial periods) subject to all Conditions Precedent having been satisfied by the investee.
GDP : Gross Domestic Product
IDC : Industrial Development Corporation
IPAP : Industrial Policy Action Plan
IRR : Internal Rate of Return
KZN : KwaZulu-Natal
MOU : Memorandum of Understanding
NEF : National Empowerment Fund
PFMA : Public Finance Management Act
PIU : Pre-Investment Business Support Unit
POIU : Post Investment Business Support Unit
SEDU : Socio-Economic Development Unit
SME : Small and Medium Enterprise
SPF : Strategic Projects Fund
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 4
3. Overview by the Chairman
Black economic empowerment remains a national imperative for an inclusive economy. As a
driver and thought-leader in promoting and facilitating black economic participation through
the provision of financial and non-financial support, the NEF has evolved steadily into a
credible and effective development finance institution. Having approved 957 transactions
worth R9.5 billion to date, the NEF is positioned to make a meaningful contribution to the
transformation of the economy. In order to continue to deliver on its mandate, it remains critical
that funding is secured in order to ensure the long-term sustainability of the fund.
Since the Strategic Plan was conceptualised in 2014 there are no significant changes to the
strategy of the NEF going forward. The key strategic focus continues to be recapitalisation
and securing new capital from the IDC and/or other government institutions. It remains critical
to urgently implement the business combination process with the IDC as approved by the
stakeholder ministries. Delays in finalising the recapitalisation of the organisation have
consistently resulted in the Board reducing annual targets in order to ensure that activities of
the NEF are managed within available funds. These reductions impeded the impact that the
NEF could have in the economy to advance radical transformation and facilitate the formation
of decent job opportunities.
Another key focus area in the immediate short term has been the improvement of efficiencies
within the fund. The NEF’s strategy is aligned to the dti’s strategic priorities as well as the
National Development plan, specifically through our targets to provide finance to business
ventures established and managed by black people, and thereby investing in black
empowered businesses that have employment creation opportunities in priority sectors
identified in the IPAP, as well as in rural areas and the agricultural sector.
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Strategic Plan for the years 2019/20 - 22 6
5. Strategic Overview
5.1. Vision
Our vision is to be the leading provider of innovative transformation solutions for an
economically inclusive South Africa. We seek to be the lead financier of B-BBEE
investments in the DFI space.
5.2. Mission
The National Empowerment Fund is a catalyst of Broad-Based Black Economic
Empowerment in South Africa.
We enable, develop, promote and implement innovative investment and
transformation solutions to advance sustainable black economic participation in the
economy.
5.3. Values
The NEF has implemented a values & culture programme which has been
developed, communicated and implemented through various workshops with staff.
The values are:
1. Ethics
2. Motivation
3. Performance
4. Ownership
5. Worthy
6. Excellence
7. Respect
5.4. Strategic goals and objectives
The NEF’s key strategic outcome oriented goals against which performance is
reported are to:
1. Provide finance to business ventures established and managed by black
people.
2. Invest in black empowered businesses that have high employment creating
opportunities.
3. Support the participation of black women in the economy.
4. Facilitate investment across all provinces in South Africa.
5. Encourage and promote savings, investment and meaningful economic
participation by black people.
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Strategic Plan for the years 2019/20 - 22 7
6. Advance black economic empowerment through commercially sustainable
enterprises.
7. Establish the NEF in the South African economy as a credible and meaningful
DFI.
8. Establish the NEF as a sustainable DFI.
In order to achieve these objectives the NEF is structured to deliver against this mandate by
performing the following core activities:
� Fund Management, which comprises:
� The Venture Capital & Corporate Finance Division, which is comprised
of uMnotho Fund, the Strategic Projects Fund (SPF) and the Women
Empowerment Fund.
� The SME & Rural Development Division, which consists of Pre-
Investment Unit, iMbewu Fund, Rural & Community Development Fund
and Regional Offices.
� General Counsel, which provides the following:
� Legal support;
� Post-investment support services to the invested portfolio;
� Turnaround, workout and restructuring services,
� Socio-economic Development and Asset Management Units through
which the NEF provides support to communities, aims to foster a
culture of savings and investment among its beneficiaries as well as
promote Enterprise Development.
These core areas are strategically supported by the following units:
� Human resource;
� Finance;
� Information Systems and Technology;
� Supply Chain Management;
� Strategy and Planning;
� Marketing and Communications; and
� Facilities.
Empowerment Dividend
The NEF seeks to measure and assess its impact not only on the basis of financial return, but
in accordance with what is referred to as the Empowerment Dividend which is the socio-
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Strategic Plan for the years 2019/20 - 22 8
economic impact of the NEF’s investment activities, as provided for in the Broad Based Black
Economic Empowerment Act.
The elements of the Empowerment Dividend are measured as follows:
� Contribution to Broad Based Black Economic Empowerment – the NEF
assesses each transaction against the results of the B-BBEE scorecard, before and
after funding, to ensure that each transaction contributes to the advancement of B-
BBEE.
� Participation by black women – the NEF emphasises the empowerment of women
by providing for an additional weighting for black women participation.
� Job Creation – Contribution towards employment creation and the number of jobs
created per rand invested or jobs sustained through investment in expansion type
activities.
� Investment in Priority Growth Sectors – The number of investments facilitating
black ownership and control of existing and new enterprises in the priority sectors of
the economy as identified by the IPAP and the National Development Plan.
� Geographic Spread - Geographic spread of investments and contribution towards
increased economic activity across all provinces, particularly in areas of regional
economic disadvantage.
� Investment Return - The real return that each Fund realises on capital employed,
after the impairment ratios experienced for that fund, as a combined measure of debt,
equity and quasi equity invested.
5.5. Products and Services
In pursuit of this mandate the NEF provides financial and non-financial support to investees.
The financial support provided comprises the provision of innovative financing products to
black entrepreneurs and black empowered businesses via the five funds of the NEF, which
are iMbewu Fund, Rural & Community Development Fund, uMnotho Fund, the Strategic
Projects Fund and the Women Empowerment Fund.
The non-financial support provided comprises pre-investment services and post-investment
services which include mentorship and training for investees. The Turnaround, Workout and
Restructuring services provides support to investee companies that are in distress; and the
Socio- Economic Development Unit focuses on fostering a culture of savings and investment
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 9
among its beneficiaries by offering investor education seminars around the country as well as
by promoting enterprise development.
5.5.1. Financial Support
The NEF provides funding to black empowered businesses and entrepreneurs from R250 000
to R75 million across a range of sectors, for venture capital, start-up, expansion and business
acquisition purposes. The NEF differentiates itself not only with a focused mandate for growing
black economic participation, but by also assuming a predominantly equity-based risk to
maximise the Empowerment Dividend in that it places little if no reliance on the credit strength
of its applicants with the emphasis being on the investment risk of the funding advanced. The
investment risk associated with transactions that apply for funding is mitigated against the
evaluation of the entrepreneur, their ability to make sound commercial decisions which are
also in support of national priorities and government policy such as that contained in the National Development Plan and in support of targeted investments as identified in the dti’s
IPAP. The work of the NEF therefore straddles and complements other DFIs by allowing these
organisations to work in close collaboration in the promotion of B-BBEE with the intervention
of the NEF in many cases as the provider of equity funding allowing for the unlocking of the
bulk of the funding required from other sources.
NEF funding is provided via two divisions viz.
1. SME & Rural Development Division, which comprises two funds, viz.
a. iMbewu Fund; and
b. Rural & Community Development Fund.
The division is also comprised of:
c. the Pre-Investment Unit; and
d. The regional offices.
2. Venture Capital & Corporate Finance Division, which is comprised of:
a. uMnotho Fund; and
b. Strategic Projects Fund
c. Women Empowerment Fund
5.5.2. Non-financial business support
The NEF provides non-financial support through four of its business units, specifically:
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 10
� The Pre-Investment Unit, which provides the first line of non-financial assistance to
prospective investees. The unit provides support to applicants seeking funding, in
additional to entrepreneurial development training.
� The Post-Investment Unit, which manages the investment portfolio and assists
investees with mentorship and training.
� The Turnaround, Workout and Restructuring Unit has been a key addition
complimenting the services of the Post-Investment Unit. Its purpose is to provide
support investee businesses that are experiencing operational and financial
challenges. This team works together with the entrepreneurs in assessing and re-
structuring the financial and/or operational aspects of the businesses.
� The Socio-Economic Development and Asset Management Unit, through which the
NEF provides support to communities, aims to foster a culture of savings and
investment among its beneficiaries through such programmes as the national
investor education programme; as well as promoting Enterprise Development.
5.6. Recent Court Rulings
There are no recent court rulings which would impact on the NEF’s ability to implement its
strategy.
5.7. Updated Situational Analysis
5.7.1. Overview of the NEF’s Performance
The NEF has grown into a credible development finance institution that has managed to
steadily increase approval and disbursement activity over the last few years. From inception
to the end of 31 December 2018, the organisation approved 957 transactions worth R9,5
billion and made disbursements of circa R6,5 billion. The number of job opportunities geared
to be supported since inception is 97 220 (67 318 (69%) of which are new).
Year to date ending 31 December 2018, the NEF has approved 30 transactions worth a total
of R174 million. The NEF committed transactions worth R62 million, and disbursed a total of
R214 million. The Women Empowerment Fund underlies the NEF’s commitment to women
empowerment. Women-owned businesses account for 28% of the new deals disbursed to
date, as at 31 December 2018.
The NEF has built strong systems and processes to grow its portfolio, and is able to continue
to increase deal activity once the fund is recapitalised. In doing so, the NEF would be able to
continue making a meaningful contribution to the economy.
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Strategic Plan for the years 2019/20 - 22 11
5.7.2. Economic Outlook
Global Economic highlights
According to the World Bank, the global economy is expected to slow to 2.9% in 2019,
compared to 3% in 2018. This is largely as a result of stagnating global investment, low global
trade growth, low productivity and higher levels of debt. Furthermore, the impact of the US
and China trade war makes a globale recession very likely by 2020, says the Bank.
Recent low commodity prices have aggravated these factors with conflict and geopolitical
tensions continuing to weigh on economic prospects in several regions. Financing conditions
have tightened, industrial production has moderated, trade tensions have intensified and some
large imerging markets and developing economies have experienced significant financial
stress.Faced with these headwinds, the recovery in emerging markets and developing
economies has lost momentum.
The Bank further warned that the possibility of escalating trade restrictions involving major
economies remained elevated despite the temporary pause in tariff hikes agreed between the
US and China, and the successful negotiation of the new US-Mexico-Canada Agreement,
which have somewhat tempered trade policy uncertainties.This uncertainty is likely to weigh
on firms willingness to invest, export and engage in international value chains, with negative
effects on the global trade outlook.
Emerging-market economies are expected to grow at 4.2 % in 2019, with advanced
economies expected to grow at 2%.
Key global implications to South African markets
The UK’s withdrawal from the EU may enable the Southern African Customs Union to
negotiate improved access for agro-processing and agricultural products to the UK market as
the restrictive conditions hitherto imposed by other EU countries will no longer have to be
accommodated.
South Africa’s motor vehicle exports to the UK may benefit from Brexit should vehicles
produced in the EU face more difficult market entry. However, should the UK vehicle producing
industry suffer setbacks, its demand for South African vehicle parts and components may
decline.
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Strategic Plan for the years 2019/20 - 22 12
Import competition would most likely intensify if Chinese and Mexican clothing manufacturers
lose substantial market access in the US. This would counter ongoing efforts to stabilise the
domestic sector.
It is worthy to note that South Africa’s prudent macroeconomic and fiscal policies, which
include inflation targeting and a flexible exchange rate, enable the economy to adjust to global
volatility, and provide a stable platform for investment.
South African Economic highlights
On the domestic side, the South African economy faced a challenging year in 2018 where the
GDP had a negative growth in two consecutive periods, causing a major stir, that the country
was going into recession. However in the third quarter of 2018, the economy grew by 2.2%,
bring an end to the country’s second recession since 1994.
Following the two consecutive quarters of decline, the South African economy recorded a
promising recovery of 2.2% growth in GDP for the third quarter. This recovery was as a result
of higher contributions in a number of industries, most notably by transport, finance,
manufacuturing and business service.
High unemployment remains a key challenge in the South African economy as the
unemployment rate remained stagnant at 27.7% since the first quarter of 2017, which is the
highest observed since September 2003. Of the increased number of job-seekers, 56% were
young people aged 15-34, driving the youth unemployment rate to 38.6%.
According to the revised World Bank forecast, the South African economy is projected to grow
by 1.3% in 2019, an adjustment from its June 2018 estimate of 1.8%. The Bank cited that high
unemployment, slow growth in household credit extension as well as fiscal consolidation which
limits government spending, as the reasons for the downward adjustment.
However, a recovery is expected in 2020/21 to 1.7%, which, it is anticipated will be supported
by a stronger regional growth, more favourable weather conditions, reliable electricity supply,
less volatile labour relations, and stabilising commodity prices. The projected recovery of 1.7%
for 2020 is however a significant far cry from the 5.4% growth required in order to attain the
NDP aspirations.
Considerations for the NEF
In the midst of a global and domestic difficult economic environment, the NEF remains
committed to its role in contributing to the achievement of national goals of poverty alleviation,
transformation and economic growth. In addition, the NEF recognises its responsibility as a
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Strategic Plan for the years 2019/20 - 22 13
funder to black-owned businesses to encourage investment activites in the country that will
further contribute to job creation opportunities in a time where unemployment continues to be
a challenge.
NEF is excited about the ambitious goals shared by the President of the Republic of South
Africa, H.E Cyril Ramaphosa, in State of the Nation Address 2018. We commend and support
these aspirations to accelerate transformation as they directly address the triple challenge of
poverty, inequality and unemployment whilst striving for economic growth. The goals include:
� The establishment of the Digital Industrial Revolution Commission in partnership with
the private sector and civil society, to enable the country to seize the opportunities and
manage the challenges of rapid advances in information and communication
technology;
� The introduction of the first national minimum wage in South Africa that strives to
reduce wage inequality; and
� The free higher education and training for first year students from households with a
gross combined annual income of up to R350,000 as well as the introduction of the
Youth Employment Service (YES) Programme that will assist in upskilling the nations
labour force and increase the competitiveness of South Africa’s economy.
Armed with the above-mentioned national goals which are supported by the continuous
regulatory improvements, positive business confidence and economic outlook, we look
forward to 2018 and the years ahead.
In addition, the President has also stressed the importance of supporting start-ups and small
businesses to sustain the growth of the South African economy. In response to this call and
with a strong commitment to advancing an empowerment dividend comprising of job creation
opportunities, women economic empowerment, investment across all provinces in the country;
the NEF serves to lend support and credibility to black-owned businesses which have a higher
risk profile in a climate where otherwise investment in these businesses would be minimal.
The NEF is therefore, equipped and experienced to make higher risk and sustainable
investments that will advance economic transformation and realise the B-BBEE.
NEF has participated in selective pieces of legislation that address the B-BBEE Act and
therefore, in this regard, we believe that our engagement in discussions at Parliamentary
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Strategic Plan for the years 2019/20 - 22 14
sessions is a justification and recognition of NEF as a thought leader in the advancement of
economic transformation.
With a strong commitment to advancing an empowerment dividend comprising of job
opportunities creation, women economic empowerment, investment across all provinces in
the country; the NEF serves to lend support and credibility to black-owned businesses which
have a higher risk profile in a climate where otherwise investment in these businesses would
be minimal. The NEF is therefore equipped and experienced to make higher risk investments
that will advance economic transformation.
Identifying Growth Strategies
In this challenging environment, the NEF recognises that in order to enhance support to future
investees/entrepreneurs in ways that ensure viability and sustainability it needs to focus on
strategically positioning itself in order to not only identify business opportunities with good
market prospects that require funding but also to take advantage of them. State-led initiatives
such as the newly established Black Industrialists Programme as well as Operation Phakisa
present opportunities for the NEF to expand its activities to tap into sectors where an enabling
environment is being created by various government programmes.
Also, some structural constraints that have restricted economic growth in the past have led to
opportunities for entrepreneurs to capitalise on. For example, South Africa was plagued with
an electricity supply crisis since 2008, and which led to the emergence of green industry
entrepreneurs that specialise in renewable energy and harness natural resources e.g. wind
and solar radiation, and process them to create electricity for both the local and international
markets. The NEF also recognises the country’s high unemployment rate as an obstacle
towards real transformation and is proud of the progress it continues to make towards the
support and creation of employment opportunities. The NEF strives to maximise the
empowerment dividend through targeting investment activities with the most potential for job
creation, with a social multiplier effect, as well as sustainable business success.
The NEF continues to contribute to the national transformation agenda whilst remaining
responsive to the economic environment and adjusting accordingly. Also, discussions at
Board level continue to challenge the organisation to constantly interrogate ways in which it
operates and evaluate whether or not they enable the organisation to effectively fulfil its
mandate.
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Strategic Plan for the years 2019/20 - 22 15
5.7.3. The NEF’s Target market The NEF provides funding to black entrepreneurs for start-up and expansion companies as
well as for acquiring equity in existing white-owned businesses in line with the transformation
objectives of B-BBEE. The target market is further segmented into the following tiers:
� Black individuals and groups with significant operational experience and an
extensive investment portfolio and accumulated capital (Tier 1).
� Black individuals and groups with operational experience which could include having
concluded a limited number of BEE transactions. This sector typically has limited
accumulated capital with existing Investments still encumbered / “not in the money
yet” (Tier 2).
� Black individuals and groups with limited business or entrepreneurial experience
(Tier 3).
� White individuals and groups who own, manage and/or control economic means and
are potential partners for, or opponents to, economic transformation (Tier 4).
5.7.3.1. Challenges faced by the target market
In bridging the economic divide the NEF strives to address the following market failures:
� Limited own capital,
� Poor quality of business plans,
� Lack of accurate and reliable financial information,
� Limited management skills, including financial, marketing and technical expertise,
� Lower bargaining power and strong competition from established businesses with
entrenched market dominance,
� Inadequate access to affordable capital, and
� Lack of access to international markets.
In response to these challenges, the NEF has developed financial and non-financial services
to assist the target market. The NEF offers funding in the range from R250 000 to R75 million,
and projects are funded and structured individually, with a focus on sustainability. Suitable
applicants therefore have access to affordable capital through the NEF.
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 16
5.7.4. Analysis of Strengths, Weaknesses, Opportunities and Threats (SWOT)
A brief summary of the NEF’s strengths, weaknesses, opportunities and threats is listed
below:
Strengths
� Innovative and solutions-based products.
� Institutional and operational maturity.
� Maintenance of high standards of corporate
governance. The NEF has rigorous accounting,
governance and regulatory frameworks together with
sound financial management systems. The NEF
also has a good internal control environment.
� Non-financial support provided.
� Growing national footprint, together with increased
visibility through local conferences, exhibitions and
civil society initiatives, which optimises visibility of
the NEF.
� Employee Wellness, training, performance
management, together with the Values and Culture
Programme is contributing to a healthy and
performance-orientated organisational culture.
� Technically strong and committed staff.
� Track record in BEE funding.
� Established portfolio with lessons learnt database.
Opportunities
� Providing access to funding for BEE entrants.
� Thought leadership on B-BBEE.
� Ability to contribute towards job support and
creation.
� Contribute to closing the gaps in the economic
value chain.
� Support of agriculture and other priority sectors.
� Low cost of funding.
� Expansion into other parts of Africa.
Weaknesses
� Need to be recapitalised in order to continue fulfilling
mandate.
� Need to rebuild staff morale.
� Sustainability and quality of deal flow which impacts
impairments and write-offs. Low approval rate on
number of applications received due to the poor
quality of the applications.
� Need to improve efficiency of information systems.
Threats
� Inability to secure additional capital.
� Lower consumer and investor confidence.
� Slow pace of transformation across the
economy.
� B-BBEE being viewed as a stand-alone policy
with organisations only complying with minimum
requirements.
� Potential gearing of the balance sheet could
increase the cost of funding for investees.
� Potential loss of key staff.
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 17
6. Products and Services
6.1. Financial Support
6.1.1. iMbewu Fund
The iMbewu Fund seeks to address market failures experienced by black-owned SME’s.
The fund has three products, viz. Franchise, Contract and Entrepreneurship products. An
overview of the products is outlined below.
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National Empowerment Fund
Strategic Plan for the years 2019/20 – 22 19
6.1.2. Rural and Community Development Fund
The Rural and Community Development Fund facilitates community involvement in projects
by supporting the B-BBEE Act objectives of empowering local and rural communities. In
accordance with the B-BBEE Act, it aims to increase the extent to which workers, cooperatives
and other collective enterprises own and manage business enterprises.
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w
orke
rs tr
ust.
Pri
nci
pal
go
al
To c
ater
for r
ural
ent
repr
eneu
rs o
r co
mm
uniti
es s
eeki
ng to
buy
equ
ity in
ex
istin
g ru
ral a
nd c
omm
unity
ent
erpr
ises
To a
ssis
t rur
al e
ntre
pren
eurs
and
co-
oper
ativ
es a
nd c
omm
uniti
es w
ith e
quity
co
ntrib
utio
n to
war
ds e
stab
lishm
ent o
f su
stai
nabl
e ne
w v
entu
res
in a
gri-s
ecto
r.
To fa
cilit
ate
invo
lvem
ent a
nd o
wne
rshi
p by
co
mm
uniti
es in
pro
ject
s pr
omot
ing
soci
al
uplif
tmen
t
Typ
es o
f co
mp
anie
s/p
roje
cts
Focu
s on
sm
all t
o la
rge
vent
ures
whe
re
partn
ersh
ips
betw
een
NEF
, BEE
par
ties
or
com
mun
ity e
ntity
, and
tech
nica
l par
tner
is
invo
lved
Med
ium
siz
ed n
ew v
entu
re p
roje
cts
with
to
tal f
undi
ng re
quire
men
ts o
f bet
wee
n R
1m
and
R50
m
Rur
al a
nd c
omm
unity
pro
ject
s us
ing
entit
ies
such
as
co-o
pera
tives
and
priv
ate
com
pani
es
Typ
es o
f in
stru
men
t D
ebt,
equi
ty, q
uasi
equ
ity a
nd p
refe
renc
e sh
ares
D
ebt,
equi
ty, q
uasi
equ
ity a
nd p
refe
renc
e sh
ares
D
ebt,
equi
ty, q
uasi
equ
ity a
nd p
refe
renc
e sh
ares
Bla
ck e
qu
ity
thre
sho
ld
Min
imu
m o
f 50
.1%
Pri
cin
g
Pri
me
(+/-
) E
mp
ow
erm
ent
Div
iden
d o
r D
evel
op
men
t Im
pac
t In
flu
ence
d
Ter
ms
of
Inve
stm
ent
and
oth
er t
erm
s
� 5
to 1
0 ye
ars
� C
lear
exi
t Stra
tegy
�
Up
to 1
0 ye
ars
� To
tal p
roje
ct e
quity
≥ 4
0%
� N
EF E
xpos
ure
≤ 50
% o
f pro
ject
co
sts
� U
p to
10
year
s
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 21
6.1.3. uMnotho Fund
This Fund is designed to improve access to BEE capital and has five products: Acquisition
Finance, New Ventures Finance, Expansion Finance, Capital Markets Fund, and Liquidity and
Warehousing. These products provide capital to black-owned and-managed enterprises, black
entrepreneurs who are buying equity shares in established white-owned enterprises, new
ventures finance and BEE businesses that are or wish to be listed on the JSE. Funding ranges
from R2 million to R75 million. The Fund pricing is to achieve returns that are in line with the
level of risk taken by the NEF.
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
22
A
cqu
isit
ion
Fin
ance
New
Ven
ture
Fin
ance
E
xpan
sio
n C
apit
al
Cap
ital
Mar
kets
L
iqu
idit
y &
War
eho
usi
ng
P
rop
erty
Fu
nd
Inve
stm
ent
thre
sho
ld
R2
milli
on to
R75
milli
on
R5
milli
on to
R75
milli
on
R5
milli
on to
R75
milli
on
R2
milli
on to
R75
milli
on
R2
milli
on to
R75
milli
on
R5
milli
on to
R75
milli
on
Pro
du
ct
pu
rpo
se
BEE
appl
ican
ts
seek
ing
to fu
nd
equi
ty p
urch
ases
of
betw
een
R2
milli
on
and
R75
milli
on in
exis
ting
busi
ness
es.
BEE
parti
es s
eeki
ng
to p
artic
ipat
e in
med
ium
-siz
ed
Gre
enfie
lds
proj
ects
with
tota
l fun
ding
requ
ests
of b
etw
een
R10
milli
on a
nd R
200
milli
on.
Fund
ing
prov
ided
to e
ntiti
es th
at a
re
alre
ady
blac
k -
empo
wer
ed, b
ut
seek
exp
ansi
on
capi
tal t
o gr
ow th
e
busi
ness
.
This
pro
duct
inve
sts
in
BEE
ente
rpris
es,
parti
cula
rly th
ose
owne
d
by b
lack
wom
en th
at
seek
to li
st o
n th
e JS
E or
its ju
nior
AltX
mar
ket.
The
uMno
tho
Fund
will
also
hel
p lis
ted
BEE
com
pani
es to
rais
e
addi
tiona
l cap
ital f
or
expa
nsio
n.
This
pro
duct
ass
ists
BEE
shar
ehol
ders
who
nee
d to
sel
l
a po
rtion
or a
ll of
thei
r sha
res
(as
min
ority
sta
kes
in u
nlis
ted
firm
s ar
e ha
rd to
sel
l). A
lso
acqu
ires
and
tem
pora
rily
war
ehou
ses
thes
e sh
ares
befo
re o
n -se
lling
thos
e to
new
BEE
shar
ehol
ders
, and
refin
ance
s BE
E sh
areh
oldi
ngs
whe
re e
xist
ing
finan
cing
stru
ctur
es a
re c
ostly
and
/or
inef
ficie
nt.
This
pro
duct
see
ks to
cate
r for
BEE
gro
ups
seek
ing
to b
uy e
quity
in
exis
ting
prop
erty
busi
ness
es; d
evel
op
new
pro
perty
ven
ture
s;
and
to p
rovi
de
expa
nsio
n fin
ance
to
entit
ies
that
are
alre
ady
empo
wer
ed.
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
23
A
cqu
isit
ion
Fin
ance
New
Ven
ture
Fin
ance
E
xpan
sio
n C
apit
al
Cap
ital
Mar
kets
L
iqu
idit
y &
War
eho
usi
ng
P
rop
erty
Fu
nd
Pro
du
ct
crit
eria
� M
ediu
m to
larg
e co
mpa
nies
�
Focu
s on
pa
rtner
ship
s w
ith e
xist
ing
man
agem
ent
team
s an
d ot
her
equi
ty in
vest
ors
� Ac
tive
BEE
invo
lvem
ent i
n in
vest
ee
com
pani
es
� BE
E fin
anci
al
cont
ribut
ion
on a
ca
se-b
y-ca
se
basi
s
� M
ediu
m-s
ized
gr
eenf
ield
pr
ojec
ts w
ith to
tal
fund
ing
requ
ests
of
bet
wee
n R
10
milli
on a
nd R
200
milli
on.
� BE
E-sp
ecifi
c fin
anci
al
cont
ribut
ion
asse
ssed
on
a ca
se-b
y-ca
se
basi
s �
NEF
exp
osur
e to
th
e pr
oduc
t ge
nera
lly n
ot to
ex
ceed
50%
of
the
tota
l pro
ject
co
sts
� Pr
oven
m
anag
emen
t ex
perie
nce
with
in
the
cons
ortiu
m
� Ac
tive
BEE
invo
lvem
ent i
n in
vest
ee
com
pani
es
� A
ctiv
e BE
E in
volv
emen
t in
inve
stee
co
mpa
nies
�
Secu
rity
to
incl
ude
pers
onal
gu
aran
tees
and
se
curit
y ov
er
busi
ness
as
sets
� M
ediu
m to
larg
e co
mpa
nies
�
Focu
s on
pa
rtner
ship
s w
ith
exis
ting
man
agem
ent
team
s an
d ot
her
equi
ty in
vest
ors
� Ac
tive
BEE
man
agem
ent
parti
cipa
tion
� Ac
tive
BEE
invo
lvem
ent i
n in
vest
ee c
ompa
nies
�
BEE
finan
cial
co
ntrib
utio
n on
a
case
-by-
case
bas
is
� M
ediu
m to
larg
e co
mpa
nies
�
Focu
s on
par
tner
ship
s w
ith e
xist
ing
man
agem
ent
team
s an
d ot
her e
quity
in
vest
ors
� Ac
tive
BEE
man
agem
ent
parti
cipa
tion
� Ac
tive
BEE
invo
lvem
ent i
n in
vest
ee c
ompa
nies
�
BEE
finan
cial
con
tribu
tion
on a
cas
e-by
-cas
e ba
sis
� M
ediu
m to
larg
e co
mpa
nies
�
Alig
nmen
t with
pr
iorit
y se
ctor
s �
Activ
e BE
E in
volv
emen
t in
inve
stee
co
mpa
nies
�
BEE
finan
cial
co
ntrib
utio
n on
a
case
-by-
case
bas
is
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
24
A
cqu
isit
ion
Fin
ance
New
Ven
ture
Fin
ance
E
xpan
sio
n C
apit
al
Cap
ital
Mar
kets
L
iqu
idit
y &
War
eho
usi
ng
P
rop
erty
Fu
nd
Typ
es o
f in
stru
men
t
Inve
stm
ent
inst
rum
ent c
an
incl
ude
a co
mbi
natio
n of
deb
t, eq
uity
and
m
ezza
nine
fina
nce.
Inve
stm
ent
inst
rum
ent c
an
incl
ude
a co
mbi
natio
n of
deb
t, eq
uity
and
m
ezza
nine
fina
nce.
Inve
stm
ent
inst
rum
ent c
an
incl
ude
a co
mbi
natio
n of
de
bt, e
quity
and
m
ezza
nine
fina
nce.
Inve
stm
ent i
nstru
men
t ca
n in
clud
e a
com
bina
tion
of d
ebt,
equi
ty a
nd m
ezza
nine
fin
ance
.
Inve
stm
ent i
nstru
men
t can
in
clud
e a
com
bina
tion
of d
ebt,
equi
ty a
nd m
ezza
nine
fin
ance
.
Inve
stm
ent i
nstru
men
t ca
n in
clud
e a
com
bina
tion
of d
ebt,
equi
ty a
nd m
ezza
nine
fin
ance
.
Bla
ck
equ
ity
thre
sho
ld
Min
imu
m o
f 25
.1%
M
inim
um
of
25.1
%
Min
imu
m o
f 50
.1%
M
inim
um
of
25.1
%
Min
imu
m o
f 25
.1%
M
inim
um
of
50.1
%
Pri
cin
g
In
flu
ence
d b
y E
mp
ow
erm
ent
Div
iden
d o
r D
evel
op
men
t Im
pac
t. D
ebt
linke
d t
o p
rim
e ra
te a
nd
eq
uit
y b
ased
on
tar
get
IRR
Ter
ms
of
Inve
stm
ent
and
oth
er
term
s
Typi
cal i
nves
tmen
t ho
rizon
of 4
to 7
ye
ars .
Typi
cal i
nves
tmen
t ho
rizon
of 5
to 1
0 ye
ars.
Typi
cal i
nves
tmen
t ho
rizon
of 4
to 7
ye
ars .
Typi
cal i
nves
tmen
t ho
rizon
of 4
to 7
yea
rs.
Ty
pica
l inv
estm
ent h
oriz
on o
f 4
to 7
yea
rs.
Ty
pica
l inv
estm
ent
horiz
on o
f up
to 1
0 ye
ars
on s
enio
r deb
t an
d up
to 1
5 ye
ars
on
mez
zani
ne d
ebt a
nd
equi
ty in
stru
men
ts.
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 25
6.1.4. Strategic Projects Fund
The Strategic Projects Fund will facilitate the acquisition of equity in large strategic projects
where the NEF assumes the role of BEE partner.
The fund aims to play a central role in early stage projects by identifying, initiating, scoping
and developing projects that are in sectors identified by government as the key drivers to
South Africa’s economic growth. These projects will be taken through 6-stages of the project
development phases.
The phases being the following:
Scoping and Concept Study, Pre-Feasibility Study, Bankable Feasibility Study, Financial
Closure, Construction Phase, and Technical Completion.
Through the Strategic Projects Fund, NEF will facilitate B-BBEE in the following ways:
� Warehouse equity for B-BBEE in early stage projects at valuations with little or no
premium paid to access the projects. This enables NEF to distribute its warehoused
equity to B-BBEE at lower valuations once the project is operational;
� Take early stage risk on behalf of black people as early stage projects have higher
execution risks compared to operational companies. The NEF will assume most of
the financing risk and devise instruments to carry or transfer equity to B-BBEE once
project fatal flaws have been mitigated;
� Manage the project and venture capital finance structuring complexities as it is more
complex and difficult to raise capital for new ventures as compared to uMnotho
finance deals where valuations can be ascertained based on historical performance
and risks are clearly understood;
� Enable project promoters to focus on making projects bankable and operational by
giving the B-BBEE status as NEF is the only DFI gazetted as a B-BBEE facilitator;
� Once the initial project risks have been reduced, the NEF will transfer its
shareholding to selected B-BBEE groups through a transparent process.
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 26
6.1.5 The Women Empowerment Fund
Purpose of the Women Empowerment Fund programme, established in the financial year
2014/15 is to accelerate the women economic empowerment through the provision of funding
to businesses owned by black women.
� Finance will be provided from R250 000 to R75 million across the whole of the NEF
existing product suite described above.
� Depending on type of funding the horizon of funding provided ranges between 4 and
10 years.
� Minimum of 51% black female ownership is a main criteria.
� Black women have to be operationally involved at the managerial and board levels.
� Other empowerment dividend pillars have to be considered.
6.2. Non-financial Support
6.2.1. Investor Education
The NEF’s Investor Education campaign is planned to hold over 167 training sessions
across the country over the strategic period, providing information necessary to make
prudent savings and investment decisions.
6.2.2. Pre-Investment Business Support
Applicants for funding may be excellent entrepreneurs, but often struggle to navigate the
necessary application procedures and to manage their businesses and this is often evident
during the initial assessment of the funding application. The NEF therefore assists with funding
advice, business planning and general assistance to help ensure that applications are of
sufficient quality to complete all steps in the application process.
As the first point of contact for many potential clients, the PIU's primary functions are to:
� Provide information on NEF products and procedures;
� Control and assist in drawing up funding applications;
� Identify applications that will qualify for funding;
� Keep clients informed on the progress of their applications;
� Advise applicants and assist with drawing up business plans; and
� Where applicable, recommend entrepreneurs for incubation.
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 27
Entrepreneurship Development Strategy
By 2010 the NEF through its Fund Management Divisions faced a number of challenges in
delivering on its Mandate. These challenges included:
� The number of applications received, of up to 100 per month.
� The quality of these applications, as evidenced by an approval ratio of less than 3%
of applications received.
� The sophistication of the target market in terms of the ability to package bankable
business plans.
� The skills of the target market in terms of business experience and industry
knowledge.
� High impairments (especially in the SME Fund) where a total impairments ratio
(including write offs) of about 40% was experienced.
� The limited own contribution and lack of collateral prevalent in the typical NEF
application.
The NEF’s Pre-Investment Unit then developed the Entrepreneurship Development Strategy
in order to better assess and support the development of black entrepreneurs. The Rationale
for this strategy was to take cognisance of the NEF mandate and operating environment with
a view to:
� Enhancing the NEF’s interventions to aspirant black entrepreneurs in order to
mitigate financial risk for the NEF whilst supporting sustainable black businesses;
� Identify potential tools that can be used by the NEF to better assess the
entrepreneurial readiness of potential applications;
� Propose refinements to the NEF’s investment process in order to provide a more
efficient investment process particularly in the case of SME’s whilst maintaining
sound investment methodologies i.e. provision of SMART capital;
� Explore additional financial interventions aimed at providing black entrepreneurs with
early stage funding to address limited own capital; and
� Enhance NEF impact in developing entrepreneurship in South Africa more broadly
with focus on Financial and Non-Financial Support as well as advocacy on issues
pertaining to entrepreneurship.
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 28
The Pre-Investment Unit has implemented a business incubation model in order to support
the development of aspirant black entrepreneurs. The NEF realises the value and impact that
can be made through incubation and has established partnerships with various incubation
service providers.
6.2.3. Post-Investment Business Support
Black empowered businesses need to be robust and self-sustaining for B-BBEE to succeed.
In recognition of this fact, the NEF has established structures to monitor its clients for risk and
provide advice when needed. Although start-ups are inherently higher risk, the rewards for
success are jobs and increased capital for further start-ups.
The Post Investment Unit manages this process of client monitoring and support. The unit is
responsible for:
� Monitoring and preparing management information on investments
� Administering investment contracts
� Coordinating mentorship programmes
� Facilitating investment valuations with fund managers
� Working with distressed assets and recommending solutions such as liquidations,
turnarounds and restructurings
� Conducting strategic reviews
The Post-Investment Unit also facilitates access to training for investees according to the
needs of the business.
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 29
7. Key programmes aligned to Government Priorities
7.1. Alignment to the dti’s priorities
The NEF actively contributes to the following strategic objectives of the dti.
the dti Strategic Objectives NEF Strategic Objectives Programmes/ Activities
Facilitate transformation of the
economy to promote industrial
development, investment,
competitiveness and employment
creation.
Provide finance to business
ventures established and
managed by black people.
Approval and Commitment
activities by the funds. (iMbewu
Fund, Rural & Community
Development Fund, uMnotho
Fund, Women Empowerment
Fund and Strategic Projects
Fund).
Invest in black empowered
business’ that have high
employment creating
opportunities.
Approval and Commitment
activities by the funds. (iMbewu
Fund, Rural & Community
Development Fund, uMnotho
Fund, Women Empowerment
Fund and Strategic Projects Fund)
Black economic empowerment is
advanced through commercially
sustainable enterprise.
Non-financial support activities
including mentorship,
entrepreneurial development, and
portfolio management activities
Facilitate broad-based economic
participation through targeted
interventions to achieve more
inclusive growth.
Encourage and promote savings,
investment and meaningful
economic participation by black
people.
Investor education campaign.
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 30
7.2. Alignment to the National Development Plan
Enabling milestones listed in the National Development Plan to which the NEF can
contribute include:
� Increasing employment from 13 million in 2010 to 24 million in 2030.
� Broaden ownership of assets to historically disadvantaged groups.
By focusing on its mandate which is to promote and facilitate black economic participation in
the economy, the NEF is able to contribute towards the transformation of the economy. In
particular, the NEF can contribute towards the achievement of these milestones by
contributing to the creation of employment through the financial and non-financial support of
entrepreneurs.
Through the funding of sustainable local black-owned ventures, the NEF would be actively
contributing towards supporting local, black-owned, small and medium sized enterprises, and
in doing so, supporting the job creation abilities of these firms. The NEF also strives to
contribute towards the promotion of labour absorbing industries by funding transactions in the
priority sectors. In addition, the funding provided by the NEF can support local business and
contribute towards attract funding from private investors through co-funding arrangements.
The NEF is able to contribute towards the creation of an integrated rural economy through its
Rural & Community Development Fund, which focuses on funding agricultural projects in rural
areas. In doing so, the fund contributes to the development of rural economies, as well as the
development of agriculture and agro-processing and tourism in rural areas.
Through the continuation of its Investor Education Programme, the NEF endeavours to
inculcate a spirit of entrepreneurship, as well as savings and investment.
“Employment scenarios prepared by the Commission suggest that most
new jobs are likely to be sourced in domestic-orientated businesses, and in growing small- and medium-sized firms.”
(Page 39, National Development Plan)
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
3
1
7.3.
A
lign
men
t w
ith
Ou
tco
me
4 o
f th
e M
ediu
m T
erm
Str
ateg
ic F
ram
ewo
rk
The
alig
nmen
t of t
he N
EF’s
stra
tegy
and
act
iviti
es w
ith O
utco
me
4 of
the
Med
ium
Ter
m S
trate
gic
Fram
ewor
k is
pre
sent
ed b
elow
. S
ub
-Ou
tco
me
Act
ion
s In
dic
ato
rs
NE
F T
arg
et &
Act
ion
s
1.
Pro
du
ctiv
e in
vest
men
t is
effe
ctiv
ely
cro
wd
ed in
thro
ug
h t
he
infr
astr
uct
ure
bu
ild
pro
gra
mm
e.
Su
pp
ort
fo
r lo
cal
sup
plie
rs f
or
infr
astr
uct
ure
pro
gra
mm
e.
% s
har
e o
f lo
cal
inp
uts
in g
ove
rnm
ent
infr
astr
uct
ure
.
The
NEF
su
ppor
ts
the
gove
rnm
ent’s
in
frast
ruct
ure
prog
ram
mes
by
supp
ortin
g lo
cal s
uppl
iers
. Fo
r ins
tanc
e, th
e N
EF h
as fu
nded
loca
l B-B
BEE
supp
lier i
nvol
ved
in th
e PR
ASA
rollin
g st
ock
supp
ly c
ontra
ct. T
he p
roje
ct a
lso
aim
s to
pro
vide
Bla
ck w
omen
ow
ned
busi
ness
es w
ith a
n ef
fect
ive
plat
form
from
whi
ch th
ey c
an tr
ansi
tion
into
inde
pend
ent b
usin
esse
s.
Pas
sen
ger
Rai
l Ag
ency
of
So
uth
Afr
ica
(PR
AS
A)
(R90
mill
ion
co
mm
itte
d)
� PR
ASA
initi
ated
a r
ollin
g st
ock
fleet
ren
ewal
pro
cure
men
t pr
ogra
m
wor
th R
50bn
with
exp
ecte
d m
aint
enan
ce c
ontra
ct o
f R
10bn
ove
r 10
year
s to
repl
ace
the
agin
g st
ock.
� PR
ASA
inte
nd fo
r loc
al B
lack
ent
repr
eneu
rs to
par
ticip
ate
econ
omic
ally
in th
e ro
ll ou
t of t
he ro
lling
stoc
k.
Dur
ing
the
initi
al s
tage
s, th
e N
EF w
areh
ouse
d th
e sh
ares
inte
nded
to b
enef
it
Activ
e Bl
ack
Ente
rpris
es, I
nves
tor B
lack
Ent
erpr
ises
, Em
ploy
ee T
rust
s, a
nd
the
Educ
atio
n Tr
ust w
hich
will
bene
fit a
ppro
xim
atel
y 12
0 pe
ople
.
The
proj
ect a
ims
to a
chie
ve a
min
imum
of 6
6% a
vera
ge lo
cal c
onte
nt.
T
he
bu
ildin
g o
f st
rate
gic
infr
astr
uct
ure
sti
mu
late
s
cro
wd
ing
in o
f p
rod
uct
ive
inve
stm
ent.
New
pro
du
ctiv
e
inve
stm
ents
uti
lise
the
infr
astr
uct
ure
pro
vid
ed b
y ev
ery
SIP
.
By s
uppo
rting
tou
rism
inf
rast
ruct
ure
and
film
ind
ustry
pro
ject
s, t
he N
EF i
s
inve
stin
g in
stra
tegi
c in
frast
ruct
ure
that
has
the
abi
lity
to a
ttrac
t pr
oduc
tive
inve
stm
ent.
Two
of th
ese
inve
stm
ents
are
out
lined
bel
ow:
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
3
2
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
Gra
sko
p (
R33
.4 m
illio
n in
vest
ed)
� Th
e G
rask
op G
orge
are
a is
bei
ng d
evel
oped
into
a m
ajor
tour
ism
nod
e on
the
Pano
ram
a To
uris
t R
oute
in M
pum
alan
ga t
hrou
gh t
he n
ew A
dven
ture
Cen
tre.
� Th
e m
ain
feat
ure
of th
e pr
ojec
t is
the
cons
truct
ion
of a
n ou
tdoo
r lift
sys
tem
that
will
be a
ble
to fe
rry p
eopl
e up
and
dow
n of
f the
clif
f-fac
e in
to th
e fo
rest
envi
ronm
ent b
elow
. The
fore
st e
nviro
nmen
t will
have
var
ious
ele
vate
d an
d
grou
nd w
alkw
ays
that
will
allo
w v
isito
rs to
exp
lore
the
uniq
ue e
nviro
nmen
t.
� Su
ppor
ting
this
out
door
lift s
yste
m w
ill be
a n
ewly
con
stru
cted
tour
ism
cen
tre
that
will
prov
ide
a m
ultit
ude
of to
uris
m p
rodu
cts
and
serv
ices
, inc
ludi
ng: a
rest
aura
nt, b
ar, r
etai
l out
lets
, kid
s pl
ay a
rea
and
cent
re m
anag
emen
t offi
ces
that
will
supp
ort t
he e
ntire
dev
elop
men
t.
� In
the
med
ium
-term
the
proj
ect w
ill co
nstru
ct a
36-
bed
hote
l in th
e G
orge
that
will
supp
ort P
hase
I th
roug
h th
e pr
ovis
ion
of a
dditi
onal
sup
port
infra
stru
ctur
e
such
as
the
hote
l gue
st p
arki
ng, l
aund
ry, o
ffice
s et
c. T
he p
roje
ct w
ill cr
eate
145
jobs
.
Cap
e P
oin
t F
ilm S
tud
ios
� C
ape
Poin
t Film
Stu
dios
(CPF
S) a
ims
to d
evel
op th
e fir
st p
urpo
se b
uilt
four
Prec
inct
s Se
a an
d U
nder
wat
er S
ound
Sta
ge in
the
Sout
hern
Hem
isph
ere.
� Th
ere
has
been
gro
win
g de
man
d fo
r pro
duct
ion
faci
litie
s of
an
inte
rnat
iona
l
stan
dard
in S
outh
Afri
ca b
y H
olly
woo
d pr
oduc
ers.
� Th
eref
ore,
CPF
S ai
ms
to a
ddre
ss th
is s
hortf
all b
y of
ferin
g un
ique
and
nic
he
wat
er s
tage
faci
litie
s th
at a
re c
urre
ntly
not
ava
ilabl
e in
the
coun
try in
add
ition
to e
xist
ing
soun
d st
ages
.
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
3
3
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
� Th
e pr
ojec
t ha
s gr
eat
job
crea
tion
pote
ntia
l an
d w
ill as
sist
to
revi
ve a
n
econ
omic
ally
-dep
ress
ed a
rea
in A
tlant
is, C
ape
Tow
n. T
his
proj
ect w
ill cr
eate
50 d
irect
and
450
0 in
dire
ct jo
bs.
2.
Th
e p
rod
uct
ive
sect
ors
acco
un
t fo
r a
gro
win
g
shar
e o
f p
rod
uct
ion
an
d
emp
loym
ent.
IPA
P im
ple
men
ted
an
d
revi
ewed
reg
ula
rly
in
term
s o
f im
pac
ts o
n
gro
wth
, em
plo
ymen
t,
inve
stm
ent,
ou
tpu
t,
exp
ort
s an
d A
fric
an
reg
ion
al d
evel
op
men
t.
IPA
P s
ecto
r
inte
rven
tio
ns
tow
ard
s
gro
wth
, em
plo
ymen
t
crea
tio
n a
nd
mo
re
equ
itab
le in
com
es
un
der
way
.
In 2
007,
the
NEF
est
ablis
hed
the
SPF,
to p
rovi
de v
entu
re c
apita
l ent
repr
eneu
r
fund
ing
in e
arly
dev
elop
men
t sta
ge p
roje
cts
with
in s
trate
gic
Sout
h Af
rican
econ
omy-
driv
ing
sect
ors
as p
er g
over
nmen
t’s IP
AP.
In l
ine
with
IPA
P, S
PF w
as e
stab
lishe
d to
: cr
eate
new
man
ufac
turin
g an
d
indu
stria
l ca
paci
ty,
crea
te a
n in
clus
ive
econ
omy
and
new
job
opp
ortu
nitie
s,
incr
ease
Sou
th A
frica
’s e
xpor
t ear
ning
pot
entia
l and
redu
ce im
port
depe
nden
cy,
as w
ell a
s to
incr
ease
co -
inve
stm
ent a
nd li
nkag
e w
ith fo
reig
n di
rect
inve
stm
ent.
SPF
focu
ses
its i
nves
tmen
ts i
n th
e st
rate
gic
Sout
h Af
rican
eco
nom
y-dr
ivin
g
sect
ors,
inc
ludi
ng b
ut n
ot l
imite
d to
; m
iner
al a
nd r
esou
rces
ben
efic
iatio
n,
infra
stru
ctur
e,
gree
n/re
new
able
in
dust
ries,
m
anuf
actu
ring,
ag
ro-p
roce
ssin
g,
busi
ness
pro
cess
ser
vice
s an
d to
uris
m.
SPF
curre
ntly
has
abo
ut 2
7 pr
ojec
ts u
nder
dev
elop
men
t.
The
tota
l pot
entia
l num
ber o
f job
opp
ortu
nitie
s to
be
crea
ted
is o
ver 8
5 00
0.
The
impl
emen
tatio
n of
the
proj
ects
requ
ires
appr
oxim
atel
y R
28 b
illion
in c
apita
l,
of w
hich
app
roxi
mat
ely
R4
billio
n is
due
by
the
NEF
, in
res
pect
of
its e
quity
inte
rest
s he
ld in
the
proj
ects
.
Ag
ricu
ltu
ral P
olic
y
Act
ion
Pla
n (
AP
AP
)
dev
elo
ped
, im
ple
men
ted
AP
AP
sec
tor
and
cro
ss-c
utt
ing
inte
rven
tio
n t
ow
ard
s
Th
e R
ura
l &
Co
mm
un
ity
Dev
elo
pm
ent
Fu
nd
foc
uses
on
the
prov
isio
n of
finan
ce t
o ru
ral
and
agric
ultu
ral
com
mun
ities
, w
hich
sup
ports
em
ploy
men
t
crea
tion
in ru
ral a
reas
and
the
agric
ultu
ral s
ecto
r. T
his
is a
chie
ved
by:
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
3
4
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
and
rev
iew
ed r
egu
larl
y in
term
s o
f im
pac
t o
n
gro
wth
, em
plo
ymen
t,
rura
l in
com
es,
inve
stm
ent,
ou
tpu
t,
exp
ort
s an
d A
fric
an
reg
ion
al d
evel
op
men
t.
gro
wth
, em
plo
ymen
t
crea
tio
n a
nd
hig
her
rura
l in
com
es
un
der
way
.
1.
Prom
otin
g ac
cess
to fi
nanc
e fo
r bla
ck e
ntre
pren
eurs
.
2.
Prom
otin
g ec
onom
ic
trans
form
atio
n in
or
der
to
enab
le
mea
ning
ful
parti
cipa
tion
of b
lack
peo
ple
in th
e ec
onom
y.
3.
Incr
ease
the
parti
cipa
tion
of c
omm
uniti
es, w
orke
rs, c
o-op
erat
ives
and
oth
er
colle
ctiv
e En
terp
rises
ow
n an
d m
anag
ed b
y bl
ack
peop
le.
4.
Cre
atin
g su
stai
nabl
e ru
ral e
nter
pris
es a
nd th
ereb
y as
sist
ing
in th
e cr
eatio
n
of jo
b op
portu
nitie
s an
d su
stai
nabl
e in
com
es.
The
Rur
al &
Com
mun
ity D
evel
opm
ent F
und
forg
es r
elat
ions
hips
with
var
ious
depa
rtmen
ts a
nd a
genc
ies
that
are
act
ive
in th
e se
ctor
. W
e in
tend
to c
oncl
ude
thre
e M
OU
s to
sup
port
our i
nter
vent
ions
and
a jo
int p
ropo
sed
fund
to a
ddre
ss
the
key
elem
ents
of
sect
or d
evel
opm
ent,
espe
cial
ly A
gro
proc
essi
ng a
nd
Fore
stry
tran
sfor
mat
ion.
A
gri
cult
ure
, Fo
rest
ry a
nd
Fis
her
ies
Mar
ket
and
Tra
de
Dev
elo
pm
ent
Str
ateg
y.
Tra
de
and
Dev
elo
pm
ent
Str
ateg
y an
d c
ross
-
cutt
ing
inte
rven
tio
ns
tow
ard
s g
row
th,
emp
loym
ent
crea
tio
n a
nd
hig
her
rura
l in
com
es
un
der
way
.
M
inin
g B
enef
icia
tio
n
Act
ion
Pla
n (
MB
AP
)
dev
elo
ped
imp
lem
ente
d
and
rev
iew
ed r
egu
larl
y in
term
s o
f im
pac
t o
n
gro
wth
, em
plo
ymen
t,
rura
l in
com
es,
inve
stm
ent,
ou
tpu
t,
exp
ort
s an
d A
fric
an
reg
ion
al d
evel
op
men
t.
MB
AP
dev
elo
ped
and
imp
lem
ente
d.
In s
uppo
rt of
the
MBA
P, th
e N
EF h
as s
uppo
rted
seve
ral m
iner
al b
enef
icia
tion-
rela
ted
proj
ects
.
Lic
iatr
on
(R
15 m
illio
n in
vest
ed)
� Li
ciat
ron
is a
n op
en-p
it m
inin
g en
tity
that
spe
cial
ises
in g
rani
te d
imen
sion
ston
e qu
arry
ing.
The
com
pany
is
loca
ted
in K
omga
, Ea
st L
ondo
n an
d
mar
kets
its
prod
ucts
bot
h lo
cally
and
inte
rnat
iona
lly.
� 83
jo
b op
portu
nitie
s w
ill be
su
ppor
ted
thro
ugh
this
in
vest
men
t (3
3
mai
ntai
ned
and
50 n
ew).
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
3
5
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
D
eter
min
e vi
able
sh
ale
gas
� E
xplo
rati
on
pla
n
dev
elo
ped
� A
pp
rop
riat
e
leg
isla
tio
n d
evel
op
ed
Eco
no
mic
ally
via
ble
shal
e g
as r
eser
ves
det
erm
ined
.
Alth
ough
not
invo
lved
in s
hale
gas
exp
lora
tion,
by
supp
ortin
g a
nucl
ear i
ndus
try
train
ing
initi
ativ
e th
e N
EF
seek
s to
co
ntrib
ute
tow
ards
cl
ean
ener
gy
deve
lopm
ent i
n So
uth
Afric
a.
Nu
clea
r L
earn
ing
To
ur
(Fra
nce
, 201
2)
In a
ntic
ipat
ion
of th
e ro
ll-ou
t of t
he N
ucle
ar B
uild
Pro
gram
me
in S
outh
Afri
ca,
the
NEF
sou
ght t
o ed
ucat
e its
elf a
nd b
lack
ent
repr
eneu
rs o
n th
e nu
clea
r ene
rgy
sect
or v
alue
cha
in re
late
d to
nuc
lear
pla
nts
henc
e it
sent
a d
eleg
atio
n of
14
to
Fran
ce in
201
2 to
atte
nd th
e Ar
ea N
ucle
ar L
earn
ing
Tour
.
� Th
e N
EF, i
n co
llabo
ratio
n w
ith th
e N
ucle
ar In
dust
ry A
ssoc
iatio
n of
Sou
th
Afric
a (N
IASA
), ho
sted
the
Nuc
lear
Indu
stry
Em
pow
erm
ent C
onfe
renc
e in
Oct
ober
20
12
in
prep
arat
ion
for
and
to
mar
ket
the
Nuc
lear
Bu
ild
Prog
ram
me,
as
wel
l as
to p
rovi
de a
net
wor
king
pla
tform
for n
ucle
ar in
dust
ry
stak
ehol
ders
, inc
ludi
ng n
ucle
ar p
lant
OEM
s, fu
ndin
g in
stitu
tions
and
bla
ck
entre
pren
eurs
(ser
vice
pro
vide
rs, e
quip
men
t sup
plie
rs, i
nves
tors
etc
.).
� Th
e N
EF fa
cilit
ated
for a
tota
l of 1
4 de
lega
tes
to a
ttend
the
Area
Nuc
lear
Lear
ning
Tou
r in
Fra
nce
in 2
012.
The
obj
ectiv
es o
f th
e to
ur i
nclu
ded;
crea
ting
an u
nder
stan
ding
of n
ucle
ar b
asic
s an
d ph
ysic
s, e
stab
lishi
ng a
n
appr
ecia
tion
of th
e nu
clea
r ind
ustry
from
ura
nium
min
ing
to n
ucle
ar p
ower
plan
t eq
uipm
ent
prod
uctio
n, i
nclu
ding
dev
elop
ing
an u
nder
stan
ding
of
proj
ect f
inan
cing
nuc
lear
pla
nts
and
risk
miti
gatio
n.
� Fu
rther
mor
e, it
was
exp
ecte
d of
the
blac
k SM
E’s
who
par
ticip
ated
in th
e
lear
ning
to
ur
that
th
ey
wou
ld
iden
tify
and
expl
ore
for
expl
oita
tion,
entre
pren
euria
l opp
ortu
nitie
s w
ithin
the
valu
e ch
ain
of th
e pr
opos
ed S
outh
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
3
6
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
Afric
an N
ucle
ar b
uild
Pro
gram
me,
incl
udin
g id
entif
ying
pot
entia
l fu
ndin
g
mea
ns fo
r any
inve
stm
ent p
rosp
ects
.
The
ultim
ate
goal
of
th
e pr
ogra
mm
e is
to
su
ppor
t bl
ack
SME’
s an
d
entre
pren
eurs
who
may
wan
t to
posi
tion
them
selv
es in
this
sec
tor .
Im
ple
men
t N
atio
nal
To
uri
sm S
trat
egy
and
revi
ew im
pac
t re
gu
larl
y
in t
erm
s o
f im
pac
t o
n
gro
wth
, em
plo
ymen
t,
inve
stm
ent,
ou
tpu
t,
exp
ort
s an
d A
fric
an
reg
ion
al d
evel
op
men
t.
To
uri
sm S
trat
egy
inte
rven
tio
ns
tow
ard
s g
row
th,
emp
loym
ent
crea
tio
n a
nd
hig
her
inco
mes
fo
r p
oo
r
ho
use
ho
lds
un
der
way
.
The
NEF
’s in
terv
entio
ns in
tour
ism
incl
ude
the
fund
ing
of h
otel
s an
d ga
me
lodg
es.
Thes
e in
clud
e in
vest
men
ts in
Tal
a G
ame
Res
erve
, Rhi
no L
odge
and
Jozi
ni C
ount
ry L
odge
.
The
follo
win
g tra
nsac
tion
wer
e un
derta
ken
in a
n ef
fort
to a
ddre
ss th
e im
pact
of
grow
th a
nd s
usta
inab
le e
mpl
oym
ent i
n th
e to
uris
m s
ecto
r
TA
LA
Pri
vate
Gam
e R
eser
ve (
R14
.1 m
illio
n in
vest
ed)
TALA
Priv
ate
Gam
e R
eser
ve is
a w
ildlif
e co
nser
vanc
y hi
dden
in th
e hi
lls o
f a
quie
t fa
rmin
g co
mm
unity
not
far
fro
m D
urba
n in
Kw
aZul
u -N
atal
. T
ALA
is
situ
ated
bet
wee
n D
urba
n an
d Pi
eter
mar
itzbu
rg, c
onve
nien
tly a
cces
sibl
e of
f the
N3
thro
ugh
the
Cam
per -
dow
ns o
ff-ra
mp
on t
he R
603.
Spa
nnin
g ov
er 2
092
hect
ares
and
inco
rpor
atin
g m
any
dive
rse
natu
ral
envi
ronm
ents
, th
e re
serv
e
feat
ures
wel
l ove
r 38
0 bi
rd s
peci
es,
with
gam
e su
ch a
s rh
ino,
kud
u, h
ippo
,
gira
ffe a
nd th
e ra
re s
able
ant
elop
e. S
ever
al d
istin
ctiv
e an
d re
mar
kabl
e pl
ant
spec
ies
are
also
to b
e fo
und
on T
ALA.
The
gam
e re
serv
e is
ow
ned
100%
by
the
Nku
mbu
leni
Com
mun
ity T
rust
.
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
3
7
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
Am
azin
Ho
tel (
R45
.8 m
illio
n in
vest
ed)
� Am
azin
Hot
el i
s a
3 st
ar P
ark
Inn
in P
olok
wan
e, L
impo
po.
Am
eniti
es
incl
ude
a re
stau
rant
, co
nfer
ence
fac
ility,
spa
and
oth
er r
elat
ed f
acilit
ies
typi
cal o
f a 4
sta
r up-
scal
ing
hote
l exp
erie
nce.
� Th
e ho
tel i
s w
ell l
ocat
ed n
ext t
o a
golf
cour
se a
nd P
eter
Mok
aba
stad
ium
;
with
in w
alki
ng d
ista
nce
to m
any
prof
essi
onal
firm
s an
d en
terta
inm
ent a
nd
betw
een
3 an
d 6
kilo
met
res
from
the
CBD
and
the
airp
ort.
� O
pera
tions
sta
rted
in F
ebru
ary
2017
, ach
ievi
ng o
ccup
ancy
rate
of o
ver 4
0%
agai
nst a
pro
ject
ed ra
te o
f 30%
.
� 50
8 jo
b op
portu
nitie
s w
ere
crea
ted
thro
ugh
this
pro
ject
, 90%
of w
hich
wer
e
for w
omen
.
Rh
ino
Lo
dg
e K
ZN
(R
23.7
mill
ion
inve
sted
)
The
proj
ect e
ntai
ls th
e es
tabl
ishm
ent o
f a 4
4 be
d Sa
fari
Lodg
e lo
cate
d in
the
Mpe
mbe
ni G
ame
Res
erve
. The
man
agem
ent o
f the
lodg
e ha
s be
en c
ontra
cted
to T
ourv
est a
nd th
ey w
ill o
ffer
Big
5 ga
me
driv
es a
nd w
alks
, bird
ing
and
spa
treat
men
t. Th
e M
pem
beni
C
omm
unity
Tr
ust
repr
esen
ts
the
inte
rest
s of
appr
oxim
atel
y 60
0 ho
useh
olds
who
fal
l un
der
the
Trib
al A
utho
rity
of i
Nko
si
Hla
bisa
and
the
Empe
mbe
ni T
ribal
Cou
ncil.
The
pro
ject
has
bee
n en
dors
ed b
y
the
Ezem
velo
KZN
Wild
life,
KZN
Tou
rism
Aut
horit
y an
d th
e of
fice
of th
e M
EC
of E
cono
mic
Dev
elop
men
t and
Tou
rism
.
Pro
vid
e co
ach
ing
incu
bat
ion
, in
ten
sive
sup
po
rt a
nd
fin
anci
ng
to
gro
w t
he
smal
l bu
sin
ess
and
co
op
erat
ive
sect
or
% o
f g
row
th in
th
e
nu
mb
er o
f sm
all
bu
sin
ess
and
coo
per
ativ
es.
The
Entre
pren
euria
l D
evel
opm
ent
Stra
tegy
int
ends
to
enha
nce
the
NEF
’s
impa
ct in
dev
elop
ing
entre
pren
eurs
hip
in S
outh
Afri
ca, m
ore
broa
dly
with
focu
s
on F
inan
cial
and
non
-Fin
anci
al S
uppo
rt as
wel
l as
adv
ocac
y on
iss
ues
perta
inin
g to
ent
repr
eneu
rshi
p. W
e fu
rther
see
k to
incr
ease
the
parti
cipa
tion
by
wom
en a
nd y
outh
in th
e m
ain
stre
am e
cono
my
thro
ugh
entre
pren
eurs
hip.
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
3
8
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
tow
ard
s a
mo
re in
clu
sive
eco
no
my.
% o
f sm
all b
usi
nes
s
and
co
op
erat
ives
that
are
su
pp
ort
ed
and
th
at a
re s
till
op
erat
ing
on
e ye
ar.
afte
r su
pp
ort
pro
vid
ed.
The
follo
win
g in
itiat
ives
hav
e al
read
y be
en im
plem
ente
d as
par
t of t
he 3
-yea
r
impl
emen
tatio
n pl
an:
� Bu
sine
ss T
rain
ing
� In
cuba
tion
� G
over
nanc
e Tr
aini
ng
� M
ento
rshi
p (P
re a
nd P
ost I
nves
tmen
t)
� Th
e Bu
sine
ss P
lann
er to
ol is
on
an o
nlin
e so
ftwar
e to
ol, i
nten
ded
to a
ssis
t
entre
pren
eurs
to d
evel
op th
eir o
wn
busi
ness
pla
n an
d fin
anci
al p
roje
ctio
ns.
The
tool
is
acce
ssib
le f
ree
of c
harg
e to
all
entre
pren
eurs
(no
t on
ly
entre
pren
eurs
wan
ting
to a
pply
for
fun
ding
fro
m N
EF)
to d
evel
op t
heir
busi
ness
pla
ns in
an
easy
and
use
r fri
endl
y m
anne
r. T
o da
te, m
ore
than
19,0
00 e
ntre
pren
eurs
hav
e ac
cess
ed th
e Bu
sine
ss P
lann
er T
ool.
� Bu
sine
ss t
rain
ing
is p
rovi
ded
prim
arily
to
entre
pren
eurs
ope
ratin
g in
outly
ing
area
s, in
clud
ing
NEF
bro
ad b
ased
inve
stee
gro
ups.
Thi
s is
mad
e
up o
f 4-
day
sim
ulat
ed t
rain
ing
sess
ions
int
ende
d to
del
iver
lea
rnin
g
expe
rienc
es o
n bu
sine
ss m
anag
emen
t prin
cipl
es a
nd b
asic
kno
wle
dge
and
unde
rsta
ndin
g on
fina
ncia
l sys
tem
s, re
porti
ng a
nd c
ontro
ls.
A m
inim
um o
f
18 tr
aini
ng s
essi
ons
are
targ
eted
to b
e pr
ovid
ed p
.a.,
90%
of t
hese
in ru
ral
area
s an
d m
ore
than
70%
of t
he d
eleg
ates
are
wom
en.
� Ac
cess
to
busi
ness
inc
ubat
ion
is f
acilit
ated
for
sta
rt-up
and
exi
stin
g
ente
rpris
es.
Key
exit
outc
omes
inco
rpor
ate
finan
cial
gro
wth
, jo
b cr
eatio
n
and
full
com
plia
nce
with
lega
l and
reg
ulat
ory
requ
irem
ents
. Th
e N
EF is
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
3
9
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
targ
etin
g 75
ent
erpr
ises
to b
e re
ferre
d fo
r inc
ubat
ion;
and
15
entre
pren
eurs
in th
e fin
al s
tage
of i
ncub
atio
ns in
201
7/18
and
in th
e en
suin
g ye
ars.
� Tr
aini
ng o
n co
rpor
ate
gove
rnan
ce a
nd a
ssis
tanc
e w
ith th
e im
plem
enta
tion
ther
eof
is
prov
ided
to
th
e N
EF’s
br
oad-
base
d in
vest
ee
grou
ps
and
bene
ficia
ries.
Tra
inin
g is
pro
vide
d to
all
qual
ifyin
g in
vest
ee g
roup
s w
ithin
6-
mon
ths
of p
roje
ct im
plem
enta
tion
and
com
plia
nce
to c
orpo
rate
gov
erna
nce
requ
irem
ents
in 1
2-m
onth
s.
� Th
e N
EF e
stab
lishe
d a
men
tors
hip
pane
l co
mpr
isin
g m
ore
than
110
indu
stry
an
d te
chni
cal
expe
rts
loca
ted
thro
ugho
ut
the
coun
try.
Key
obje
ctiv
es o
f th
e m
ento
rshi
p pr
ogra
mm
e in
clud
e th
e de
velo
pmen
t an
d
mai
nten
ance
of s
usta
inab
le b
usin
esse
s w
hich
will
in tu
rn c
ontri
bute
to th
e
sust
aina
ble
grow
th
of
the
econ
omy,
as
sist
w
ith
the
turn
arou
nd
man
agem
ent
of
dist
ress
ed
com
pani
es
and
busi
ness
co
achi
ng.
A m
inim
um 3
- mon
th m
ento
rshi
p is
pro
vide
d to
all
smal
l bu
sine
ss a
nd
coop
erat
ives
fund
ed to
ass
ist p
rimar
ily w
ith th
e im
plem
enta
tion
of a
dequ
ate
finan
cial
sys
tem
s an
d co
ntro
ls.
This
is p
rovi
ded
is a
dditi
on to
oth
er re
leva
nt
pre-
and
pos
t-fun
ding
non
-fina
ncia
l sup
port.
Jo
b d
rive
rs o
n
sup
po
rtin
g t
he
inve
stm
ent
in t
he
gre
en
eco
no
my,
th
e so
cial
eco
no
my
and
pu
blic
serv
ices
as
wel
l as
Afr
ican
reg
ion
al
Sec
tor
and
cro
ss-
cutt
ing
inte
rven
tio
ns
tow
ard
s g
row
th,
emp
loym
ent
crea
tio
n a
nd
hig
her
inco
mes
fo
r p
oo
r
ho
use
ho
lds
The
NEF
act
ivel
y se
eks
to s
uppo
rt pr
ojec
ts w
ith h
igh
job-
crea
tion
oppo
rtuni
ties,
espe
cial
ly th
roug
h its
SPF
. A
few
pro
ject
s in
the
rene
wab
le e
nerg
y se
ctor
with
job
crea
tion
pote
ntia
l are
out
lined
bel
ow.
Sal
amax
166
0
� Th
e pr
ojec
t offe
rs a
n op
portu
nity
to in
vest
in a
prio
rity
indu
stry
acc
ordi
ng to
dti's
IPA
P w
here
dev
elop
men
t an
d co
mm
erci
aliz
atio
n of
Sou
th A
frica
n
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
4
0
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
dev
elo
pm
ent
to b
e
imp
lem
ente
d a
nd
revi
ewed
reg
ula
rly
in
term
s o
f im
pac
t o
n
gro
wth
, in
vest
men
t,
ou
tpu
t, e
xpo
rts
and
Afr
ican
reg
ion
al
dev
elo
pm
ent.
un
der
way
in
spec
ifie
d jo
bs
dri
vers
.
inte
llect
ual
prop
erty
is
su
ppor
ted
and
parti
cipa
tion
in
proj
ects
th
at
cont
ribut
e to
the
gree
n en
ergy
quo
ta is
enc
oura
ged.
� Sa
lam
ax 1
660
has
deve
lope
d a
seco
nd g
ener
atio
n bi
ofue
l pro
cess
tha
t
uses
gra
ss a
nd/o
r lea
ves
to p
rodu
ce b
ioet
hano
l and
ow
n el
ectri
city
, thr
ough
a lo
cally
dev
elop
ed te
chno
logy
inve
nted
by
the
proj
ect s
pons
or.
� Th
e pr
oces
s of
fers
sig
nific
ant a
dvan
tage
s ov
er c
onve
ntio
nal m
etho
ds th
at
are
curre
ntly
in u
se, b
y be
ing
cost
effe
ctiv
e.
This
cos
t effe
ctiv
enes
s m
ay
mak
e th
e pr
ojec
t via
ble
with
out r
equi
ring
gove
rnm
ent s
ubsi
dies
.
� Th
is p
roje
ct is
als
o al
igne
d to
key
prio
ritie
s of
the
ND
P of
job
crea
tion
thro
ugh
its p
oten
tial t
o cr
eate
sig
nific
ant q
ualit
y jo
bs a
t fin
anci
al c
lose
, and
cont
ribut
ing
to S
A’s
expo
rts a
s a
siza
ble
porti
on o
f pr
oduc
tion
will
be
expo
rted
to n
eigh
bour
ing
SAD
C c
ount
ries.
The
NEF
has
com
mitt
ed R
7 m
illion
tow
ards
the
cons
truct
ion
of a
pilo
t pla
nt a
t th
e N
orth
Wes
t Uni
vers
ity, P
otch
efst
room
Cam
pus;
in p
artn
ersh
ip w
ith th
e dt
i’s
Supp
ort P
rogr
amm
e fo
r Ind
ustri
al In
nova
tion
whe
re a
gra
nt o
f R4.
9 m
illion
was
secu
red.
The
pro
ject
will
proc
eed
to fu
ll sc
ale
com
mer
cial
izat
ion
upon
suc
cess
of th
e pi
lot p
l ant
.
P
acka
ge
sup
po
rt f
or
sup
plie
r d
evel
op
men
t
esp
ecia
lly s
tate
pro
cure
men
t.
Pro
gre
ssiv
ely
risi
ng
loca
l co
nte
nt
leve
ls
in t
ota
l sta
te
pro
cure
men
t.
The
Proc
urem
ent f
inan
ce p
rodu
ct p
rovi
des
fund
ing
for e
quip
men
t and
wor
king
capi
tal t
o as
sist
SM
Es w
ith th
e im
plem
enta
tion
of th
e co
ntra
cts
awar
ded
by b
oth
priv
ate
and
publ
ic s
ecto
r ent
ities
, inc
ludi
ng s
tate
-ow
ned
entit
ies.
The
NEF
als
o
prov
ides
sho
rt -te
rm r
evol
ving
faci
litie
s to
ass
ist S
MEs
to fu
lfil o
nce-
off o
rder
s
from
the
sam
e en
titie
s.
The
NEF
is
in t
he p
roce
ss o
f fo
rgin
g di
rect
rel
atio
ns w
ith s
tate
-ow
ned
ente
rpris
es a
nd g
over
nmen
t dep
artm
ents
to in
crea
se v
olum
es a
nd s
uppo
rt fo
r
proc
urem
ent s
et a
side
s, e
.g. T
rans
net.
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
4
1
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
To d
ate:
Ove
r R
1.9
6 bi
llion
of
inve
stm
ents
wer
e ap
prov
ed in
544
SM
E’s
to a
cces
s
fund
ing
from
the
NEF
sin
ce 2
005
� R
1.45
billi
on m
illion
has
bee
n di
sbur
sed
to d
ate
in 4
00 S
MEs
sin
ce 2
005
� 47
% in
Gau
teng
Pro
vinc
e an
d 53
% s
prea
d ac
ross
Sou
th A
frica
� At
leas
t 25%
in v
alue
of i
nves
tmen
t are
in S
MEs
ow
ned
and
man
aged
by
Blac
k w
omen
The
targ
et fo
r Pro
cure
men
t Fin
ance
form
s pa
rt of
the
broa
der t
arge
t to
“Pro
vide
finan
ce to
bus
ines
s ve
ntur
es e
stab
lishe
d an
d m
anag
ed b
y B
lack
peo
ple.
”
3.
E
limin
atio
n o
f
un
nec
essa
ry r
egu
lato
ry
bu
rden
s an
d lo
wer
pri
ce
incr
ease
s fo
r ke
y in
pu
ts
fost
ers
inve
stm
ent
and
eco
no
mic
gro
wth
.
Not
app
licab
le
4.
Wor
kers
’ edu
catio
n an
d sk
ills
incr
easi
ng
ly m
eet
eco
no
mic
nee
ds.
Not
app
licab
le
5.
Exp
and
ed e
mp
loym
ent
in a
gri
cult
ure
.
Dev
elo
pm
ent
of
smal
lho
lder
pro
du
ctio
n
in c
on
text
of
imp
rove
d
dis
tric
t p
lan
nin
g a
nd
lin
k
to la
nd
ref
orm
,
Pla
n t
o s
up
po
rt
smal
lho
lder
s
dev
elo
ped
an
d
inco
rpo
rate
d in
Dev
elop
men
t of s
mal
lhol
der p
rodu
ctio
n:
Thro
ugh
the
prov
isio
n of
fu
ndin
g w
e ex
pect
to
ac
cele
rate
gr
owth
an
d
trans
form
atio
n th
e ru
ral
econ
omy,
to
crea
te d
ecen
t w
ork
and
sust
aina
ble
livel
ihoo
ds, a
nd fu
rther
con
tribu
te to
bui
ldin
g ec
onom
ic a
nd s
ocia
l infra
stru
ctur
e.
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
4
2
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
exte
nsi
on
, mar
keti
ng
an
d
oth
er s
yste
ms.
AP
AP
, wit
h c
lear
ann
ual
tar
get
s.
This
for
ms
part
of t
he r
ural
dev
elop
men
t st
rate
gy t
hat
is li
nked
to
land
and
agra
rian
refo
rm, f
ood
secu
rity,
and
tour
ism
.
� To
dat
e w
e ha
ve in
vest
ed R
165
milli
on in
the
Agric
ultu
ral s
ecto
r, eq
uatin
g
to R
79k
per j
ob. A
vera
ge w
omen
em
pow
erm
ent a
chie
ved
is a
bout
60%
and
abou
t 90%
of t
he in
vest
ed p
ortfo
lio is
loca
ted
in m
argi
nalis
ed P
rovi
nces
.
Ber
lin B
eef
(R27
mill
ion
inve
sted
)_
The
busi
ness
invo
lves
the
esta
blis
hmen
t of a
feed
lot i
n Be
rlin,
Eas
tern
Cap
e fo
r
the
supp
ly o
f a h
igh
thro
ugh-
put a
batto
ir in
Eas
t Lon
don
in te
rms
of a
10
year
off -t
ake
agre
emen
t, in
clud
ing
upst
ream
inve
stm
ent i
n th
e ca
ttle
supp
ly r
egio
n
for
impr
oved
bre
edin
g of
cat
tle s
uppl
ied
to th
e Be
rlin
Beef
feed
lot.
The
beef
oper
atio
n cu
rrent
ly h
as a
one
-tim
e st
andi
ng c
apac
ity o
f 7
000
head
on
back
grou
ndin
g an
d 3
000
head
on
feed
lot,
this
cap
acity
has
mor
e th
an d
oubl
ed
in t
he f
irst
year
of
oper
atio
ns.
The
proj
ect
has
adop
ted
and
com
plie
s w
ith
requ
irem
ents
of I
SO 1
4001
, a g
loba
lly r
ecog
nise
d st
anda
rd s
peci
ficat
ion
that
stru
ctur
es th
e im
plem
enta
tion
of a
n ef
fect
ive
envi
ronm
enta
l man
agem
ent.
The
curre
nt lo
cal c
lient
ele
incl
udes
Fam
ous
Bran
ds,
Shop
rite
and
Pick
and
Pay
.
Inte
rnat
iona
l mar
kets
incl
u de
Hon
g Ko
ng, T
haila
nd a
nd V
ietn
am.
Par
tner
ship
wit
h t
he
Dep
artm
ent
of
Ru
ral D
evel
op
men
t an
d L
and
Ref
orm
(DR
DL
R)
The
NEF
est
ablis
hed
a pa
rtner
ship
with
the
DR
DLR
afte
r th
e H
on.
Min
iste
r
Gug
ile N
kwin
ti in
vite
d th
e N
EF to
bec
ome
a pa
rtner
in th
e pi
lot i
mpl
emen
tatio
n
of t
he p
rogr
amm
e ca
lled
STR
ENG
THEN
ING
OF
REL
ATIV
E R
IGH
TS O
F PE
OPL
E W
OR
KIN
G T
HE
LAN
D,
also
kno
wn
as t
he 5
0 –
50 p
roje
ct.
The
obje
ctiv
es o
f th
e pi
lot
proj
ect
are
at t
he h
eart
of t
he e
xist
ence
of
the
NEF
,
beca
use
they
see
k to
em
pow
er f
arm
wor
kers
to
beco
me
entre
pren
eurs
thu
s
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
4
3
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
redr
essi
ng th
e in
just
ices
of t
he p
ast i
n th
e ar
eas
that
wer
e de
vast
ated
mor
e
seve
rely
by
apar
thei
d.
Thro
ugh
the
partn
ersh
ip, t
he N
EF a
ssis
ted
in th
e fa
cilit
atio
n of
app
rovi
ng a
nd
final
isin
g le
gal a
gree
men
ts w
orth
R66
9 m
illion
.
6.
Mac
ro-e
con
om
ic
con
dit
ion
s su
pp
ort
emp
loym
ent-
crea
tin
g
gro
wth
.
Incr
ease
in in
du
stri
al
fin
ance
ava
ilab
le.
Incr
ease
in
ind
ust
rial
fin
ance
avai
lab
le.
� SP
F, th
e ve
ntur
e ca
pita
l fun
d of
the
Nat
iona
l Em
pow
erm
ent F
und
(NEF
),
curre
ntly
has
27
proj
ects
und
er d
evel
opm
ent,
in w
hich
it h
olds
equ
ity th
at
is w
areh
ouse
d fo
r fut
ure
dist
ribut
ion
to B
-BBE
E en
titie
s.
� Th
e im
plem
enta
tion
of th
e af
orem
entio
ned
proj
ects
requ
ires
circ
a R
28
billio
n in
cap
ital,
of w
hich
circ
a R
4 bi
llion
is d
ue b
y th
e N
EF, i
n re
spec
t of
its e
quity
inte
rest
s he
ld in
the
proj
ects
.
7.
R
edu
ced
wo
rkp
lace
con
flic
t an
d im
pro
ved
colla
bo
rati
on
bet
wee
n
go
vern
men
t, o
rgan
ised
bu
sin
ess
and
org
anis
ed
lab
ou
r.
Dev
elo
pm
ent
of
pro
gra
mm
es t
o a
dd
ress
wo
rkp
lace
co
nfl
ict
thro
ug
h (
a) im
pro
ved
com
mu
nic
atio
n, c
aree
r
mo
bili
ty, s
kills
dev
elo
pm
ent
and
fair
nes
s in
wo
rkp
lace
s,
and
(b
) st
ron
ger
lab
ou
r
rela
tio
ns
syst
ems.
Nu
mb
er o
f
wo
rkp
lace
dis
pu
tes
dec
lare
d.
The
NEF
bel
ieve
s in
bui
ldin
g th
e re
quire
d hu
man
res
ourc
e ca
paci
ty t
hrou
gh
appr
opria
te
mec
hani
sms
that
w
ill en
sure
th
e tra
inin
g an
d de
velo
pmen
t,
upgr
adin
g sk
ills, k
now
ledg
e, c
ompe
tenc
e an
d at
titud
e th
at w
ill co
ntrib
ute
to th
e
achi
evem
ent o
f the
NEF
’s g
oals
and
obj
ectiv
es.
The
NEF
’s o
vera
ll tra
inin
g an
d de
velo
pmen
t obj
ectiv
es a
re to
enc
oura
ge a
nd
supp
ort e
mpl
oyee
s to
atta
in th
eir m
axim
um p
oten
tial t
here
by c
ontri
butin
g to
the
achi
evem
ent o
f the
NEF
’s g
oals
and
obj
ectiv
es.
8.
Exp
and
ed e
con
om
ic
op
po
rtu
nit
ies
for
his
tori
cally
exc
lud
ed
and
vu
lner
able
gro
up
s.
Pro
gra
mm
es t
o e
nsu
re
incr
ease
d a
cces
s to
emp
loym
ent
and
entr
epre
neu
rsh
ip f
or
Sh
are
of
you
th
emp
loym
ent
or
edu
cati
on
.
The
NEF
has
est
ablis
hed
the
Wom
en E
mpo
wer
men
t Fun
d (W
EF) t
hat w
ill fo
cus
on o
nly
supp
ortin
g w
omen
in tr
ansa
ctio
ns. A
n am
ount
of R
238
milli
on w
as b
een
allo
cate
d to
the
fund
in th
e 20
17/1
8 fin
anci
al y
ear.
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
4
4
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
wo
men
an
d y
ou
th in
th
e
con
text
of
stro
ng
er
sup
po
rt f
or
emer
gin
g
and
sm
alle
r en
terp
rise
s
ove
rall.
Sh
are
of
wo
men
in
form
al e
mp
loym
ent.
The
NEF
has
pre
viou
sly
allo
cate
d R
1 m
illion
to th
e Ka
belo
Sei
tshi
ro B
ursa
ry
Sche
me
whi
ch fo
cuse
d on
fund
ing
univ
ersi
ty s
tudi
es fo
r you
th a
nd s
uppo
rting
them
to q
ualif
y as
Cha
rtere
d Ac
coun
tant
s.
Dur
ing
the
2015
/16
finan
cial
yea
r, th
e N
EF e
stab
lishe
d a
R2
milli
on b
ursa
ry fu
nd
to fu
nd d
eser
ving
lear
ners
acr
oss
the
coun
try, t
o fu
rther
thei
r stu
dies
in o
btai
ning
qual
ifica
tions
that
are
iden
tifie
d as
crit
ical
in th
e de
velo
pmen
t of t
he c
ount
ry.
In
its y
ear
of in
cept
ion,
the
NEF
bur
sary
fun
d ad
vanc
ed R
1.6
milli
on to
fun
d 31
lear
ners
from
pre
viou
sly
disa
dvan
tage
d ba
ckgr
ound
s. 6
1% o
f the
se le
arne
rs a
re
fem
ale.
90%
of t
hese
stu
dent
s pa
ssed
and
are
bei
ng a
ssis
ted
to s
tudy
furth
er.
A
furth
er n
ew in
take
of 1
3 le
arne
rs w
as m
ade
in th
e 20
17/1
8 fin
anci
al y
ear a
nd R
2
milli
on a
lloca
ted
to th
is fu
nd. I
n th
e 20
18/1
9 fin
anci
al p
erio
d th
e N
EF s
uppo
rted
a fu
rther
29
stud
ents
, of w
hich
23
pass
ed, 2
gra
duat
ed a
nd 4
faile
d.
As p
art o
f its
inte
rnsh
ip p
rogr
amm
e, th
e N
EF ta
rget
s gr
adua
tes
from
diff
eren
t
terti
ary
inst
itutio
ns a
nd p
rovi
des
them
on
the
job
train
ing
for a
yea
r with
the
hope
of a
bsor
bing
them
in th
e sy
stem
bas
ed o
n th
eir p
erfo
rman
ce. T
he N
EF c
urre
ntly
empl
oys
abou
t 25
such
gra
duat
es.
The
NEF
has
pre
viou
sly
man
aged
and
pro
vide
d ad
ditio
nal f
inan
cial
sup
port
to
the
JIPS
A/AF
D J
unio
r M
anag
emen
t D
evel
opm
ent
Prog
ram
me,
whi
ch i
s an
exch
ange
pro
gram
me
for
juni
or S
outh
Afri
can
man
ager
s to
gai
n va
luab
le
busi
ness
sch
ool t
rain
ing
and
prac
tical
wor
k ex
perie
nce
in F
ranc
e. 3
4 ju
nior
man
ager
s pa
rtici
pate
d in
the
firs
t in
take
, w
hich
was
fol
low
ed b
y 58
in
the
follo
win
g ye
ar.
The
NEF
is c
urre
ntly
look
ing
at d
evel
opin
g ot
her p
artn
ersh
ips
with
the
BRIC
s an
d EU
cou
ntrie
s fo
r sim
ilar p
rogr
amm
es.
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
4
5
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
We
have
set
our
selv
es a
targ
et o
f ens
urin
g th
at B
lack
wom
en p
artic
ipat
e in
and
hold
eco
nom
ic b
enef
it of
a c
erta
in p
erce
ntag
e of
the
tot
al d
isbu
rsem
ents
inve
sted
ann
ually
. An
nual
targ
ets
for t
his
are
40%
in 2
017/
18 a
nd th
erea
fter.
The
NEF
mus
t in
crea
se t
he n
umbe
r of
bus
ines
ses
owne
d an
d m
anag
ed b
y
Blac
k pe
ople
in S
outh
Afri
ca b
y pr
ovid
ing
fund
ing
to s
uch
ente
rpris
es.
We
aim
to a
ppro
ve n
ew t
rans
actio
ns w
orth
R4.
9 bi
llion
by 2
021,
and
dis
burs
e R
4.4
billio
n m
ore
into
the
econ
omy
durin
g th
e st
rate
gic
plan
ning
per
iod.
The
NEF
als
o ai
ms
to p
rom
ote
econ
omic
par
ticip
atio
n of
peo
ple
hist
oric
ally
excl
uded
fro
m m
ains
tream
eco
nom
y by
incr
easi
ng t
rans
actio
ns in
pro
vinc
es
with
low
act
ivity
and
in r
ural
are
as.
Thi
s w
ill be
ach
ieve
d by
incr
easi
ng t
he
over
all v
alue
of p
ortfo
lio in
und
er-re
pres
ente
d pr
ovin
ces
by e
nsur
ing
that
25%
of
annu
al
disb
urse
men
ts
is
inve
sted
in
th
e un
derre
pres
ente
d pr
ovin
ces
(nam
ely,
Nor
ther
n C
ape,
Eas
tern
Cap
e, L
impo
po,
Mpu
mal
anga
, N
orth
Wes
t
and
the
Free
Sta
te).
9.
Pu
blic
em
plo
ymen
t
sch
emes
pro
vid
e sh
ort
-
term
rel
ief
for
the
un
emp
loye
d a
nd
bu
ild
com
mu
nit
y so
lidar
ity
and
ag
ency
.
Not
app
licab
le
10. I
nve
stm
ent
in r
esea
rch
,
dev
elo
pm
ent
and
inn
ova
tio
n s
up
po
rts
gro
wth
by
enh
anci
ng
pro
du
ctiv
ity
of
exis
tin
g
Not
app
licab
le
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20 -
22
4
6
Su
b-O
utc
om
e A
ctio
ns
Ind
icat
ors
N
EF
Tar
get
& A
ctio
ns
and
em
erg
ing
ente
rpri
ses
and
imp
rovi
ng
livi
ng
con
dit
ion
s o
f th
e p
oo
r.
National Empowerment Fund
Strategic Plan for the years 2019/20-22 47
8. Financial Plan
The NEF’s strategic objectives are detailed in section 5 of this Plan, and detailed Financial
Projections are provided in Appendix A.
8.1. Projections of revenue, expenditure and borrowings
The NEF is currently engaged in a recapitalisation exercise with its Shareholder Ministry,
Government and other relevant stakeholders. The projections in this section and in the
appendices are dependent on the NEF’s recapitalisation being realised in the 2019 financial
year.
Revenue projections include interest on loans and investments, interest on cash in bank,
dividend income from listed and unlisted equity investments, raising / origination fees and
enterprise and supplier development contributions received. The interest on loans is projected
at rates based on the pricing policies of each fund and the interest rate projections over the
entire investment portfolio. Most of the NEF’s loan instruments are priced against the prime
lending rate. Fees are projected at 1% of a third of funds disbursed each year.
Interest on cash in the bank is projected at an average rate of 6.5%, which are the projected
rates achieved on money invested with the South African Reserve Bank.
Dividend income is particularly difficult to predict / project as these are linked to different
dividend policies of the NEF’s investee companies. The NEF has a portfolio of listed and
unlisted investments, the majority of which relates to the MTN shares allocated to the NEF by
Government. The dividend projections included in the overall revenue is therefore based on
our best estimate of what the NEF could receive each year.
The Net Asset Value of the NEF has increased from R2.1 billion in 2005/06 to about
R4.7 billion as at financial year end 2017/18. This overall increase over the period has largely
been a factor of retained earnings over the years.
Total Expenditure (i.e. including funding for non-financial services offered by the NEF) has
increased in line with increased activities and targets. Operational expenditure includes
general & administration and employee costs, and apart from office rental and salaries, are all
budgeted for from a zero base. The overall methodology applied when budgeting for
National Empowerment Fund
Strategic Plan for the years 2019/20-22 48
operational expenditure is largely linked to the organizational targets and activities. The NEF
has continued with a targeted critical role recruitment drive since the lifting of the funding
moratorium.
The NEF also embarked on various mandate related projects (i.e. non-financial services) for
which specific budget allocations are required. To this end a further average of R15m per
annum has been budgeted for over the next three years. Some of the projects that the NEF is
and will be involved in are Investor Education road shows and non-financial support to NEF
investees (mentorship, entrepreneurship development as well as governance training).
Over the strategic period, the efficiency ratio (based on total costs) is forecasted to breach the
intended long term range of 54%-58%. This is mainly as a result of reducing income from
both investments and dividend receipts over the period. In addition, non-financial support activities are not subsidised. In the event that the NEF gets transfers from the dti to fully fund
the non-financial services we currently undertake, the efficiency ratio could be brought down
from an average of 64% and maintained around 61% over the course of the strategic period.
The current and required capitalisation of the NEF will allow it to move forward and make a
meaningful contribution in achieving its mandate, with its investment approvals projected to
reach the R12 billion milestone by the end of the strategic period.
8.2. Asset and liability management
The NEF, as a Schedule 3A entity under the PFMA, is required to operate fully on the basis
of not budgeting for a deficit. Investment activity is funded out of cash balances and thus all
liabilities will at all times be off-set by cash balances.
Excess cash is managed through a cash management process where short term cash is
invested in call accounts of three approved banks to meet short term cash requirements and
excess cash with the South African Reserve Bank in terms of the requirements of the PFMA.
8.3. Cash flow projections
Please refer to Appendix A.
National Empowerment Fund
Strategic Plan for the years 2019/20-22 49
8.4. Capital expenditure projects
Annual capital expenditure allocation is mostly related to replenishment of existing capital
expenditure items such as computers, furniture and office equipment. The NEF further plans
to enhance its IT environment and platforms over the medium period. The average budget
allocation for capital expenditure over the three year period is R5.8 million.
8.5. Infrastructure plans
The NEF does not directly fund infrastructure for itself or the country as part of its mandate
though there may be an element of infrastructure funding provided through projects funded by
the Strategic Projects Fund that is a specific requirement of that project and in line with national
targeted strategic sectors. In addition, the NEF is involved in assisting with funding and/or
planning phases for the PRASA and AREVA infrastructure development initiatives.
8.6. Dividend policies
The NEF does not have a dividend policy with respect to any surplus reported. Surpluses are
retained following a section 53(3) application to the National Treasury each year in order to
meet further capitalisation needs of the NEF since it is not currently on the MTEF.
National Empowerment Fund
Strategic Plan for the years 2019/20-22 50
9. Risk Management and Fraud Prevention Plan
9.1. Risk Management Process
Risk Management Framework
The NEF’s Risk Management Framework is based on COSO, Institute of Risk Management
Standards of South Africa (IRMSA) Code of Practice and PFMA & Treasury regulations.
The ERM (Enterprise-wide risk management) methodology of the NEF consists of the
following interrelated components: internal environment, objective setting, risk identification,
risk assessment, risk control and response, risk monitoring and reporting, and risk
performance measurement. These components are derived from best practice with respect to
ERM governance.
The Framework is continuously benchmarked against best practice such as the International
standard on Risk Management (ISO 31000) and KING IV; and where required, relevant
changes are made to the Framework. The Framework has recently been benchmarked
against the updated COSO Framework that was issued during September 2017. The NEF
Risk Management Framework has been updated and approved by Board during October
2018.
The Risk assessment process results in the output of the risk universe, allowing key risks to
be identified. The Risk assessment exercise is completed on an annual basis and divisional
risk registers are updated on a bi-annual basis to identify any emerging risks and track
progress.
Risk Strategy (Risk Register)
The realisation of the strategic objectives presented by the NEF may be affected by the
following key risks: 1. Recapitalisation Risk: The risk that the NEF will not be able to raise sufficient
capital to fund the NEF’s short to medium-term investment and operating
activities.
Without an injection of new capital in the next few months, the NEF will run out of capital to
finance new transactions going forward. The lack of adequate capital will also negatively
National Empowerment Fund
Strategic Plan for the years 2019/20-22 51
impact on the NEF’s ability to follow through on participation interest or equity options for
transactions within the NEF’s Strategic Projects Fund. This will have a negative impact on the
achievement of the NEF’s mandate and the ability to transform the economy.
The NEF has obtained approval by the shareholder ministry to become an Arms-length
subsidiary of the IDC. The implementation of the business combination process has
commenced with work being done in various areas. IDC has also approved interim funding of
R500. Certain approvals are however required from the Ministers of dti, Economic
Development and Finance as well as Cabinet before funds may be released by the IDC. The
delay in receiving interim funding will however negatively impact on the NEF funding new
transaction. Various initiatives are underway regarding resolving the issue relating to the
recapitalisation of the NEF. Engagements are being held with stakeholder. NEF is also
undertaking fundraising initiatives for the Strategic Projects Fund transactions.
2. People Risk
The risk that the NEF does not have adequate capacity and skills to deliver on its mandate.
There is a risk of loss of key personnel due to the uncertainty regarding the delay in
implementation of recapitalisation process. There has recently been an increase in
resignations at management and professional level.
Management and the Board are however currently limited on implementing viable retention
strategies due to lack of certainty regarding future funding. Various non-monetary options are
currently being explored as retention strategies.
3. Business/Market Risk: The risk that changes in external market conditions have
a negative impact on the viability of funded transactions
The investment portfolio of the NEF consists of businesses in the commercial environment
that are susceptible to normal business risks in an economic environment, fluctuations in
commodity prices and foreign exchange rates amongst other variables. The current volatile
local and international economic environment has led to significantly lower GDP growth rates.
In addition household personal finances are under financial strain due to an increase in living
costs. This is negatively impacting on business conditions and has placed strain on some of
the clients in the portfolio.
National Empowerment Fund
Strategic Plan for the years 2019/20-22 52
The NEF portfolio is arguably more susceptible to these variations given the nature of the
businesses being supported i.e. early stage business, inexperienced entrepreneurs, geared
balance sheets and hence not as able to absorb the impact of these fluctuations as well as
more established businesses.
In evaluating transactions, market conditions are considered, due diligence investigations,
modelling and structuring of transactions by the deal teams. In addition, a regular micro and
macro economy sensitivity is undertaken by our Post Investment Unit and NEF appointed
mentors are used to promptly advise NEF investees on appropriate course of action.
4. Failure of third party relationships such as DRDLR, Department of Arts & Culture
& Department of Tourism
The NEF has entered into strategic partnerships with various National Departments to assist
them with implementation of their mandates as it relates to transformation. If the NEF does
not clearly understand third party relationships prior to entering into them, stakeholder
expectations may not be met and this will have a negative impact on the reputation of the NEF.
As some of the areas being looked at by the NEF such as Agricultural projects and movies
require specialist skills, there is a risk that the relevant skills may not be available to the NEF
resulting in financial losses and negative impact on the reputation of the NEF. The NEF has
implemented the following steps to mitigate the identified risks:
� Regular meetings with stakeholders to understand requirements and
expectations
� Entering into MOU’s with stakeholders
� Developing Frameworks that guide how transactions will be implemented
� Establishing joint steering committees to monitor implementation
� Ensuring that we have the relevant skills within the NEF to execute on
transactions.
� Where skills are not available within the NEF, we ensure that staff receive the
relevant training
� Where projects are not achieving intended objectives, these projects are not
continued
National Empowerment Fund
Strategic Plan for the years 2019/20-22 53
5. Changes in Key stakeholders
Changes in leadership at stakeholders due to recent political events impacting on the ability
to execute on projects i.e. changes resulting in the role of the NEF and NEF initiatives having
to be re-explained to stakeholders resulting in delays in implementation of mandate. Various
engagements are held with stakeholders to ensure they understand the mandate of the NEF
and its role.
6. Credit Risk: The risk of exposure to high credit risk investments and poor quality
of the invested portfolio
The NEF is mandated to intervene in the economy through the provision of funding to black-
owned enterprises which, due to past economic imbalances, may be of a higher credit risk.
This risk is exacerbated by the current tough economic climate that may impact on funded
businesses and their cash flows leading to the inability to honour loan repayments and
possible defaults on loans to the NEF.
Internally, the risk that the assessment processes of the NEF may not be able to inform
appropriate investment decisions does exist, as does the risk of not collecting on amounts due
and not being able to timeously identify distressed investments which may be able to be
rescued. The risk of funding the wrong “jockey’s” impacting on the performance of investments
and the portfolio also exists.
Inadequate controls mitigating this risk may negatively impact on the performance and quality
of the portfolio.
The controls introduced to attempt to mitigate this risk include:
� Appointment of skilled fund management teams.
� Due diligence investigation processes which include background checks.
� Adequately constituted and efficient approval structures.
� Portfolio management, monitoring and reporting processes.
� Use of pricing models according to a pricing policy which compels consideration of
credit risk.
� An independent credit risk assessment process by the Risk Division.
� Credit collection process managed by collaboration between the Post Investment Unit
and the Finance Division.
� Adequate turnaround workout and restructuring process.
National Empowerment Fund
Strategic Plan for the years 2019/20-22 54
A Credit Risk policy has recently been finalised and approved by the Board to enhance the
Credit vetting process at the NEF.
Fraud Prevention Plan
The Fraud Prevention Plan is the responsibility of all staff and management at the NEF. This
plan is a dynamic document and is updated regularly to reflect changes in the business
operations and circumstances of the NEF. The plan has been reviewed by management,
updated and approved by Board during October 2018.
The NEF has developed and implemented a Fraud Prevention Strategy and Fraud Prevention
Plan to guide behaviour and to combat any fraudulent activities. Key aspects of the Fraud
Prevention Strategy and Plan are listed below.
Anti-Fraud Policy Statement
As a first step towards implementing an anti-fraud strategy, the NEF adopts and
publishes an Anti-Fraud Policy statement along the following lines:
The NEF recognises the possibility of fraud and corruption occurring in its operations. As such it is the policy and mission of the NEF to strive for the protection of its employees and its other stakeholders (such as applicants, investees, suppliers etc.) through the implementation of an effective and efficient Fraud Prevention Strategy. We believe that there is only one effective way of fighting fraud and other corrupt practices and that is by instilling the reality amongst employees and other stakeholders, (such as clients (investees), suppliers of goods and services, public,) that fraud and corruption do not pay and will be detected and dealt with severely. Therefore, the NEF’s view on fraud and corruption is one of zero tolerance, and as such the
NEF is committed to: � Aggressively detecting incidents of fraud and corruption;
� The investigation of all allegations of misconduct by employees, clients and suppliers, said to be occasioned by fraud and corruption; and
� The prosecution of all offenders criminally and, where necessary, the institution of civil and disciplinary action against them.
National Empowerment Fund
Strategic Plan for the years 2019/20-22 55
Anti-Fraud Charter
In implementing the Fraud Prevention Policy of the NEF has adopted the following principles:
� We have a zero-tolerance attitude to fraud
� We understand and manage our risks
� We are proactive in defending our assets
� We react swiftly when a crime is uncovered
Fraud Risk Management strategy
The key objectives of the NEF’s Fraud Risk Management Strategy are:
� To establish the necessary preventative, control and monitoring mechanisms/ systems
to minimise the defrauding of the NEF funds, resources, assets and services by any
persons/organizations.
� To ensure that adequate measure are in place to protect the NEF from internal as well
as external fraud (i.e. supplier, potential applicants, clients, syndicates targeting NEF
i.e. false applications etc.).
� To ensure that adequate measures are in place to report fraud (whistle blowing policy
and hotline).
� To ensure that all reported matters are investigated.
� To account to the Board, via the Audit Committee on all fraudulent activity within the
NEF.
� To take the necessary action against all parties involved in fraudulent activities against
the NEF and to punish and deter any fraudulent actions from continuing or recurring.
The focus of such a strategy is the formalisation and implementation within the NEF of a
culture of zero tolerance for fraud and corruption, a high level of fraud awareness, and a
management and control environment that makes it as difficult as reasonably possible to
misappropriate assets or to succumb to corruption.
From the perspective of the NEF, good governance as it pertains to fraud prevention includes:
� Continuing the present focus on governance
� A robust control environment
� A strong and independent Internal Audit function
National Empowerment Fund
Strategic Plan for the years 2019/20-22 56
� A relevant and well-communicated Code of Conduct
� A whistleblowing policy and mechanism (fraud hotline) to report suspected fraud or
corruption
From a fraud prevention point of view it is important that:
� When management considers the strategy and direction that the organisation
is taking, they take into account the environmental factors relating to fraud and
that they insist that a suitably comprehensive fraud prevention strategy be put
in place to address such risks, this is done via the organisational risk
assessment process.
� Each manager brings his or her specialised industry knowledge or technical
background to bear when considering how fraud risks are to be avoided.
� Regular monitoring of performance against pre-set objectives should take
place.
� Individual operational units are held accountable for their actions.
� Constant pressure for improvement is exercised as this has a powerful impact
on reducing fraudulent activity. This is done via the implementation of internal
and external auditor’s recommendation, which is tracked.
� The management team’s awareness of the possibility of fraud is monitored, as
this is also an active manner in which managers can encourage defensive
strategies.
� Regular monitoring of the internal control environment takes place to ensure
that it remains of sufficiently high standard.
Nat
iona
l Em
pow
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und
Stra
tegi
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r the
yea
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019/
20-2
2
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pen
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42 2
51
2 2
53 8
78 3
05
2 2
54 0
00 4
69
2 2
54 0
14 2
19
-
Bala
nce a
t B
egin
nin
g o
f th
e Y
ear
2 3
18 2
39 6
30
2 2
53 6
65 1
82
2 2
53 8
42 2
51
2 2
53 8
78 3
05
2 2
54 0
00 4
69
-
Reta
ined Inco
me/(
Deficit)
for
the Y
ear
(64 5
74 4
48)
177 0
68
36 0
54
122 1
64
13 7
50
No
n-C
urren
t L
iab
ilitie
s
Lia
bilitie
s d
irectly a
sso
cia
ted w
ith n
on-c
urr
ent
assets
cla
ssifie
d a
s h
eld
fo
r sale
9 2
49 1
51
9 2
49 1
51
-
-
-
Cu
rren
t L
iab
ilitie
s271 3
76 1
94
171 3
76 1
96
71 3
76 1
97
61 3
76 1
97
35 8
00 0
00
Acco
unts
Payable
271 3
76 1
94
171 3
76 1
96
71 3
76 1
97
61 3
76 1
97
35 8
00 0
00
TO
TA
L E
QU
ITY
AN
D L
IAB
ILIT
IES
5 0
02 7
21 9
99
4 9
02 8
99 0
69
4 7
93 6
85 9
74
4 7
83 8
08 1
38
4 7
58 2
45 6
91
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20-2
2
5
9
Cas
h F
low
Sta
tem
ent
2018
2019
2020
2021
2022
Mar
chM
arch
Mar
chM
arch
Mar
chR
RR
RR
Cas
h f
low
s fr
om
op
erat
ing
act
iviti
es(3
48 1
94 7
04)
(346
389
060
)
(3
52 5
88 7
72)
(2
85 2
96 6
17)
(316
099
918
)
C
ash
rece
ipts
from
cus
tom
ers
17 7
97 7
59
26 7
00 0
00
44 7
00 0
00
49
700
000
54
700
000
C
ash
paid
to s
uppl
iers
and
em
ploy
ees
(365
992
463
)
(3
73 0
89 0
60)
(397
288
772
)
(334
996
617
)
(3
70 7
99 9
18)
Cas
h f
low
s fr
om
inv
estin
g a
ctiv
ities
137
473
898
(1
54 5
89 5
96)
(219
270
350
)
(4
43 0
95 0
65)
(662
274
602
)
A
dditi
ons
to p
rope
rty, a
nd e
quip
men
t(1
094
796
)
(4 5
00 0
00)
(5 0
60 0
00)
(3 0
00 0
00)
(3 0
00 0
00)
Add
ition
s to
inta
ngib
le a
sset
s(1
099
044
)
(1 0
00 0
00)
(1 8
40 0
00)
(1 0
00 0
00)
(1 0
00 0
00)
Inve
stm
ent d
isbu
rsem
ents
(445
271
876
)
(8
12 0
00 0
00)
(837
200
000
)
(1 0
76 4
80 0
00)
(1
309
052
000
)
Div
iden
ds re
ceiv
ed42
944
962
11
5 51
6 89
7
70 0
00 0
00
70
000
000
70
000
000
In
tere
st re
ceip
ts73
311
704
51
994
247
18
111
629
(17
071
126)
(6
1 80
8 58
3)
Rep
aym
ents
on
orig
inat
ed lo
ans,
pre
fere
nce
shar
es a
nd le
ases
468
682
948
495
399
261
52
9 99
8 11
0
584
456
061
64
2 58
5 98
1
Pro
ceed
s fro
m s
ale
of in
vest
men
ts-
-
6
719
911
-
-
Dec
reas
e in
cas
h a
nd
cas
h e
qu
ival
ents
(210
720
806
)
(5
00 9
78 6
56)
(571
859
122
)
(7
28 3
91 6
82)
(978
374
520
)
Cas
h a
t b
egin
nin
g o
f th
e ye
ar1
344
522
588
1
133
801
782
632
823
126
60
964
004
(6
67 4
27 6
78)
To
tal C
ash
at
end
of
year
1 13
3 80
1 78
2
632
823
126
60
964
004
(667
427
678
)
(1
645
802
199
)
Nat
iona
l Em
pow
erm
ent F
und
Stra
tegi
c Pl
an fo
r the
yea
rs 2
019/
20-2
2
6
0
Per
son
nel
info
rmat
ion
National Empowerment Fund
Strategic Plan for the years 2019/20 - 22 61
Personnel numbers have decreased from a staff complement of 171 at the beginning of
2013/14 to 160 as at 31 December 2018. The staff complement is projected to grow to over
195 in the long term. The financial projection over this strategic period however project a staff
complement of 175. The staff complement is mainly made up of professionals. Attrition levels
increased to 14% during 2013/14 as a result of uncertainties regarding the recapitalisation and
job security, however there has been a significant fluctuation of attrition levels since, which
currently stand at 10% as at 31 December 2018. Personnel cost as a percentage of total
operating expenses, averages around 68%, which is an acceptable norm in Development
Finance Institute/Private Equity environments, where there is a high dependence on
professional staff. The ratio of support staff to line staff is 1: 2.
STOP Fraud, Corruption and Theft Contact Tip-Offs Anonymous on 0800 212 705 or email [email protected]
National Empowerment Fund Trust (established by Act 105 of 1998) IT: 10145/00www.nefcorp.co.za | www.nefbusinessplanner.co.za
How To Reach The National Empowerment Fund
Gauteng ProvinceHead OfficeWest Block, 187 Rivonia Road, Morningside 2057, PO Box 31, Melrose Arch, Melrose North 2076 Tel: +27 (11) 305 8000 | Fax: +27 (11) 305 8001 | Call Centre: 0861 843 633 | 0861 (THE NEF) [email protected] (Funding) | [email protected] (General Enquiries)
Eastern Cape Province7b Derby Road, Berea, East London 5241 | Tel: (043) 783 4200 | 0861 NEF ECP (0861 633 327) Fax: 0861 ECP NEF (0861 327 633) | [email protected]
Free State Province34 Fountain Towers, Corner Zastron and Markgraaf Street, Westdene, Bloemfontein, 9300 Tel: (051) 407 6360 | 0861 NEF FSP (0861 633 377) | Fax: 0861 FSP NEF (0861 377 633) [email protected]
KwaZulu-Natal Province4th Floor (South Side), Grindrod Bank Building (Old KPMG Building), 5 Arundel Close, Kingsmead Office Park, Durban | Tel: (031) 301 1960 | 0861 NEF KZN (0861 633 596) Fax: 0861 KZN NEF (0861 596 633) | [email protected]
Limpopo ProvinceSuite 8, Biccard Park, 43 Biccard Street, Polokwane 0699 | Tel: (015) 294 9200 | 0861 NEF LIM (0861 633 546) Fax: 0861 LIM NEF (0861 546 633) | [email protected]
Mpumalanga Province13 Ferreira Street, Maxsa Building, 2nd floor, Nelspruit | Tel: (013) 754 9860 | 0861 NEF MPU (0861 633 678) Fax: 0861 MPU NEF (0861 678 633) | [email protected]
Northern Cape ProvinceBlock Three, Ground Floor, The Montrio Corporate Park, 10 Oliver Road, Monument Heights, Kimberley Tel: 0861 NEF NCP (0861 633 627) | Fax: 0861 NCP NEF (0861 627 633) | [email protected]
North West Province 32B Heystek Street, Sunetco Office Park, Ground Floor, Rustenburg, 0299 Tel: (014) 523 9220 | 0861 NEF NWP (0861 633 697) Fax: 0861 NWP NEF (0861 697 633) [email protected]
Western Cape ProvinceSuite 2815, 28th Floor, ABSA Centre, 2 Riebeek Street, Cape Town 8001Tel: (021) 431 4760 | 0861 NEF WCP (0861 633 927) Fax: 0861 WCP NEF (0861 927 633) [email protected]
Northern Cape
KwaZulu-NatalFree State
Gauteng
Western Cape
Eastern Cape
Limpopo
Mpumalanga
North West
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