Role of sefa in assisting small, micro
and medium enterprises (SMMEs) to
access finance
Presentation by SEFA to the Select Committee on
Trade and International Relations
30 May 2012
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OUTLINE
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Overview and Background
Corporate form
sefa Board of Directors
sefa developmental outcome
Mandate and Vision
Mission and Values
Strategic Objectives
Products and Services
Delivery model
What’s different in the delivery model
Footprint & Access Points
Performance targets
Current provincial footprint
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OVERVIEW AND BACKGROUND
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The merger of Khula, the South African Micro Finance Apex Fund (samaf) and the
Industrial Development Corporation (IDC) small business funding portfolio was
initially mentioned in the New Growth Path and later announced by the President
in the State of the Nation Address in February 2011; leading to the establishment
and launch of The Small Enterprise Finance Agency (sefa) in April 2012.
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The purpose of sefa is to respond to the challenge of access to finance for start-up
and expansion by small businesses. sefa will do this by providing and facilitating
access to finance for sustainale small business, and ultimately contributing to
economic development and employment creation.
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sefa services are targeted to Survivalist, Micro, Small and Medium Enterprises
(SMMEs) in South Africa.
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SEFA BOARD
The following sefa Board Members were appointed by the
Minister with effect from 1 April 2012:
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Ms SM Rensburg (Chairman),
Mr M Ferreira,
Mr IAS Tayob,
Ms HN Lupuwana,
Mr SA Molepo,
Mr VG Mutshekwane,
Ms BP Calvin,
Mr GS Gouws,
Ms K Schumann,
Mr LB Mavundla.
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CORPORATE FORM
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Shareholder
compact
Policy Engagement
Establishment of a new wholly
owned subsidiary of the IDC
combining Khula, SAMAF and
IDC’s Small Business function
IDC
Shareholder agreement
To be established in terms of the
IDC Act
Shareholder agreement to be
signed between the subsidiary
Board and the IDC
Shareholder compact between
IDC and EDD incorporates the
activities of the entity
To be managed as a subsidiary in
respect of accountability, fiduciary
responsibility, etc.
Independent sefa board appointed
EDD
• Policy Engagement
between EDD & dti and
IDC & sefa
Board
sefa
IDC Small
Business
activities
IDC SB
portfolio
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activities
migrates
(absorbs Khula )
RFI’s (capacity building and
wholesale lending)
Loan Guarantees with banks
Direct lending
Joint ventures
Migrate to
Khula
Samaf
MFIs
(Capacity building
and wholesale
lending)
Co-ops
(Capacity building
and wholesale
lending)
Other government initiatives with whom to explore relationships
National
Empowerment
Fund
Business Support
Services (pre loan
approval) in partnership
with SEDA
Postbank
Sefa developmental outcome
• The objective of sefa is to contribute to the establishment, survival and
growth of SMMEs.
• Through the provision of access to finance sefa aims to positively impact
on OUTCOME 4, i.e decent employment through inclusive economic
growth as per government’s outcomes delivery agreement.
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Mandate and Vision
• sefa’s strategic objectives are a response to the organisational
mandate, vision and mission as follows:
– Legislative Mandate
Derived from IDC Act
3(d) to foster the development of Small and Medium enterprises and
cooperatives
– Vision
• To be the leading financier for development of sustainable
Survivalist, Micro, Small and Medium enterprises.
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Mission
Our mission seeks to:
• To provide finance to Survivalist, Micro, Small and Medium sized enterprises
(SMMEs) throughout South Africa on a wholesale and direct basis
• To provide credit guarantees to financial intermediaries that lend to Small,
Medium and Micro businesses
• Support the capacity development of Financial Intermediaries.
• To support SMMEs with post investment support
• To create strategic partnerships for sustainable SMMEs development and
support.
• To monitor the effectiveness and impact of finance provision, credit
guarantees and capacity development in the Survivalist, Micro, Small and
Medium sized enterprise sector
• To develop innovative finance products, tools and channels to catalyse
increased market participation in the provision of affordable finance to
Survivalist, Micro, Small and Medium sized enterprises.
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Values
sefa’s guiding principles for decisions and activities and behaviour are:
1. Speed and urgency: (kuya sheshwa!!!)
2. Passion for development (solution driven attitude, commitment to
serve )
3. Integrity: (Dealing with clients and stakeholders in an honest and
ethical manner).
4. Transparency: (Ensuring compliance with best practice on the
dissemination and sharing of information with all stakeholders).
5. Innovative: (continuously looking at new and better ways to serving
our customers)
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Sefa’s strategy will be underpinned by four
(4) key pillars:
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Appropriate and affordable products and services that are
cost effective
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Continuous research, learning and innovation
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An effective highly performing organisation with passion
for development
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An appropriate structure, infrastructure and process
throughout South Africa to drive organisational
performance
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Strategic Objective 1
Increase access and provision of finance to Survivalist, Micro, Small and
Medium Enterprises
Goal statement 1: Increase the utilisation of guarantee indemnity scheme by
commercial banks
Goal statement 2: Expand partnerships with microfinance institutions
Goal statement 3: Expand partnerships with retail finance institutions
Goal statement 4: Scale-up direct lending to Micro, Small and Medium
Enterprises
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Strategic Objective 2
Build a fit for purpose institution that is sustainable and responsive to the
needs of target market
Goal statement 1: Complete the integration of staff and systems of the relevant
organisations to create an effective sefa
Goal Statement 2: Build efficient and effective business processes, systems and
infrastructure
Goals statement 3: Develop and implement a dynamic human capital, values and
culture aligned to the sefa’s mandate
Goal statement 4: Develop appropriate, cost effective and affordable products and
service
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Strategic Objective 3
Build a learning organisation
Goal statement 1: Design and implement a dynamic research and development
capacity
Goal statement 2: Develop performance-based monitoring and evaluation
systems and processes
Goal statement 3: Design and implement an organisation-wide knowledge
management system
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Strategic Objective 4
Develop and implement a national footprint for effective product and service
delivery.
Goal statement 1: Ensure representation of sefa in each of the nine provinces
Goal statement 2: Implement effective marketing and communication to
relevant stakeholders
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Strategic Objective 5
Build a sefa that meets all legislative, regulatory and good governance
requirements
Goal statement 1: Implement approved strategic plan
Goal statement 2: Ensure effective board and management with clear roles and
responsibilities are in place
Goal statement 3: Design and implement all governance structures for effective
reporting
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Product and Services
• The products and services offered by sefa include:
Wholesale Products
• Business loans
• Funds/JVs
• Non-financial support e.g. capacity building and post-loan support
• Institutional Indemnities
Retail Products
• Commercial debt
– Revolving loans
• Guarantees
–Performance guarantees
– Bridging finance
–Supplier guarantees
– Term loans
–Loan payment facility guarantees
– Asset finance, and
– Short-term trade finance
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Delivery model
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It is proposed that the Survivalists and Micro Enterprises be exclusively serviced through the
wholesale model and the Small and Medium Enterprises through a hybrid of a wholesale and
retail business model.
SURVIVALIST
MICRO
SMALL
R3 million
R50 000
WHOLESALE LENDING
MEDIUM
WHOLESALE LENDING THROUGH BANKS AND RFIs
RETAIL LENDING
Serviced indirectly through FSCs and MFIs.
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Serviced directly through retail lending and indirectly through
specialist financing partners
The pricing strategy will be such that there is a discount to market rates generally available to
these enterprises but should adequately cover operating costs, exposure to losses, economic
fluctuations and generate sufficient margin to be largely self sustaining. In addition the
development objectives will be taken into consideration.
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What’s different in the delivery model
Wholesale lending
• partner with stronger financial intermediaries operating in sector
specific/niche markets
• seek intermediaries that share sefa’s developmental objectives
• limit interest rate charged by intermediaries to end-beneficiaries
• build a network of stronger intermediaries through targeted capacity
building interventions aimed at creating sustainable SMMEs
• leverage sefa systems and processes to build the branch network
• develop targeted programmes to support key government policies and
targeted sectors
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What’s different in the delivery model
Retail lending
• provide finance directly to viable SMMEs that cannot otherwise attract
private sector funding
• deliver simplified products
• faster turnaround times
• leverage infrastructure of existing and potential partners (eg IDC, seda,
Post Bank, provincial economic development institutions, etc)
• promote financial literacy amongst SMMEs through various partnerships
• provide post loan support to funded SMMEs
• use flexible approach to traditional credit scoring methods (cash flow
based and viability of the business)
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Footprint
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The retail network consisting of regional; branch; and satellite offices will span across the
nine provinces and all districts of South Africa
In order to be efficient as well as effective: a “one stop shop” concept has been developed
where Branch Offices and/or Satellite Offices will be established on the premises of sister
organisations or other DFIs or local government agencies or other local development
agencies.
Sefa Head Office
(Gauteng, Tshwane -Centurion)
Eastern Cape (East London)
Districts
Free State (Bloemfontein)
Districts
Gauteng (Johannesburg)
Districts
Kwazulu Natal (Durban)
Districts
Limpopo ( Polokwane )
Districts
Mpumalanga (Nelspruit)
Districts
North Cape (Kimberly)
Districts
North West (Rustenburg)
Districts
Western Cape (Cape Town)
Districts
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Performance targets for SEFA
For the period 2013 – SME Finance Micro Finance
2017
Wholesale
Wholesale
Loans to
loans to
intermediaries intermediaries
SME Retail –
Small
SME Retail –
Medium
Credit
Indemnity
Approvals
R600 million
R1 billion
R1.2 billion
R1.1 billion
R360 million
by banks
No of new loans
issued directly
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5000
350
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R250 000
R3 million
R300 000
Ave SMME loan size
R250 000 (by
R4 500 (by
intermediaries) intermediaries)
No of SMME's
financed through
intermediaries
3000
180 000
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1200
No of jobs created
12 000
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14 000
12 000
8 400
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Current provincial footprint
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No. of financing partners
Access points to sefa products and services
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Disbursements (R’000)
Disbursements for the period ended 31 March 2012
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THANK YOU
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