RURAL HOUSING LOAN FUND
Strategic plan 2005/06
1
RHLF’s Vision
Statement
RHLF is a world class rural social
venture capital fund that creates
new financial arrangements and
opportunities for rural families to
improve their housing, economic
and living environments.
2
RHLF implementation
strategy
3
RHLF’s contribution to
“Peoples Contract to Create
Work and Fight Poverty”
• Establish credit histories & repeated
access to credit
• PPP with intermediaries creating jobs
within housing finance value chain
• Stimulate local economic development
using local builders in construction
• Enable access to public utilities
• Supporting the BMS industry create
jobs in the industry and related
industries
4
STRATEGIC INSTITUTIONAL POSITIONING OF RHLF
CABINET
DEPT. OF DEPT. OF
DEPT. OF DEPT. OF
Key National AGRIC & DEPT. OF NATIONAL PUBLIC
Departments > LAND HOUSING
LOCAL
TREASURY SERVICE &
TRADE &
GOVT. INDUSTRY
AFFAIRS ADMIN.
Wholesale Other Micro-
LAND
finance & > MAFISA
BANK
Housing NHFC RHLF DBSA IDC Khula business DFI
purpose Institutions (APEX)
Nurcha, HLGC,
Rural & peri- Infrastructure
NHBRC, Social Housing,
urban development / Industrial
Agriculture Servcon, SHF, IH, Home Small business
incremental Capacity development
Thubelisha, Ownership
housing building
PHPT
Building Commercial Private
Other strategic Finmark
partners > Trust
Bank Seta Material ITC Banks & Post Venture
Suppliers Bank Capital
5
RHLF’s contribution to “New
Comprehensive Housing
Strategy”
• Contribution to job creation
• Informal settlement upgrading
• Increase household income limit in line with new
subsidy rules to R 7 500
• Contribute to Specific Programme Thrusts:
– Financial Services Market
– Incremental Housing
– Rural Housing
6
RHLF’s contribution to “New
Comprehensive Housing
Strategy”
Financial Services Market:
• Access to micro-loans for incremental housing
and fixed home improvements for the rural
working poor
• RHLF will use its venture capital investments
to leverage additional debt funding from banks:
– Clients reaching maximum RHLF exposure
of R 25 m
– Constructive discussions with two banks;
application to co-fund Norufin submitted to
Std Bank
– Bayport’s relationship with Brait
• Borrower education – revised Building Advice
Handbook now available in 3 languages &
include chapter on household budgeting
7
RHLF’s contribution to “New
Comprehensive Housing
Strategy” (cont…)
Incremental Housing:
• Existing core financing
opportunity for RHLF business
• Informal settlement upgrading –
post occupancy
• Disburse 200 loans to subsidy
beneficiaries in Northern Cape
with monthly income below R 1
500
8
RHLF’s contribution to “New
Comprehensive Housing
Strategy” (cont…)
Rural Housing:
• Farm worker housing – 200 loans
to emerging farmers and farm-
workers in Mpumalanga
• Provision of loans for improving
traditional houses in communal
land and support indigenous
housing (maximizing housing
choices)
9
Status of RHLF approved
business strategy
• Continue to fund profitable and adequately
capitalised established entities
– Two new clients, Izwe & Bayport
– New facilities to current clients Blue Dot & Indlu
– Increase in facility to Norufin
– Received application from Lendcor (including
pilot loan for emerging contractors)
– Received application from new client; African
Dawn Capital (emerging farmer and farm worker
housing)
• RHLF will continue to use its venture capital
investments to leverage additional debt
funding from banks
• Financial sustainability and development
impact
– Bayport phase 2, SAPO savers & rural lending
– Izwe’s expansion to secondary towns 10
RHLF: FINANCIAL YEAR TARGETS
Performance Indicators Description For 2005/2006
RHLF as lender of loans to intermediaries.
1 Number of loans approved The number of new loans approved. 5
Value of loans approved (R
2 million) The value of new loans approved. 62,000,000
The total number of managed loans in
3 Number of loans in place place 22
4 Value of loans in place The total value of loans in place 119,756,670
Number of houses financed by
5 loans granted Number of end user loans financed 20,000
Income from loans and related Interest earned and other income
6 activities derived from all loans. 16,972,183
Average interest on the loans Average interest rate charged on new
7 granted loans. 15.43%
Losses on loans (non- Losses due to borrowers not
8 performing) performing on their loans. 5,830,000
Number of financial Number of financial intermediaries
9 intermediaries operating which are using RHLF funding. 6
Number of financial intermediaries
Number of financial which are likely not to perform on their
10 intermediaries in distress loans. 1
Finance
Income earned on core business
11 Income from core business investments and activities. 16,972,183
Income from other Income earned on investments and
12 activities/investments other non core business activities. 856,651
13 Expenditure As indicated in the Income statement. 10,669,355
Profit / Loss (Operating surplus /
14 deficit) As indicated in the Income statement. 1,329,480
15 Total capital As indicated in the Balance statement. 153,922,760
Value of the Total capital, used in
guarantees, loans and other business
16 Capital used in operations. operations. Equity and investments
Loan facilities
450,000,000
400,000,000
350,000,000
300,000,000
Total Cumulative Commitments
112,925,448
Rand
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
-
1998 1999 2000 2001 2002 2003 2004 2005 2006
Capital used in other Value of the Total capital, used in other
11
17 investments non-business related investments. -
Equity and investments Total Cumulative Commitments
Loan facilities
450,000,000
400,000,000
350,000,000
300,000,000
Rand
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
-
2000 2001 2002 2003 2004 2005 2006
Equity and investments Total Cumulative Commitments
Loan facilities
450,000,000
400,000,000
350,000,000
300,000,000
Rand
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
-
1998 1999 2000 2001 2002 2003 2004 2005 2006
12
Number of facilities approved
and active clients
80
74
69
66
60 59 60 Cumulative number of facilities
52 52 50 approved
44 45 45
40 38 38 Cumulative number of facilities
33
disbursed
20 17 18 Number of active clients
10 9
4 6 6
-
2000 2001 2002 2003 2004 2005 2006
13
Equity investments
Annual Disbursements
Loan facilities
120,000,000
100,000,000
80,000,000
Rand
60,000,000
40,000,000
20,000,000
-
2000 2001 2002 2003 2004 2005 2006
14
Commitment to BEE
• Four distinct strategic
thrusts
– Demand driven developmental
needs of end-users
– Funding black owned and
managed companies
– Warehouse RHLF shares for
future acquisition
– Employment equity
15
Gender distribution of end-user loans
45%
Male
55% Female
16
RHLF Empowerment Clients Other clients
(Both MDF Grants and Loans)
Empowerment clients
40
35
30
19 19
25 16 16 18
12 13
20
15
10 15 15 15 16 16 17 18
5
0
2000 2001 2002 2003 2004 2005 2006
17
Cumulative number of end-user loans financed
120,000
100,000 87,519
80,000 67,519
60,000 53,209
45,203
40,000 34,667
29,114
17,992
20,000
-
2000 2001 2002 2003 2004 2005 2006
18
Warehouse RHLF
shares
• RHLF owns shares in the
following number of clients:
– Protea Financial Services
Group
– Norufin Housing
– Lendcor
– Indlu Finance
– Izwe
– Bayport
19
Organogram
Willem van Emmenis
Managing Director
Client Business Risk Financial
Relation- Develop- Manage- Manage-
ships ment ment ment
Xoliswa Katleho Tsaliko Jabulani Makgala- Andrew
Bebula Fakazi borwa Maila Jager
Nchapa Ntoampe
Client Business Risk Chief
Executive Client Client Relations Manager Financial
Executive Executive Manager Officer
Corinthia William Porche Myriam
Ndatsa Mlatsji Knauf Kheza
Business Risk Analyst Book- Program
Relations keeper Admin-
Officer istrator
Rhona
Mokhele
20
Office
Assistant
Employment Equity
African Coloured Asian White Total
Grade F M F M F M F M
5 2 2
4 3 4 7
3 1 1 2
2
1 1
Total 5 4 1 2 12
% 42% 33% 8% 17%
% 75% 0% 0% 25%
21
RHLF Development Impact: Some key
findings
• Loan usage: 69% (vs 70% RHLF target for 2003/04
FY) of the loans are used for developmental
purposes
– 54% housing
– 14% education
– 1% working capital for in micro/survivalist
enterprises
• Satisfaction: 61% of the end-users said they were
satisfied with the outcome of the loan use, and
• 68% said they would recommend their retail lender
to friends and relatives.
• 55% of the end-users are females
22
RHLF Development Impact: Some key
findings (cont…)
• Direct correlation between end-users receiving
consumer education and those who are up-to-date
with payments;
– But only 19% report having received consumer
education
• 11% of end-users live in RDP housing, and 3% used
the loan to top up subsidy at acquisition
• End-users live in the RDP house an average of 24
months before borrowing to improve or extend the
RDP house
23
RHLF Development Impact: Some key
findings (cont…)
• On average end-users who built new space on the
RDP house or existing dwelling, added 22 m2 to the
house at cost effective amount of R617 per square
metre
• 7% of the end-users are informally employed
• RHLF currently has small exposure of 3.6% of loans
surveyed in 3 ISRDP nodes in Eastern Cape and
Limpopo/Mpumalanga
24
Key Environmental
Factors
Debit
Order
Financial Land & Monopoly
Sector Agric.
Charter Policy
Changing
DFI Traffic Laws &
Jam Regulations
25
R Pearson 2003: Updated Retreat March
2005
RHLF’s response to Key
Environmental factors
• Financial Sector Charter – Constructive engagement
with banks, funding of 2 clients reaching RHLF’s
maximum exposure limits
• Land and Agricultural Policy – Share experiences in
micro-finance for housing with Mafisa
• Debit order monopoly – RHLF made representations
to SARB and PASA
• DFI mandates reviewed and confirmed with
implementation gaps to be addressed
• New National Credit Bill – bigger loans and longer
terms at lower cost to borrower
26
Rural Housing Loan Fund Forecast
Key objectives and indicators Full Year Full Year YTD YTD
Actual Budget Actual Budget
31-Mar-04 31-Mar-05 31-Mar-05 31-Mar-06 Variance
Cumulative number of facilities approved number 59 63 69 74 7.2%
Cumulative number of facilities disbursed number 50 55 60 66 10.0%
Average interest rate charged on loans % 15.35% 15.46% 14.03% 15.43% 10.0%
Cumulative number of clients 34 35 36 37 2.8%
Cumulative number of BEE clients 16 16 16 17 6.3%
Number of active clients number 4 6 6 6 0.0%
Number of clients in distress number 0 0 1 1 0.0
Total cumulative commitments R 287,539,496 343,004,496 353,189,496 415,189,496 17.6%
Cumulative loan facilities committed since inception R 270,284,701 325,284,701 335,434,701 397,434,701 18.5%
Cumulative equity investments committed R 17,254,795 17,719,795 17,754,795 17,754,795 0.0%
Total cumulative disbursements R 260,974,871 335,739,871 330,120,386 436,120,386 32.1%
Cumulative loan amounts disbursed R 251,144,826 325,444,826 319,744,826 425,744,826 33.2%
Cumulative equity investments disbursed R 9,830,045 10,295,045 10,375,560 10,375,560 0.0%
Total disbursements as percentage of total commitments % 91 98 93 107 14.6%
Total new commitments p.a. R 76,999,750 55,465,000 65,650,000 62,000,000 -5.6%
New loan facilities committed p.a. R 74,830,000 55,000,000 65,150,000 62,000,000 -4.8%
New equity investments committed p.a. R 2,169,750 465,000 500,000 0 -100.0%
Total disbursement p.a. R 38,520,000 74,765,000 69,145,515 106,000,000 53.3%
Loan amounts disbursed p.a. R 38,070,000 74,300,000 68,600,000 106,000,000 54.5%
Equity investments disbursed p.a. R 450,000 465,000 545,515 0 -100.0%
Average size of end user loans R 4,720 5,000 4,736 5,300 11.9%
Number of new end user loans financed number 8,006 14,860 14,310 20,000 39.8%
Cumulative number of end user loans financed number 53,209 68,069 67,519 87,519 29.6%
Potential number of end user loans number 66,466 81,326 79,759 99,759 25.1%
MDF grant amounts disbursed per annum R 1,153,995 800,000 100,000 - -100.0%
Cumulative MDF grant amounts disbursed R 6,628,580 7,428,580 6,728,580 6,728,580 0.0%
27
Cumulative number of MDF grants number 50 54 50 50 0.0%
Average MDF grant size R 132,572 137,566 134,572 134,572 0.0%
Audited Budget Actual Budget %
Sustainability indicators 31-Mar-04 31-Mar-05 31-Mar-05 31-Mar-06 Variance
Total capital 132,950,500 184,768,164 132,482,124 153,922,760 16.2%
Loan capital - 51,225,000 - 20,510,000 #DIV/0!
Capital utilised in operations 61,397,280 92,082,550 99,810,840 112,925,448 13.1%
Capital utilised in other investments - - - - #DIV/0!
Operating costs excluding MDF grants R 9,522,635 11,180,820 10,259,821 10,669,355 4.0%
Interest income R 17,620,865 14,076,025 14,550,348 17,828,834 22.5%
Interest Income on Advances 11,855,794 11,142,958 10,221,287 16,972,183 66.0%
Interest Income on Investments (after funding costs) 5,765,071 2,933,067 4,329,061 856,651 -80.2%
Losses on loans and investments 17,803,920 3,343,500 5,796,895 5,830,000 0.6%
Costs to income ratio % 54.04 79.43 70.51 59.84 15.1%
Net surplus/(deficit) before tax and MDF grants R (12,006,612) (448,295) (468,376) 1,329,480 383.8%
Advances book outstanding before impairment R 56,800,641 87,628,750 101,041,905 119,002,671 17.8%
Equity investments before impairment R 5,450,878 6,052,058 5,235,889 5,235,889 0.0%
Impairments as % of advances % 9.0% 6.2% 11.8% 14.9% 26.5%
Audited Budget Actual Budget %
Sustainability indicators 31-Mar-04 31-Mar-05 31-Mar-05 31-Mar-06 Variance
Total impairments as % of advances and investments % 16.0% 11.9% 15.5% 17.9% 15.7%
Total capital 132,950,500 184,768,164 132,482,124 153,922,760 -13.9%
Loan capital - 51,225,000 - 20,510,000 0.0%
Capital utilised in operations 61,397,280 92,082,550 99,810,840 112,925,448 -11.6%
Capital utilised in other investments - - - - 0.0%
Operating costs excluding MDF grants R 9,522,635 11,180,820 10,259,821 10,669,355 -3.8%
Interest income R 17,620,865 14,076,025 14,550,348 17,828,834 -18.4%
Interest Income on Advances 11,855,794 11,142,958 10,221,287 16,972,183 -39.8%
Interest Income on Investments (after funding costs) 5,765,071 2,933,067 4,329,061 856,651 405.3%
Losses on loans and investments 17,803,920 3,343,500 5,796,895 5,830,000 -0.6%
Costs to income ratio % 54.04 79.43 70.51 59.84 17.8%
Net surplus/(deficit) before tax and MDF grants R (12,006,612) (448,295) (468,376) 1,329,480 -135.2%
Advances book outstanding before impairment R 56,800,641 87,628,750 101,041,905 119,002,671 -15.1%
Equity investments before impairment R 5,450,878 6,052,058 5,235,889 5,235,889 0.0%
Impairments as % of advances % 9.0% 6.2% 11.8% 14.9% -21.0%
Total impairments as % of advances and investments % 16.0% 11.9% 15.5% 17.9% -13.6%
Cash 71,553,220 41,460,614 32,671,284 40,997,312 -20.3%
Cash 71,553,220 41,460,614 32,671,284 40,997,312 25.5%
28
INCOME STATEMENT
RURAL HOUSING LOAN FUND Mar-05 Mar-06 Mar-07 Mar-08 Mar-09
Full Full Full Full Full
Year Year Year Year Year
Interest Received Advances 10,221,287 16,972,183 18,631,201 20,415,206 21,531,996
Interest Paid - (1,870,000) (2,040,000) (2,040,000) (2,040,000)
10,221,287 15,102,183 16,591,201 18,375,206 19,491,996
Provision for bad debts (5,796,895) (5,830,000) (5,907,000) (6,138,000) (6,105,000)
4,424,392 9,272,183 10,684,201 12,237,206 13,386,996
Other income 816,619 - - - -
5,241,011 9,272,183 10,684,201 12,237,206 13,386,996
Interest received surplus funds 4,329,061 2,726,651 2,628,594 2,533,822 2,441,489
9,570,072 11,998,835 13,312,795 14,771,029 15,828,485
Operating Expenditure 10,259,821 10,669,355 11,404,488 12,202,802 13,056,998
(689,749) 1,329,480 1,908,307 2,568,226 2,771,487
Exchange Gain / Loss 221,373 - - - -
(468,376) 1,329,480 1,908,307 2,568,226 2,771,487
MDF Grants - - - - -
(468,376) 1,329,480 1,908,307 2,568,226 2,771,487
Taxation - Current Taxation - (1,710,594) (1,901,567) (2,151,518) (2,205,071)
- Deferred Taxation 1,311,750 1,329,075 1,381,050 1,373,625
(468,376) 930,636 1,335,815 1,797,758 1,940,041
Bad Debts 5.5% 29
Interest paid 10.2%
BUDGETED BALANCE SHEET
RURAL HOUSING LOAN FUND
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09
ASSETS
Gross Advances 101,041,905 119,002,671 127,825,213 136,965,158 139,013,028
Impairments (11,899,593) (17,729,593) (23,636,593) (29,774,593) (35,879,593)
Net Advances 89,142,312 101,273,078 104,188,620 107,190,565 103,133,435
Investment in Associates 754,019 754,019 754,019 754,019 754,019
Fixed Assets 885,815 557,907 89,163 470,419 1,675
Deferred Tax 9,822,590 11,134,340 12,463,415 13,844,465 15,218,090
Current Assets
33,201,291 41,527,319 39,087,260 36,120,768 41,213,058
Deposits 52,765 52,765 52,765 52,765 52,765
Sundry Debtors 75,300 75,300 75,300 75,300 75,300
Receiver of Revenue 401,942 401,942 401,942 401,942 401,942
Accompanying Measure - - - - -
Bank Balances 32,671,284 40,997,312 38,557,253 35,590,761 40,683,051
133,806,027 155,246,662 156,582,477 158,380,236 160,320,277
EQUITY AND LIABILITIES
Grant Capital 154,762,590 154,762,590 154,762,590 154,762,590 154,762,590
Distributable Reserves (22,280,466) (21,349,830) (20,014,015) (18,216,257) (16,276,216)
132,482,124 133,412,760 134,748,575 136,546,333 138,486,374
Long Term Liabilities
Soft Loan 20,510,000 20,510,000 20,510,000 20,510,000
Current Liabilities
1,323,902 1,323,902 1,323,902 1,323,902 1,323,902
Sundry provisions 790,729 790,729 790,729 790,729 790,729
Accompanying Measure 305,787 305,787 305,787 305,787 305,787
Receiver of Revenue - - - - -
Sundry Creditors 227,386 227,386 227,386 227,386 227,386
30
133,806,026 155,246,662 156,582,477 158,380,235 160,320,276
CASHFLOWS Mar-06 Mar-07 Mar-08 Mar-09
RURAL HOUSING LOAN FUND
Cash balances
Std Jersey 11,631,958 12,472,833 13,374,495 14,341,338
Std Bank Curr 1 866,929 866,929 866,929 866,929
Std Bank Curr 2 + Sal 132,642 132,642 132,642 132,642
SCMB Notice Deposit 185,838 197,792 210,514 224,054
Investec Call 28,179,945 24,887,058 21,006,181 25,118,087
40,997,312 38,557,253 35,590,761 40,683,051
Liquidity ratio
Cash expenses
Total expenses 10,669,355 11,404,488 12,202,802 13,056,998
Expenses excl Bad debt
Less: Depreciation (457,908) (468,744) (468,744) (468,744)
Less: Bad Debt provision plus recoveries
10,211,447 10,935,744 11,734,058 12,588,254
Cash movement
Investec Call
Opening balance 20,649,334 28,179,945 24,887,058 21,006,181
Disbursements (106,000,000) (107,400,000) (111,600,000) (111,000,000)
Receipts 105,011,418 117,208,658 122,875,261 130,484,126
Cash expenses (10,211,447) (10,935,744) (11,734,058) (12,588,254)
Transfer from offshore / current / soft loan 18,640,000 (2,040,000) (2,040,000) (2,040,000)
Adjustment / Prov tax / Capex (1,840,594) (1,901,567) (3,001,518) (2,205,071)
Capital for interest calculation 26,248,711 23,111,292 19,386,743 23,656,982
Interest @ 6.75% 6.75% 1,931,234 1,775,766 1,619,438 1,461,105
10.00%
Closing balance 28,179,945 24,887,058 21,006,181 25,118,087
SCMB Notice Deposit
Opening balance 174,607 185,838 197,792 210,514
Interest @ 8% 6.25% 11,231 11,953 12,722 13,541
Closing balance 185,838 197,792 210,514 224,054
Offshore Funds - Domestic Currency
Opening balance 10,847,772 11,631,958 12,472,833 13,374,495
Interest earned 7.00% 784,186 840,875 901,662 966,843
Transfers out
Transfers in
31
Closing balance 11,631,958 12,472,833 13,374,495 14,341,338
Rural Housing Loan Fund
INCOME STATEMENT
AUDITED 2004, FORECAST MARCH 2005 AND BUDGET MARCH 2006
Audited Unaudited Budget %
2004 2005 2006 Change
YTD YTD YTD
Interest earned 17,620,865 14,550,348 19,698,835 35%
Interest paid - - (1,870,000) #DIV/0!
Gross Margin 17,620,865 14,550,348 17,828,835 23%
Bad debts (17,803,920) (3,384,895) (5,830,000) 72%
Net Margin (183,055) 11,165,453 11,998,835 7%
Other Income (2,300,922) 816,619 - -100%
Total Income (2,483,977) 11,982,072 11,998,835 0%
Less: Expenses ** 9,522,635 10,259,821 10,669,355 4%
Audit Fees 277,590 345,016 326,040 -6%
Bank Charges 20,731 21,894 24,000 10%
Computer Expenses 30,876 10,873 18,000 66%
Conferences 27,831 35,911 87,996 145%
Consulting Fees 628,045 329,138 588,504 79%
Courier & Postage 44,381 25,909 30,000 16%
Depreciation 229,737 276,302 457,908 66%
Directors Fees 23,000 270,828 368,004 36%
Donations 15,000 27,899
Entertainment Expenses 30,248 17,441 36,000 106%
Insurance 86,085 89,019 102,420 15%
IT Hosting & ASP Rentals 415,506 323,755 130,476 -60%
Legal Fees 823,452 284,133 570,000 101%
Levies 68,281 76,742 80,076 4%
Office Equipment Rentals 474,798 547,126 21,791 -96%
Office Minor Purchases 10,755 9,257 14,196 53%
Marketing & Promotions 992,965 1,235,124 875,004 -29%
Office Plants 11,923 11,931 12,576 5%
Payroll & HR Costs 47,649 68,592 159,384 132%
Penalties - -
Photocopy charges 8,578 9,615 15,600 62%
Printing 23,986 11,084 42,996 288%
Rent Paid 437,520 485,197 455,604 -6%
Repairs & Maintenance 53,502 44,639 18,600 -58%
Salaries & Wages 4,198,519 4,887,356 5,228,904 7%
Sponsorships - 140,004 #DIV/0!
Staff Training 116,296 148,785 184,044 24%
Staff & Client Refreshments 20,877 34,753 39,996 15%
Stationery 45,999 39,869 66,000 66%
Subscriptions 21,365 47,360 38,832 -18%
Telephone & Fax 107,489 84,240 86,400 3%
Travel & Accommodation 229,651 460,033 450,000 -2%
Net Profit/(Loss) before Tax (12,006,612) 1,722,251 1,329,480
32
Add. Protea FSG Impairment (2,412,000)
* * = Excludes MDF grants (689,749)
Thank You
33