National Empowerment fund Assistance Provided to Export Oriented

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					Assistance Provided to Export
Oriented Businesses
Briefing to the Select Committee on Trade and International
Relations
                   1 September 2010
Presenters


1.   Ms Philisiwe Buthelezi
         Chief Executive Officer

2.   Mr Andrew Wright
         Chief Financial Officer




                                   2
NEF Mandate …

       Established by the National
   Empowerment Fund Act No 105 of
     1998, the NEF is a driver and a
    thought- leader in promoting and
       facilitating Black economic
   participation through the provision
      of financial and non-financial
      support to Black empowered
  businesses, as well as by promoting
  a culture of savings and investment
           among Black people.


                              2
    Key Strategic Objectives …

   Promote and support business
    ventures pioneered and run by black
    people;
   Promote the understanding of equity
    ownership among black people;
   Provide black people with direct and
    indirect opportunities to acquire share
    interests in State
    Owned and private business
    enterprises;
   Encourage and promote investments,
    savings and meaningful economic
    participation among black people.

                                       3
The Strategic Planning Framework …
                Broad Based Black Economic Empowerment
                       The Codes of Good Practice



                            Sectors
                             NEF/ ASGISA:                         Government Priorities:
                            • BPOs; Tourism; Biofuels;
                            Construction; Agri-processing;        1)      Acceleration of economic growth and
              Objectives
 Objectives
  NEF Act:




                            Transport; ICT & Media; Mining                transformation, creating decent work and
               The dti




                            services; Franchising                         sustainable livelihoods;
                             Industrial Policy Action Plan:       2)      Infrastructure development to achieve
                            • Capital/ Transport Equip.                   social and economic goals and rural
                            • Metal Fabrication                           development;
                            • Chemicals & Plastics                3)      Skills and human resource development;
                            • Pharmaceuticals                     4)      Build a developmental state and improve
                            • Forestry, pulp, paper &                     public service.
                              furniture
                            • Automotive




                       NEF priority sectors aligned with IPAP sectors


                                                              4
    Alignment of NEF Strategic Objectives to
    National Performance Agreement
    Outcome 4:
    Decent employment through Inclusive growth
    Promotion and support of business ventures pioneered and run by black people, thereby
     directly contributing to the outcome of inclusive economic growth.

    Contribution to the fourth output:
       Raising South Africa’s competitiveness through investments made by the NEF’s
         Strategic Projects Fund.

    Contribution to the sixth output :
       Critically review our support for cooperatives and small businesses .. address the
         circumstances of workers and enterprises in the survivalist sectors of the economy.
       The NEF has specific and measurable targets in terms of the number and value of
         deals.
       The provision of financial and non-financial support (mentorship programme) to small
         business.
       Focus on increasing sustainable investment to strengthen the NEF’s balance sheet.
       Development of new models for co-operative enterprise such as using the OVOP
         model from Japan.

                                               5
NEF’s Performance and Investment Criteria …
            “The Empowerment Dividend”
The assessment of impact is not driven only by financial returns but by
measurement in terms of “The Empowerment Dividend” made up as follows:

   Broad Based Black Economic Empowerment
    Ownership, management control, employment equity, skills etc
   Black Women Empowerment
   Job Creation
   Growth Sectors
   Geographic Spread
   Investment Return


                                   6
Key Positioning Objectives of the NEF …
   To focus exclusively on providing investment funding to black empowered businesses
    and wealth creating investment opportunities for black individuals;
   To be experts in investment and funding structures for black empowered businesses
    and black individuals in direct support of black empowerment policy;
   To stimulate sector targeted economic growth, job and wealth creation as a direct
    product of investment and funding activities;
   To act as a warehousing conduit for the transfer of valuable equity allocations and
    investments to the black public;
   To ensure broad-based and sustainable empowerment;
   To maximize the empowerment dividend in parallel to the financial dividend;
   To create a prudently and effectively managed fund with a time horizon of at least 10
    years;
   To maintain and grow the capital base of the NEF for the benefit of its beneficiaries and
    provide a self sustainable real return to stakeholders;
   To differentiate against and work in syndication with existing business funding offerings
    by other operating Development Finance Institutions (DFIs) in promoting BB BEE;
   To work in partnership with both public and private sectors;

                                             7
Additional Key Positioning Objectives …

   To evaluate the effectiveness of black empowerment policy and the development
    thereof;
   To capitalise on the status of being the only gazetted “BEE Facilitator” and apply this
    status in the development of key sectors and the transformation thereof:
        Full black ownership status in the case of equity warehousing;
        Providing a BEE recognised fund allowing for full recognition for Enterprise
         Development scores for contributing companies;
        Effectively investing Enterprise Development contributions into mandated and
         recognised activities;
        Focusing on Enterprise Development contributions as a key source of additional
         capital for the NEF.




                                             8
The Promotion of Exports by the
NEF
   The promotion of exports is built into the NEF strategic plan as a
    product of the output applied to the dti regarding the need to raise
    our competitiveness, to raise our net exports and to grow our trade
    as a share of world trade.

   Addressed in the sourcing and evaluation of export orientated
    transactions within the existing product offering of the NEF.

   Given the growth potential for exporters, should Black empowered
    companies applying for finance from the NEF be positioning
    themselves for export, this aspect is used as a motivator for funding.




                                       2
The Promotion of Exports by the
NEF

   Once invested, the NEF actively seeks ways and means of assisting
    investees seek new export markets.

   These initiatives will involve:

        Introducing the investees into the dti Export Marketing &
        Investment Assistance Scheme (EMIA),

       Facilitating their participation on state and trade visits to
        countries of potential new foreign markets, and

       Sponsoring their participation on trade shows through the post
        investment non-financial support initiatives.



                                        2
Standard NEF Investment Criteria

   Overall sustainability of the Black empowered business is firstly considered.

   Specific criteria for funding will vary depending on the type of funding requested,
    however generic criteria include:

        The Black applicant/s should be actively involved in the operation of the
         business;

        There should be a minimum Black ownership of 25.1% or 50.1%, depending
         on the funding product type;

        There should be clear industry experience of the BEE party/ies or non-BEE
         partners;

        The business model must be financially sustainability.
Export Oriented Investees
   The NEF has identified five (5) businesses as examples of Black empowered
    businesses that the NEF has funded which are currently involved in export
    activities or are positioning themselves to do so and in sectors aligned to IPAP:

        Amajuba Berries (Pty) Ltd

        DMS Powders (Pty) Ltd

        Safepak (Pty) Ltd

        Colliery Dust Control (CDC)

        Sun Space and Information Systems (SunSpace) (Pty) Ltd

   Amajuba Berries & Safepak have previously been considered for sponsorship
    by the NEF for exhibitions at international trade shows.



                                          12
Export Oriented Investees
   Company Name             Sector        Proposed Markets                          Motivation
1. Amajuba Berries (Pty) Fresh Produce   Europe Markets       Sells fresh raspberries to the European markets. By
   Ltd                                                        undertaking trade missions to Europe, the company
                                                              will be exposing itself to its target market. The
                                                              company cannot sell all its produce in the local market
                                                              as the local economy has a limited need for the
                                                              product.
2. DMS Powders (Pty)    Manufacturing    African countries,   Currently export to other African countries, Australia
Ltd                                      Australia and some   and some Asian countries. They are currently facing
                                         Asian countries      competition from Chinese firms, particularly in the
                                                              East. Their product is used in the mining and scrap
                                                              metal industries so would be suitable for mineral rich
                                                              countries.
3. Safepak (Pty) Ltd    Manufacturing    European Markets     Safepak manufactures a variety of plastic packaging
                                                              for retailers in SA and overseas. They have recently
                                                              launched an apple bag product that has attracted
                                                              interest from overseas (UK). Any additional exposure
                                                              to overseas (particularly the European) markets would
                                                              assist in fast-tracking the product launch and take-up
                                                              in the market.
Export Oriented Investees
    Company Name              Sector        Proposed Markets                             Motivation
4. Colliery Dust Control   Manufacturing   European Markets        CDC specializes in the manufacture of components
   (CDC)                                                           for an integrated dust suppression system for use on
                                                                   continuous miners in underground coal mines. Their
                                                                   products are being used on a small scale at mines in
                                                                   Botswana and Australia. The intent is to expand this
                                                                   market and penetrate the European market. They
                                                                   have also been approached by several mines in
                                                                   China.

5. Sun Space and           Manufacturing   African countries       SunSpace is a market leader in the design and
   Information Systems                     (Algeria, Nigeria &     manufacture of satellites. Their business model relies
   (SunSpace) (Pty) Ltd                    Kenya to begin with);   having on support from governments. It is thus
                                           Australia and           important that they are properly positioned with the
                                           European countries.     South African government to benefit from existing
                                                                   inter-governmental relationships. There is a need to
                                                                   especially strengthen relationships with various African
                                                                   countries (Algeria, Nigeria & Kenya to begin with);
                                                                   Australia and European countries.
Contact information …


         The National Empowerment Fund
          West Block 187 Rivonia Road
                Morningside, 2057
            PO Box 31, Melrose Arch
               Melrose North, 2076
            Tel: (+27)-11- 305 – 8159
           Fax:(+27) – 11 – 305 – 8316
            buthelezip@nefcorp.co.za

                        15
THANK YOU




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