Aluminum Fabrication Seminar Vuyelwa Matsiliza: Executive Manager, Wholesale Lending

05 March 2015

Contents

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Contents

sefa’s Target Market sefa’s Delivery Model sefa’s Distribution Model Our products sefa’s Footprint sefa’s Development Impact Highlights ABI Facility Details Qualification Criteria Documentation Required Application Checklist Application Process Flow

Mandate of sefa

To be the leading catalyst in South Africa for the development of sustainable Survivalist, Micro, Small and Medium enterprises (SSMMEs) through the provision of finance in an efficient and sustainable manner by:

• Providing loans to SSMMEs • Providing credit guarantees to SMMEs; • creating strategic partnerships with a range of institutions for sustainable SMME development and support; • developing (through partnerships) innovative finance products, tools and channels to speed up increased market participation in the provision of affordable finance.

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sefa’s Target Market Targeted Groups

 women,  black people,  youth,  people in rural communities and,  people living with disabilities.    services (including retail, wholesale, IT and tourism); manufacturing (including agro-processing); agriculture (specifically land reform beneficiaries and micro-farming activities);    construction (small construction contractors); Mining (specifically small miners); green industries (renewable energy, waste and recycling management).

Lending policy is informed by government’s economic policy - NGP, IPAP, NDP

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sefa’s Delivery Model

Direct Lending

Provide finance directly to SMMEs

Regional approach

SMMEs in general

Wholesale Lending

Facilitate financial assistance to in specific targeted groups or sectors through strategic partnerships SMMEs

Internal Funding Partnerships

(such as newly developed ‘Structured Finance Solutions’, others)

External Funding Partnerships

(such as the current wholesale facilities & guarantees)

RFIs & MFIs Banks/ Suppliers through KCG Funds Other / new / innovative structures

Targeted SMMEs

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sefa ’s distribution model

sefa Funding Model

sefa WHOLESALE LENDING sefa DIRECT LENDING CREDIT GUARANTEE SCHEMES Finance Intermediaries: (CFIs, MFIs, Joint Ventures & Funds, Retail Finance Intermediaries) R500 to R5m sefa regional offices and seda co-locations R50k to R5m Registered financial institutions Up to R5m SMMEs can access sefa funding solutions through any of the above channels

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Our products

Our Direct Lending channel offers the following products

: • • • • • Working Capital Facilities Asset Finance Term Loans Revolving Loans Bridging Loans • • • • •

Through our Wholesale Lending channel, we offer these financial products:

• Business Loans – (RFIs, Joint Venture Funds) Microfinance; Financing of Co-operatively owned enterprises Credit Guarantee Scheme; Land Reform Empowerment Fund. Structured Finance Solutions • •

The Institutional Support for the following:

• Institutional Strengthening Technical Support Rental Property (Industrial and commercial) 7

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9 sefa

Regional Offices

sefa’s Footprint

6 sefa

Branch Offices 10 Co-operative Financial Institutions 11 Active Micro-Finance Institutions * 6 Retail Finance Intermediaries 25 seda Co-locations Referral Offices 8 Specialised Funds & Joint Ventures

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sefa’s Development Impact

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YOUTH OWNED ENTERPRISES

10 291 R157 million • •

WOMEN OWNED BUSINESSES

44 302 R362 million • •

RURAL-BASED ENTERPRISES

36 729 R429 million • • • R822m disbursements 46 702 SMMEs funded 46 402 permanent and contract jobs facilitated • •

BLACK OWNED ENTERPRISES

43 643 R599 million 9

Highlights – Co-operatives

The first groubeneficiaries of the Tshepo 10 000 initiative, finally graduated. GROCAT -

Funding of 24 Charcoal briquettes manufacturing Co operatives in Gauteng, Mpumalanga and Kwazulu Natal in partnership with R11,6 million.

RiseUp Bakeries

– Establishment of at least 20 Bakery Co-operatives in the Swartland District Municipality, Western Cape using donor funding of R14 million.

GEP

- Partnership forged with the Gauteng Economic Propeller to support at least 100 youth Co operatives in the Tshwane area – R30 million.

Feeding Scheme

–Ring fenced facility for the funding of 60 School Feeding Scheme Co operatives in KwaZulu Natal and Gauteng – R28,5 million 10

Highlights - LREF

Provide finance for Black citrus farmers in conjunction with Lona Citrus – R50 million.

Partnered with Tongaat Hulett and Akwandze (TSB) to provide financing to black small scale farmers in Mpumalanga and KwaZulu Natal – R100 million.

Forged a new partnership with First National Bank (FNB) to support black farmers – R50 million 11

Highlights - Microenterprises

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Microenterprise Finance Intermediaries

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Small Enterprise Foundation (SEF)

 Disbursed to over 33, 270 new microenterprises (2014)  creating and/or maintain as many jobs in the priority Provinces.

Enabled over R109.9 million to circulate within the microenterprise sector.

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Phakamani Foundation

 Disbursed to over 7,500 microenterprises and  creating approximately 2,900 new jobs (2014).

Circulated over R20 million to microenterprises.

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Highlights - SME

Facility for Liquid Petroleum Gas SME distributors in partnership with Cadac – R20 million.

SME Supply Chain and Aluminium Beneficiation Initiative in partnership with Hulamin and BHP Billiton – R100 million.

Greenfund for SMMEs in partnership with DBSA – R30 million.

Taxi finance in partnership with BAW (SA) – R60 million.

Gold Loan Scheme for SMME in partnership with the IDC an d the dti – R20 million.

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ABI Facility Details

Facility On-lending R80 million Aluminium Beneficiation Facility R19 million

Purpose of facility / Finance SMEs doing aluminium Revolving credit facility to finance application of finance beneficiation.

Term 1 to 5 years contractors in the aluminium plants of Hulamin and BHP Billiton.

30 days to 1 year Repayment Monthly Monthly Interest Rate - SMME Prime lending rate plus risk margin Prime lending rate plus risk margin, subject to sefa pricing model subject to sefa pricing model Administration Fee Initiation fee 1% Nil 1% 4% of loan value Payment Moratorium Determined based on each case’ s Determined based on each case’ s merit merit 14

Qualification Criteria

• The majority shareholder(s) must be involved in the day to day running of the business on a full time basis (owner - manager) • The business must be registered in SA • The major shareholder must be an SA citizen and/ or permanent resident • The business must be conducted with a profit motive and be economically viable • The forecasted cash flow must show the ability to repay the facility (affordability) • The owner must display sufficient entrepreneurship, skills and experience directly related to the nature of the business • Compliance with all relevant laws and regulations • Demonstrate job creation (potential to create new jobs or sustain existing ones) • Loan Range R50 000 to R5 million 15

Documentation Required

1. 2.

3.

BRIDGING/TERM LOAN APPLICATIONS- Contractors Application Form Surety Form (where applicable) Certified Copy of ID and that of Spouse (if Married in Community of Property (ICOP)) 10.

11.

12.

Six months latest Bank Statements (personal and business) Copy of Contract or Order (if applicable) Loan Breakdown 4.

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Marriage Certificate (where applicable) 13.

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Supporting Quotations (with contact person and banking details of supplier) Personal Income and Expenditure Schedule 6.

7.

8.

9 Short CV of the Members / Directors / Shareholders / Trustees, etc.

Proof of Residence – Utility Bill / Sworn Affidavit (not older than 3 months) Valid Tax Clearance Certificate Company Registration Documents e.g. CK2, Company Profile Proof of CIPC/CIPRO Annual Fees 15.

Assets & Liability Statement 16.

17.

Proof of own Contribution and Source (if applicable) Member’s Resolution to Apply (if applicable) 18.

If a judgment, notice, default is issued against the applicant, a letter or document to prove that arrangements are made to settle the account or proof that the account is settled must be provided

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Documentation Required (Cont’d)

ADDITIONAL CHECKLIST FOR TERM LOAN AND ASSET FINANCE APPLICATIONS- Aluminium Beneficiation Project 19 20 21 22 23 24 25 26 Cash Flow Projections Business Plan Historic Financial Statements (not less than 3 years – if applicable) Up to date Management Accounts (if applicable) Debtors Age Analysis (if applicable) Creditors Age Analysis (if applicable) Lease Agreement (if applicable) Franchise Agreement (if applicable)

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Application Checklist

Documents Required (Bridging Loan)

                    Applications filled correctly Surety form filled in correctly (if married) Certified copy if ID and Spouse (If married) Personal Income & Expenditure (by client and spouse) Marriage certificate Short CV of applicant Email address Proof Residence-utility bill, affidavit (not older than 3 months) Valid Tax Clearance certificate Company registration e.g. CK2, Company profile) 6 months latest bank statement (personal) 6 months latest bank statement (business) Copy of Contract or Order Loan Breakdown Supporting quotations (with banking details) Personal Income and Expenditure Schedule Assets & Liabilities Statement Proof of own Contribution and Source (if applicable) Member’s Resolution to Apply (if applicable) If a judgment, notice, default is issued against the applicant, a letter or document to prove that arrangements are made to settle the account or proof that the account is settled must be provided

Yes/No Comment

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Application Checklist

                 

Documents Required(Term Loan)

 Applications filled correctly Surety form filled in correctly (if married) Certified copy if ID and Spouse (If married) Personal Income & Expenditure (by client and spouse) Marriage certificate Short CV of applicant Email address Proof Residence-utility bill, affidavit (not older than 3 months) Valid Tax Clearance certificate Company registration e.g. CK2, Company profile) 6 months latest bank statement (personal) 6 months latest bank statement (business) Copy of Contract or Order Loan Breakdown Supporting quotations (with banking details) Cash flow Projections Business Plan Financial statements Proof of CIPC Annual Fees

Yes/No Comments

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Application Process Flow

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Application Process Flow (cont’d)

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Deal Origination

: Source deals from SMEs contracted to either BHP Billiton and/or Hulamin as well as SMEs which have gone through the Aluminium Beneficiation Initiative program. These clients would be referred to BSC by either BHP Billiton, Hulamin or ABI. •

Enquiries

: BSC Credit Manager will receive and load applications to

sefaLAS

based on information received from SMEs. Checklist to be agreed upon.

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Basic Assessment and Initial Screening

: BSC Credit Manager will perform the checks and determine whether the SME qualifies. The supply or service contract between an SME and Hulamin or BHP Billiton will form part of the documentation.

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Application Process Flow (cont’d)

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Application

: BSC Credit Manager will load the applicant’s details onto sefaLAS systems.  Access to system to be granted to BSC.

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Due Diligence

: Part One - BSC will conduct the technical due diligence which shall comprise • • the following activities:  Collection of all FICA documentation using an agreed checklist

Compilation of the applicant profile in terms of

:  Demographics of owner/s     Number of years in business Annual Turnover Number of jobs created Track record in complying with sefa rules and terms and conditions Post Investment Monitoring  Operations Management   Financial Performance Development Impact   Business Support, where necessary Compliance to Loan Agreement undertakings 22

Thank You