10 MARCH 2006

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PRESENTATION TO THE PARLIAMENTARY PORTFOLIO
COMMITTEE ON TRADE AND INDUSTRY
Presenters Victor Mabuza Asset Manager Andrew
Wright Manager in the CEOs Office Nozizwe
Mthembu Legal Officer

• 10 MARCH 2006

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PRESENTATION SECTIONS POSITIONING PERFORMANCE
FINANCIAL CURRENT INITIATIVES CASE STUDIES
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NEF STRATEGIC FOCUS
Broad Based Black Economic Empowerment The Codes
of Good Practice
Priority Sectors Arts Culture,
Tourism, Textiles, Agro Processing Automotive,
Chemicals, ICT, Aerospace Film Industry, Exports

• Government Aims
• . Access to Finance
• 2. Job creation
• 3. Geographic spread
• 4. Women empowerment
• 5. Integrated manufacturing economy
• 6. Efficient, fast flexible economy
• 7. Diversity of enterprise
• 8. Skills transfer development

The dti Objectives
NEF Act Objectives
Accelerated Shared Growth Initiative for SA
ASGI - SA 6 GDP Growth 10 Investment Growth
10 Export Growth 2014
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NEF POSITIONING IN ADDRESSING MARKET FAILURE

• Identification of market failures particularly
  regarding participation of Black People in
  ecoonomy
• Avoid duplication of other DFI product offerings
• Positioning of NEF to complement other DFIs and
  financial institutions

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BEE Participation Thresholds
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PERFORMANCE
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NEF INVESTMENT PROCESS REPORT Since 1 April
2005 to 28 February 2006
Investment Committee
Legal
ENQUIRIES
APPLICATIONS
PENDING MORE INFO
NEW DEALS ACCEPTED
DUE DILIGENCE
APPROVED
DISBURSED (Including Undrawn Capital)


28 worth R241m
30 worth R244m
1,092 worth R801m
Approx 9,532
17 worth R282m
60 worth R241m
1,556
NEF work in progress 135 of R1bn
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FINANCIAL
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CURRENT INITIATIVES
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BEE Retail Schemes Key Objectives

• The creation of innovative savings and investment
  opportunities for Black people to create wealth
  (assets)
• Provide a meaningful broad-based ownership of
  SOCE shares by Black people
• Unlocking listed SOCE share value for NEF
  investments through value-adding and empowerment
  opportunities for Black people
• Educating and promoting an understanding of
  investments and other related savings instruments
  amongst Black people

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Designated SOCEs

• Asset Shareholding Status
• MTN Group 1.5 received by NEF
• Telkom 5 not yet received
• SAA 5 not yet received
• ACSA 10 not yet received
• Connex Travel 10 not yet received
• Viamax 10 not yet received
• Syncat 10 not yet received
• Transwerk Perway 10 not yet received
• Sentech 10 not yet received
• Uthingo 5 received by NEF
• SAFCOL 10 not yet received

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Product Offerings

• Once-off share offerings
• Collective Investment Schemes
• Broad-based Share Ownership structuring
  administration
• Assets to be used
• NEF SOCE share set-asides
• (currently on Balance sheet)
• Further SOCE share set-aside allocations
• (upon transfer to NEF Balance sheet)
• NEF invested equity portfolio
• (when it exercises its exit strategy)
• Equity set-asides for BB-BEE groupings by
  applicant companies
• (Database access and ESOPs)

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• Targeted Beneficiaries
• Targeted broad-based groups of Black people
• General public (nationally and of all income
  levels)
• Savings Schemes (e.g. stokvels, investment clubs,
  etc.)
• Rural and Community organisations (e.g. burial
  societies, co-operatives, etc.)
• Women-entrepreneur groupings (both rural and
  urban organised groupings)
• Other organized groupings (e.g. informal traders,
  employee share schemes, etc.)
• Local, Provincial National Governments (e.g
  avail affordable funding for their LEDs, IDPs
  Strategic Projects)
• INDIVIDUALLY OR COMBINATIONS THEREOF

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CASE STUDIES

• Choice Technologies
• Bohang Bead Manufacturers
• Morobe Trading

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Company background
Black owned IT and systems integration business
(hardware and software solutions) Established in
1997 Staff complement of 5 in 1997 200 in
2005 Based in Gauteng, regional branches in Cape
Town, Durban 10 service centers throughout South
Africa Shareholding pre NEF funding

• 51 owned by Choice Group
• 49 owned by Dimension Data

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Salient features of the deal
Risks Strengths NEF funding Funding
amount
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Compliance with funding criteria and NEF Mandate
Strong empowerment dividend ICT is a priority
sector Addresses market failure Supporting black
entrepreneurship Saved 150 black IT
professionals jobs Liquidity and Warehousing
product NEF to hold 49 equity whilst BEE
managers return the business to
profitability Commercially viable
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Company Background

• Bohang Africa Investments (Pty) Ltd founded in
  2003 by Mr. Tlholo Mohlathe.
• All beads are imported into South Africa.
• Large scale specialised glass plant in Wadeville
  producing range of glass beads.
• Located adjacent to Consol supplying glass and
  technical expertise.
• The company will in the first 2 years create 70
  new jobs.

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Salient features of the deal
Risks Strengths NEF funding Funding
amount
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Compliance with funding criteria and NEF Mandate
Strong empowerment dividend Arts Culture one
of NEFs sector focus Addresses market
failure Supporting black entrepreneurship New
jobs to be created and supporting 106 000 bead
workers jobs Provincial bead SMME industry
clusters Strategic Projects product NEF to hold
equally with PIC 15 equity with 25 shareholding
in the hands of Rural Women Crafters Commercially
viable
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Morobe Trading Enterprises CC (Morobe)
Preferential Procurement
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Company background
Electrification services company 100 owned by a
Black woman, Ms. Alettah Ngwetjana (also a
Managing Member). Established in 1993 to provide
various services. Recently branched into
contract work as a result of opportunities
provided by preferential procurement
policies. Company provides maintenance and
installation services as a contractor to Eskom in
areas surrounding Polokwane. Company has created
16 jobs. NEF provided non-financial support in a
form of advise on business plan and financial
modelling.
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Salient features of the deal

• NEF invested R1.1 million in a form of 5-year
  loan.
• Interest rate charged _at_ prime less 1 with
  capital holiday of 6 months.
• Loan secured by assets and suretyship by Ms.
  Ngwetjana.
• Proceeds used for funding working capital and
  capital expenditure acquired specialized trucks
• ABSA provided asset finance as a result of NEFs
  funding.

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Compliance with NEF Mandate
NEF facilitated access to finance to enable the
business to service the contract. Assisted the
business to build the track record and hence
improve its credit rating Without NEFs
investment, the company would not have qualified
for ABSA facility. Assisted with capacity
building of the business. Investment resulted in
the creation of 16 jobs. Investment in Limpopo in
line with government policy to spread economic
development to rural provinces. Direct financial
support to SME
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