National Empowerment Fund Presentation on BB-BEE / Transformation Seminar for Japanese Companies. 21 April 2011

Transcription

1 National Empowerment Fund Presentation on BB-BEE / Transformation Seminar for Japanese Companies 21 April 2011

2 Presenter Mr Andrew Wright Chief Financial Officer 2

3 Contents NEF Mandate Brief background on BEE Enterprise Development Fund Strategic Projects Fund 3

4 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 4

5 Unpacking the NEF Mandate NEF Mandate Grow black economic participation Financial & non-financial support Culture of savings & investment Fund Management Fund black-empowered businesses Business plan toolkit Mentorship support Early-stage investments Asset Management Investor Education Public Share Offers Enterprise Development BEE Repository 5

6 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. 6

7 BEE Macro-Economic Rationale BEE is defined as an integrated and coherent socioeconomic process that contributes to the economic transformation of South Africa and brings about significant increases in the numbers of black people that manage, own and control the country s economy, as well as significant decreases in income inequities. (Source: dti BEE Strategy Document) BEE policy linked to SA s economic growth path Intended to support development of an inclusive economy Promotes deepening of SA s middle class Promotes entrepreneurial development Supports development of SA s human capital in an inclusive manner Support job creation 7

8 Alignment of Mandate to Government Objectives Broad Based Black Economic Empowerment The Codes of Good Practice NEF Act: Objectives The dti Outputs: - Raising competitiveness - Support for co-operatives and small business Sectors NEF SPF & FMD: BPOs; Tourism; Biofuels; Construction; Agro-processing; Transport; ICT & Media; Mining & beneficiation; Franchising Industrial Policy Action Plan: Metals fabrication, Capital & transport equipment, Green energy, Agro-processing, Automotive, components, medium and heavy commercial vehicles, Plastics, pharmaceuticals and chemicals, Clothing, textiles, footwear and leather, Biofuels, Forestry, paper, pulp and furniture, Strengthening linkages between cultural industries and tourism, Business process servicing New Growth Path Priorities: 1) Accelerate employment 2) Support labour creating activities in agriculture, light manufacturing and services 3) Support knowledge and capital intensive sectors to remain competitive 4) Target: infrastructure, agriculture, mining value chain, green economy, manufacturing, tourism & high level sectors 5) Rural development, education & skills, enterprise development, BB BEE NEF mandate & funding in line with national growth and industrial objectives 8

9 BEE Facilitator Status NEF is a facilitator of the Codes of Good Practice of the Broad-Based Black Economic Empowerment Act (the Codes) This means if NEF buys equity in a Company, the company is allowed to claim BEE points on the following: o 100% Black ownership o 40% Black Women o 10% Designated Group This will be done pro-rata to NEF s shareholding in that company. 9

10 Enterprise Development Fund Broad Based Black Economic Empowerment Codes of Good Practice Section 9(1) Series 600 provides that companies make monetary or non monetary contributions either recoverable or non recoverable for development, sustainability and financial and operational independence of beneficiaries. 10

11 The BB-BBE Codes of Good Practice The seven (7) elements that will assist the South African economy to grow, are: No. Code Description 1. OWNERSHIP 2. MANAGEMENT CONTROL 3. EMPLOYMENT EQUITY 4. SKILLS DEVELOPMENT Measures participation of the black people in companies where they are coowners or part-owners. Measures participation by black people in companies where they are Executive Board Members, Executive Directors, Senior Top Management etc. Measures participation of black people in companies at junior, middle or senior management levels. Measures commitment to train and develop the skills of Black employees in companies. 5. PREFERENTIAL PROCUREMENT Measures purchase of goods and services from BEE-compliant companies. 6. ENTERPRISE DEVELOPMENT 7. SOCIO-ECONOMIC DEVELOPMENT Measures the assistance by large companies, Government, etc. in facilitating the entry and / creation or Black SMMEs. The assistance provided by Government, State Owned Enterprises etc. in facilitating the improvement of living standards of Black people living underdeveloped areas. 11

12 Why an Enterprise Development Fund? Limited management time to spend on non-core business Insufficient knowledge of BEE ED requirements Insufficient resources and skills to support BEE startups, which require significant skills injection to achieve economic viability Poor economies of scale achieved based on number of initiatives Lack of time and resources to identify sustainable Beneficiaries; Lack of a business model to maximise recognition of contribution; Lack of a process to monitor progress on projects and to introduce corrective measures, where necessary; Delaying implementation until the right partner comes along; and Reservation of spending lump sum due to fear that money will be wasted or misused. 12

13 Possible Approach 13

14 Turning Rural Communities into Shareholders The community owns this 4-Star hotel! This is a R50 million project The NEF invested R28,3 million The Trust represents beneficiaries in the Jozini area (Northern Kwa-Zulu Natal) Overlooks the third largest lake in South Africa The hotel has 60 rooms Accommodates 144 guests 14

15 A Sweet Deal for the People! CCT IDC NEF Technical Partner CR R14.8m R19.4m AMAJUBA R37m 60 HA raspberry farm in Amajuba district, KZN Farm established on land secured through restitution process Supply local and export markets (70% of production) Tap into growing popularity of raspberries Supplies berries to Europe Supplies berries to Woolworths 15

16 Strategic Projects Fund 16

17 Strategic Projects Fund Rationale Strategic projects fund was created to warehouse equity for Black people in projects with long lead times in the following targeted sectors: Renewable Energy Mining and Minerals Beneficiation Agro-processing Tourism Business Process Outsourcing Infrastructure Objectives The objective of the SPF remains the following: The expansion of strategic industrial manufacturing capacity The creation of jobs The direction of investments to rural and poor areas Increase in foreign currency earnings through exports Stimulate import substitution Increase FDI into South Africa 17

18 SPF Sector-Selection Policies Policy Key Objectives Sectors Industrial Development Zone Plastics Tax incentives Infrastructure Pharmaceuticals and Chemicals IPAP-2 GNP Diversification Labour Intensive Jobs Automobiles Mineral Processing Knowledge Economy Biofuels Forestry & Paper, pulp and furniture Textiles Country Competitiveness Infrastructure New Growth Path GDP Growth Foreign Direct Investment Job Creation Poverty alleviation Industrial capacity Mining and Mineral beneficiation Agriculture Manufacturing Green Economy Infrastructure Development Tourism 18 Paper & Pulp

19 SPF s Role In Venture Capital 19

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24 Thank You National Empowerment Fund West Block 187 Rivonia Road Morningside, 2057 PO Box 31, Melrose Arch Melrose North, 2076 Tel: (+27) Fax:(+27)

25 Addendum 25

26 NEF s Performance 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 26

27 NEF Approved and Disbursed Deals by value 2,500,000,000 NEF APPROVED & DISBURSED DEALS BY VALUE Since Inception to 31 December ,000,000,000 1,500,000,000 R 2bn R 1,5bn 1,000,000, ,000,000 0 Approved Disbursed 27

28 NEF Approved and Disbursed Deals by number NEF APPROVED & DISBURSED DEALS BY NUMBER Since Inception to 31 December Approved Disbursed 28

29 Portfolio by size of transaction 67% of the disbursed portfolio (by value) is comprised of transactions of R5 million or more, with 33% of the portfolio comprised of deals worth less than R5 million. 19% of the portfolio is comprised of transactions worth less than R3 million. 29

30 Portfolio by region 30

31 NEF Portfolio by Value NEF Invested portfolio by Sector By Value Since Inception 31 December