The document provides an overview of funding options for businesses from Development Financial Institutions (DFIs) in South Africa, with a focus on the National Empowerment Fund (NEF). It discusses the roles and mandates of various DFIs, the types of products and criteria for funding, and examples of businesses that received NEF funding. The key points made are that DFIs provide funding and support to promote strategic sectors and address market gaps, the NEF exclusively funds black empowered businesses, and examples show funding went to projects in various industries ranging from transportation to tourism to construction.

1. FUNDING YOUR BUSINESS – A DFI PERSPECTIVE
I AM AN ENTREPRENEUR - DURBAN
23 June 2018
AHA G atew ay Hotel
Presented by M s Zam a Khanyile

2. Content
1. The Role of Development Funding Institutions
(DFIs)
2. How DFIs differ from commercial banks
3. Mandates of DFIs in South Africa
4. Products offered by the NEF
5. Non-financial support
6. Investment Criteria and Screening of deals
7. Examples of NEF-Funded Businesses
8. Key success considerations

3. The Role of DFIs
Development financial institutions remain relevant. Historically, DFIs have
been created by governments around the world to promote economic growth
and support social development. They typically provide credit and a wide range
of capacity-building programs to households, SMEs, and even larger private
corporations whose financial needs are not sufficiently served by private banks
or local capital markets. In doing so, they seek to promote strategic sectors of
the economy, such as agriculture, international trade, housing, tourism,
infrastructure, and green industries, among other sectors.
Although many of the institutions were created several decades ago, data
shows that many governments around the world still see them as a relevant
instrument to pursue economic goals.
Source: http://blogs.worldbank.org/eastasiapacific/the-role-of-development-
financial-institutions-in-the-new-millennium

4. 5
How DFIs differ from Commercial Banks
Commercial Banks Development Funding Institutions
Usually set up as companies under Company Act May be owned by government or the private
sector. Usually set up under special act passed by
Government
Accept deposits from public which are payable at
demand
Main source of funds is government allocations,
loans, grants, repayments of/proceeds from
previous investments etc.
Their objective is to maximise commercial
returns
Their objective is to maximise commercial
returns (sustainability) and to achieve the
intended development mandate
Place reliance on security/collateral available
(Security Cover)
Reliance is largely based on cash flows to be
generated by the business
DFIs fill a gap in the funding market
DFIs are usually referred to as “lenders of last resort”

5. 5
South African DFIs and their mandates
INSTITUTION MANDATE SECTOR
FUNDINGLIMITS
National Empowerment Fund
(NEF)
Finance B-BBEE
individuals/entities No restrictions (excl. sin industries) R250 000 - R75 million
Small Enterprise Finance Agency
(SEFA)
Finance SMMEs,
Cooperatives, Financial
Intermediaries
No restrictions
Primarily; services, manufacturing,
agriculture, construction, mining,
green industries
Direct Lending
R50 000 - R5 million
Wholesale Lending
R500 - R5 million
Industrial Development
Corporation (IDC)
To contribute to the creation
of balanced, sustainable
economic growth in South
Africa and on the rest of the
continent
Agro-processing, Manufacturing,
Industrial infrastructure, Media and
Motion Pictures
R1 million – R1 billion
Public Investment Corporation
(PIC)
To contribute towards the
realisation of key
developmental priorities of
Government by funding
businesses
Economic Infrastructure,
Environmental Sustainability and
other Priority Sectors
R10 million and above
(no maximum)
Development Bank of South
Africa (DBSA)
Finance social/economic
infrastructure
Priority Sectors: Water, Energy,
Transport and ICT R40 million to R5 billion

6. 6
South African DFIs and their mandates (cont’d)
INSTITUTION MANDATE SECTOR FUNDINGLIMITS
GPF
Affordable Housing for people
earning R3 000 - R15 000 per
month
Affordable Housing finance 30%of the project costs and up to
R50 million per project.
National Housing Finance
Corporation (NHFC)
Provide property finance to
income earning SA citizens Affordable Housing finance R10 million - R200 million
Masisizane SME funding
Agribusiness (Primary & Agri-
processing), Franchising &
Commercial, Supply Chain &
Manufacturing
R250 - R10 million
Business Partners
SME lending solutions & non-
financial services
The funding may be used for:
Equipment; Expansion;
Management buy-outs; Property
finance for owner occupied
businesses ; Revamps;
Start-up; Takeovers; Working
capital.
Financing applications fromformal
SMEs whose gross assets are
under R100 million, where annual
turnover does not exceed R200
million and/or employees are less
than 500 in number.
Land and Agriculture
Development Bank of
South Africa (Land Bank)
Provide financial services to
commercial farming sector/agri-
business
Agribusiness
R30 million
(no specified maximum)
GEP
To provide financial and non-
financial support to SMMEs
All sectors except transport and
property R50 000 – R2.5 million

7. 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-owned and
managed businesses, as well as by promoting
a culture of savings and investment
among black people.
The NEF is an agency of the dti and is the only DFI
exclusively mandated to grow
B-BBEE

8. NEF’s Products
5
specialist
funds
Fund Products Threshold
1 iMbewu Fund
(SMEs)
SME Fund providing
Entrepreneurship,
Procurement & Franchise
Finance
R250 000 –
R15 million
2 Women
Empowerment
Fund (WEF)
Achieve minimum 40% of
enterprises owned and
managed by black women
R250 000 –
R75 million
3 Rural &
Community
Development
Fund
Supporting rural economic
development through New
Ventures, Acquisition,
Expansion & Greenfields
Finance
R1 million –
R50 million
4 uMnotho Fund Funding of New Ventures,
Acquisition, Project Finance,
Expansion, Capital Markets,
Liquidity & Warehousing
R2 million –
R75 million
5 Strategic
Projects Fund
Early-stage investment in
industrial / manufacturing
transactions
Up to R75
million

9. Non-Financial Support
Pre-investment
As the first-point-of-contact the unit provides product advisory
services, manages the online business-plan solution, manages the
administration of applications, incubation and entrepreneurial training.
Socio Economic Development
Empower black people in existing NEF transactions and other broad
based groups through various interventions such as promotion of
saving and investments, social facilitation, entrepreneurial training,
investor education, corporate governance training and market access
for the acceleration of meaningful participation.
Post-investment support
Monitor investments, provide ongoing portfolio management, manage
mentorship support and collections as well as legal compliance
Turnarounds, Workouts and Restructuring
Rehabilitate distressed transactions and reduce impairments Through
a combination of measures including balance sheet restructuring,
equity and /or working capital injection, operational restructuring,
introduction of a strategic equity partner and / or turnaround specialist
and business rescue.

10. NEF Funding Criteria
Each application is assessed in terms of the following criteria
• Minimum % of black ownership
• Managerial and operational involvement of black people
• Black Women Empowerment
• Youth empowerment
• Community involvement
• Job Creation (Cost per job)
• Growth Sectors (NDP, IPAP)
• Geographic Spread ((rural/urban/disadvantaged areas)
• Investment Return (commercial viability of the business)
• Meet specific product criteria
• compliance with all the relevant laws and regulations
• the possibility of co-funding with another public or private sector institution.

11. 11
Deal declined at screening stage – Property
acquisition finance
• Business plan did not contain sufficient information to enable proper screening of the merits of the
transaction. Thus more information had to be requested from the client.
• The additional information requested was provided after an extended period of time.
• The sponsor relied on consultants to put together the information for the finance application and did
not vet all the information before submitting to the deal team. Thus when asked for clarification about
the details, they were unable to account.
• This delayed the screening process as they would first consult their consultants before responding to the
deal team.
• This also demonstrated the lack of experience that the sponsor had in that line of business.
• The sponsor believed in the merits of the transaction, but could not demonstrate it to the deal team.
• Financial projections provided did not reflect realistic/achievable figures.
• A point of reference is always the historical performance of the business which is then supplemented by
evidence of additional/new demand (occupancy rates)
• The projections could not be substantiated as there was no proper basis for them.

12. 12
Deal progressed beyond screening stage –
Property finance
• The directors are expertise in the property field, thus were able to provide comprehensive industry
and market analysis which helped in assessing the commercial viability of the transaction.
• Full co-operation and participation from all the Directors and employees of the Investee.
• The client nominated one of their employees to fully devote their time to respond to the deal team’s
requests.
• Thus they availed themselves at any time to respond to requests from the deal team.
• They understood the information required, thus provided information of good quality.
• The deal team received a comprehensive business plan with sufficient supporting information.
• Additional information request were submitted timeously which enabled smooth screening process.

13. African People Movers
APM provides intercity passenger transport
services.
APM started its operations with four rented/leased
buses before obtaining NEF funding.
APM received R45m expansion finance from the
NEF.
The company has sales offices in Pretoria,
Johannesburg and Durban.
APM has 32 operating licenses for all the routes
envisaged in the business plan.
Black ownership is 100% and includes black
women and youth.
Through this investment, 30 jobs were retained
and 33 new jobs were created.
Localisation: All NEF-funded buses were
assembled South Africa.
Local content of body value is 31%, chassis is
19%. Average of 25%.

14. 14
Rise Uniforms
§ Phakamile Industries CC t/a Rise Uniforms is 100% owned
and managed by a black female, Ms Ntombekaya
Nonxuba.
§ Clothing manufacturing company - specializes in the mass
production of a wide range of clothing items e.g.. corporate
clothing and school uniforms.
§ Established in 2007 and has grown into an established,
reputable business.
§ Located in Teguka Business Park in Philipi, a township in
Cape Town.
§ Employs 49 staff, most of whom are women
§ Annual renewable contract to supply staff uniforms to Pick
n Pay (part of ESD).
§ The NEF approved R5m (machinery, equipment and
working capital required for the expansion of the business

15. 15
L&R Building and Civils Construction
• L&R Building and Civils Construction (Pty) Ltd (“L&R”)
is a construction company that has been operating
since 2003.
• The business is 100% black woman owned and
specialises in social housing.
• Product and Service offering:
• General Building;
• Concrete Supplies; and
• L&R is expanding its services into civil engineering
• The NEF approved a R15 million working capital
facility.
• Key Highlights of L&R:
• Past projects to the value of R322 million since inception;
• Confirmed order book to the value of R201,4million; and
• Created and maintained 165 jobs where 134 are
temporary and 31 are permanent;
• Through assistance with the NEF funding has potential of
creating 10 new jobs.
• The business’ head office is based in Meyerton,
Gauteng and satellite offices in the Eastern Cape and
other site operations.

16. Mmutle Mining Projects
§ Mmutle Mining (Pty) Ltd (“Mmutle”) was established in
2016 by Mr John M Mmutle (start-up).
§ The business is 100% black and youth owned.
§ Provides material handling, crushing and screening,
mining rehabilitation, drilling, blasting and plant hire
services
§ Mmutle was awarded a material handling contract by
Zizwe Open cast Mining (Pty) Ltd
§ Anglo Greenside Colliery (Mpumalanga) for 36 months.
§ NEF assisted the client to renegotiate rates and
volumes (to improve viability). This increased the
contract size.
§ NEF approved R13m to wards this contract
§ 24 new jobs will be created through this contract
16

17. 15
Rhino Ridge Safari Lodge is a lodge of contemporary design with overtones
of organic forms, utilising natural finishes and materials. It offers 22 rooms
nestled in natural bush high up on the ridge with commanding views of the
landscape. It is situated on the Western boundary in the first private
concession within South Africa’s oldest proclaimed Game Reserve; Hluhluwe
uMfolozi Park, in Northern KwaZulu Natal. The lodge is set in a 96 000 hectare
park that enables guests to enjoy 4-star luxury at a private lodge for the first
time within the park, offering spectacular scenery and excellent safari
opportunities within the heart of Big 5 territory.
The Graskop Gorge Lift Company has developed a new lift and retail
centre at the Graskop Gorge as part of the Panorama Tourism Route node.
The outdoor lift system ferries passengers up and down the cliff face into the
forest environment that lies about 50 metres below ground level. A
complementary ground level tourism centre comprises a restaurant, bar, retail
outlets, kids play area and centre management offices. As part of the second
phase of the project, a 36-bed hotel and associated infrastructure is yet to be
developed.
R22.5 million Tourism Project in Northern Kwa-Zulu Natal
R33.4 million Tourism Project in Mpumalanga
Further examples of NEF Funding

18. Franchises Funded
17

19. 19
Key success considerations
• Be clear about your business model –
what problem are you solving? How
does your company generate income?
• What is your unique selling proposition?
• Are you the right jockey? (Demonstrate
skills, experience and technical
competence to execute sales)
• Be the first one to invest in your
business.
• Demonstrate the business’s viability.
Prove the concept.
• Become an expert on the market you
wish to service. Avoid being generic.
• Cash is king!
• It’s a learning process…
• Keep going. Don’t give up.

20. 19
Thank You
Contact Details
www.nefcorp.co.za
LOCATION TELEPHONE
1
Head Office,
Johannesburg
011 305 8000 or 0861843 633 /
0861 THE NEF
2 Eastern Cape 0861 633 327 / 0861 NEF ECP
3 Free State 0861 633 377 / 0861 NEF FSP
4 KwaZulu Natal 0861 633 596 / 0861 NEF KZN
5 Limpopo 0861 633 546 / 0861 NEF LIM
6 Mpumalanga 0861 633 678 / 0861 NEF MPU
7 Western Cape 0861 633 927 / 0861 NEF WCP
8 North West 0861 633 697 / 0861 NEF NWP
9 Northern Cape 0861 633 627 / 0861 NEF NCP

21. Key Institutional Financial Incentives
Department of Trade and Industry
INCENTIVE PURPO SE O FFER M AXIM UM
121TaxAllowanceIncentive Tosupport Greenfieldinvestments Grant R30m
Agro-ProcessingSupport Scheme
(APSS) Tosupport agro-processinginvestments 10%–40%Grant R30m
AquacultureDevelopment and
Enhancement Programme(ADEP) Tosupport aqua-culture Grant R30m
Capital ProjectsFeasibility
Programme(CPFP)
Tosupport feasibilitystudieslikelytoleadtoprojects
that will increaselocal exports 50%Grant R8m
Export MarketingandInvestment
Assistance(EMIA)
Tohelpdevelopexport marketsfor SouthAfrican
products Variousservices varies
FilmandTelevisionProduction
Incentives
Topromoteitsfilmproductionandpost-production
industry Grant Nocap
BlackIndustrialistsScheme(BIS) Tounlocktheindustrial potential
Grant
(managedbyNEF/IDC)
R50m
Support Programmefor Industrial
Innovation Topromotetechnologydevelopment Grant R7m
ClothingandTextile
CompetitivenessImprovement
Programme(CTCIP)
Tobuildcapacityamongmanufacturersandinother
areasof theapparel valuechain
Grant
(managedbyIDC)
R30m

22. INCENTIVE PURPO SE O FFER M AXIM UM
BlackBusinessSupplier Programme
(BBSDP) Tosupport small businesses
Machinery&Equipment: 50%grant
Businessdevelopment andTraining:
80%grant
R1m
Theco-operativeScheme(CIS)
Toincreaseviabilityof co-
operatives 50%grant R350k
SharedEconomicInfrastructure
Facility(SEIF)
Providenecessaryinfrastructure
especiallytownships 50%grant R5m
Key Institutional Financial Incentives
Department of Small Business Development and Other
INCENTIVE PURPO SE O FFER M AXIM UM
Youthgro-e
Topromoteyouth
entrepreneurship
Pricingof prime–5%
(AdministeredbytheIDC)
R50m
NYDA, IDCandSEFAtripartite
Topromoteyouth
entrepreneurship Grantsandfunds varies
Department of Small Business Development
Other