Description
Since the establishment of the National Empowerment Fund (NEF) in 2004 to early this year, 21% of the businesses it funded are owned and managed by black women.
“
Since the establishment of the National Empowerment
Fund (NEF) in 2004 to early this year, 21% of the businesses
it funded are owned and managed by black women. The
NEF recently established the Women Empowerment Fund,
whose ethos is “Fund a Woman is to Fund a Nation”.
Through this initiative, we intend to increase the funding
for women-owned business to a minimum of 40% in
the medium term. Given that our country comes from
the background of institutionalised racism in which the
economy was also structured to serve a few, South Africa
continues with economic transformation programmes
to expand the ownership of the economy to black South
Africans. One of our new programmes is to promote the
development of black industrialists. Our view is that
women should comprise a critical mass of bene?ciaries
in respect of the development of black industrialists. Our
target is 100 black industrialists over three years. We trust
that women will be key participants in this programme.
His Excellency President Jacob Zuma at the Africa for African
Women’s Conference, ICC Boardwalk Convention Centre, Port
Elizabeth, 08 March 2015
”
His Excellency
President Jacob Zuma,
President of the Republic
of South Africa
NATIONAL EMPOWERMENT FUND INTEGRATED ANNUAL REPORT 2014 15
GEARING BLACK INDUSTRIALISTS
FOR AFRICA’S GROWTH
CONTENTS
Foreword by the Hon. Minister of Trade and Industry 1
About this Report 2
Performance Highlights 3
Women Participation in the Economy 4
Introducing the National Empowerment Fund 6
Stakeholder Engagement 22
Overview of the Economic Environment 31
Report of the Acting Chairman of the Board of Trustees 32
Report of the Chief Executive Of?cer 36
Report of the Chief Financial Of?cer 41
Performance Review 50
Enterprise-Wide Risk Management 56
Investing in Human Capital 62
Governance 70
Assurance 74
Social, Environmental & Entrepreneurial Support 75
Pro?les of the Board of Trustees 77
Pro?les of the Executive Committee 80
Annual Financial Statements 81
Audit Committee Report 140
Investee Stories 141
Administration 160
GEARING BLACK INDUSTRIALISTS FOR AFRICA’S GROWTH
The image of industrial gears depicted on the front cover of this Integrated Annual Report 2015
conveys a unity of purpose, and is a metaphor for a nation hard at work to bring about radical
economic development and transformation. The NEF contributes towards this objective by providing
?nancial and non-?nancial support for small and medium enterprises, rural and community
development, the economic empowerment of black women and the creation of new manufacturing
and industrial capacity. The orange gear represents the NEF, which propels and drives the quest for
an inclusive economy. As the source of motion, as the motive-force of inclusive growth, the NEF
drives the aspirations of black South African entrepreneurs to become industrialists. Because they
are integral parts of a greater whole, these entrepreneurs are geared to become part of Africa’s
promise and resolve to grow into a global industrial power. A dynamic and multi-faceted engine of
hope, the NEF offers black entrepreneurs business-planning support, incubation and entrepreneurial
training, as well as innovative funding and mentorship support. This, then, is the narrative of a
development ?nancier that is committed to the success of its investees, South Africa’s development
and growth and the prosperity of the African continent.
Printed on environmentally-friendly paper
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FOREWORD BY THE
HON. MINISTER OF
TRADE AND INDUSTRY
NEF ANNUAL REPORT 2015
The National Empowerment Fund (NEF) is a statutory trust mandated to
promote and facilitate black economic participation in the economy through
the provision of financial and non-financial support to black empowered
businesses. In doing so, the NEF contributes to the dti’s objectives of
facilitating the transformation of the economy and broadening black
economic participation.
A notable contributor to this transformation of the economy, is the NEF’s
Strategic Projects Fund (SPF), which is an initiative aimed at entrenching
black entrepreneurial rights in early stage projects by identifying, initiating,
scoping and developing projects aligned to the Industrial Policy Action Plan.
SPF’s investment strategy includes investment in tourism and hospitality,
renewable energy, business process outsourcing, mining and mineral
beneficiation, agro-processing, infrastructure and strategic manufacturing
capacity. I am pleased to note that these projects, which are valued at
R25 billion have potential to create over 80 000 jobs, and offer the real
possibility to generate exports and beneficiation.
The recapitalisation risk currently faced by the NEF, which has resulted in
funding activity slowing down significantly during the 2013/14 financial
year, remains a high priority that we aim to manage with the expediency
it deserves. Given the valuable role that the NEF plays within the South
African economy, the dti is committed to support the NEF in its efforts to
obtain additional capital.
The executive and management teams’ efforts to improve efficiencies during
this time are commendable. The institutional knowledge and expertise
owned by the NEF in financing of enterprises across priority sectors of the
economy is valuable assets to the South African economy.
The development of this plan has presented an opportunity for the NEF
to reflect upon the achievements made to date as well as the critical
constraints facing the NEF. The NEF achieved its highest level of funding
during the 2012/13 financial year with more than R1.3 billion approved
to support 135 black businesses. Since inception, the NEF has supported
projects that are to create or maintain over 80 000 job opportunities. The
focus on entrepreneurship, rural and community development, as well
as the support of black entrepreneur in new industrial development has
resulted in the support of a number of projects of which we are proud. In
particular, the focus on SMEs has contributed towards the increase in the
number of business supported, thereby broadening access and participation
in the economy.
The Hon. Dr Rob Davies, MP
Minister of Trade and Industry
Government of the Republic of South Africa
The Hon. Dr Rob Davies, MP
Minister of Trade and Industry
MINISTER’S FOREWORD
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National Empowerment Fund Integrated Annual Report 2015
T
his is the NEF’s ?rst integrated report, guided
by best practice as outlined in the Global
Reporting Initiative (GRI) guidelines and King III.
It is our primary annual report to stakeholders
that represents a balanced presentation of the
NEF’s ?nancial, economic, environmental and
social performance.
The report provides an overview of the NEF Trust
business activities and to a limited extent, a high
level overview of its operating subsidiaries for the
year ended 31 March 2015. A high level overview
of the two subsidiaries is provided on page 18.
The report covers the Trust’s and Group ?nancial
statements, overall performance against set targets,
impact of key indicators since inception and looks at
prospects for the next year.
The NEF has fully embraced its role of facilitating
equitable economic participation of black business
in the economy. We hope that this report will provide
a transparent overview of our mandate, strategic
objectives, the values that outline everything we
do, our stakeholder engagement processes, risks and
opportunities ahead. We trust the report further
outlines a clear picture of how we are shaping and
ful?lling our mandate of facilitating ?nancial and
non-?nancial support for black business and the
empowerment dividend/ social impact we have
gained through our various activities.
The report provides perspective of past and current
performance, while giving insight of future
prospects and addressing the short, medium and
long term account of various capitals employed in
the value creation activities. Our annual ?nancial
statements are prepared in accordance with
standards of Generally Recognised Accounting
Practice (GRAP), requirements of the Public Finance
Management Act (PFMA) of South Africa and the
National Empowerment Fund Act.
The NEF’s ongoing stakeholder engagements as
well as ongoing scanning of external macro factors
(mainly economic, regulatory, political factors)
allow us to identify material issues that inform the
content of our report and validate the importance
of what we communicate through this report. We
assess the materiality of issues to be included in this
report by referring to:
• Our Materiality Framework, which largely guides
?nancial materiality levels;
• Assessment of issues that would affect our
ability to be sustainable or that impact on our
ability to discharge our mandate; and
• Strategic risk environment.
The Board is responsible for ensuring the integrity
of this integrated report. The Board believes that it
has addressed all material issues and has presented
a balanced account of the NEF’s performance and
ability to create value over time through this report.
The ?nancial as well as material non-?nancial
information relating to all key indicators in this
report have been independently assured by our
external auditors, Sizwe Ntsaluba Gobodo. Our
internal auditors conduct quarterly reviews of our
performance indicators to give ongoing assurance
of the integrity of the information we provide to our
stakeholders throughout the year and at year end.
ABOUT THIS REPORT
g g
We welcome the views of our stakeholders on this integrated
report and the manner in which we approach strategic priorities.
Please send us your feedback to [email protected].
“
The institutional knowledge
and expertise owned by
the NEF in financing of
enterprises across priority
sectors of the economy
is valuable assets to the
South African economy.
The Hon. Minister of Trade and Industry,
Dr Rob Davies, MP, NEF Integrated
Annual Report 2015
”
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PERFORMANCE HIGHLIGHTS
Performance by Funds for year ending 31 March 2015
iMbewu
(SME)
Rural & Community
Development Fund
(Rural)
Umnotho
(Corporate Finance)
Strategic
Projects Fund
(Venture Capital)
Women
Empowerment
Fund
TOTAL
Approvals:
R181 million
Commitments:
R154 million
Disbursements:
R60 million
Approvals:
R33 million
Commitments:
R5 million
Disbursements:
R56 million
Approvals:
R244 million
Commitments:
R327 million
Disbursements:
R208 million
Approvals:
R166 million
Commitments:
R144 million
Disbursements:
R47 million
Approvals:
R271 million
Commitments:
R249 million
Disbursements:
R191 million
Approvals:
R895 million
Commitments:
R879 million
Disbursements:
R562 million
Job opportunities supported 33 763 in 2014/15
(Target 4 000)
New Jobs
32 820
Existing Jobs
943
“
Through the signi?cant changes
in the B-BBEE codes, government
encourages big business to support
and facilitate the development of
sustainable, competitive black-
owned business.
NEF Integrated Annual Report 2015
”
PERFORMANCE HIGHLIGHTS
4
National Empowerment Fund Integrated Annual Report 2015
WOMEN PARTICIPATION IN THE ECONOMY
26 % of portfolio owned by black women
47 % of committed deals in the year partially/
wholly owned by black women
26%
of portfolio owned
by black women
47%
of committed deals
in the year
partially/wholly
owned by black
women
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NEF Invested Portfolio by Sector since inception to 31 March 2015
Distributors, Dispatchers and Processors 1%
Energy 8%
Construction and Materials 13%
Chemicals & Pharmaceuticals 5%
Agro Processing 6%
Engineering 6%
Financial Services 1%
Food and Beverage 4%
ICT 3%
Retail 5%
Property 4%
Services 13%
Tourism and Entertainment 3%
Transportation 8%
Printing and Publishing 1%
Motor Industry 1%
Mining Industry 3%
Media 6%
Manufacturing 9%
NEF Invested Portfolio per Region by Value since inception to 31 March 2015
Western Cape 14%
North West 1%
Northern Cape 2%
Mpumalanga 4%
Limpopo 5%
Gauteng 45%
Kwa-Zulu Natal 18%
Free State 2%
Eastern Cape 9%
PERFORMANCE HIGHLIGHTS
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National Empowerment Fund Integrated Annual Report 2015
INTRODUCING
THE NATIONAL
EMPOWERMENT
FUND
Vision
The National Empowerment Fund’s (NEF) vision
is to become the leading provider of innovative
transformation solutions for an economically
inclusive South Africa.
Mission
The NEF is a catalyst for Broad-Based Black
Economic Empowerment (B-BBEE) in South Africa.
We promote, enable, implement and develop
innovative investment and transformation solutions
to advance sustainable black economic participation
in the economy.
Mandate of the NEF
Established by the National Empowerment Fund Act
(NEF Act), Act No.105 of 1998, the NEF is a driver
and thought leader in promoting and facilitating
black economic participation. Government created
and mandated the NEF through the NEF Act to
grow black participation in South Africa’s national
economy. Subsequently, Parliament passed the
Broad-Based Black Economic Empowerment Act in
order to guide the process of crafting a growing,
inclusive and employment-generating economy.
Government discharges the implementation of
B-BBEE through the dti, and speci?cally through
its BEE Unit, which monitors the implementation
of policy, and provides practical guidelines for the
implementation of B-BBEE for industry.
Policy and Regulatory Framework
The NEF’s strategy and operations are informed by
various government policies, and especially by the
NEF Act. Other policies to which the NEF’s strategy
and operations are aligned include the various
policies and legislation directing macro-economy
and governance. These include:
• The National Development Plan
• Broad-Based Black Economic Empowerment
Act, and the B-BBEE Codes of Good Practice
• Industrial Policy Action Plan (IPAP)
• Public Finance Management Act, No. 1 of 1999
(PFMA), including National Treasury regulations
• King Report on Governance for South Africa
2009 (King III)
• Protocol on Corporate Governance in the Public
Sector, 2002
• Preferential Procurement Policy Framework Act
No. 5, 2000
In order to ensure the NEF’s ability to deliver a social
and economic impact as broadly outlined in the
NEF Act, the Executive and Board of Trustees have
translated these policy objectives into strategic
objectives which represent the NEF’s priorities for
the future. The strategic objectives are used to
monitor and review the performance of the NEF.
“
The NEF offers innovative solutions and a broad product portfolio for the needs of a
diverse range of business opportunities and objectives. These may be small, medium to
large, rural or urban, private or community-owned, start-up or expansionary.
Mr Rakesh Garach, Acting Chairman of the Board of Trustees, Integrated Annual Report 2015
”
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The following table outlines the link between the policy objectives as de?ned by the NEF Act as well as the Government priorities as outlined is various policies and how
they relate to the strategic objectives used for performance monitoring purposes.
NEF Strategic Objectives and
Key Performance Indicators
Alignment with the NEF Act Alignment with Government Priorities,
Policies and Plans
NEF Activities
ADVANCING B-BBEE
1. Provide ?nance to business
ventures established and
managed by black people.
1.1. Value of deals approved by the
NEF (R million)
1.2. Value of new Commitments
(R million)
1.3. Value of deals disbursed by the
NEF (R million)
Promote & support business
ventures pioneered and run
by black people.
Promote the universal
understanding of equity
ownership among black
people
Supports the following Government
Priorities:
• Creating decent jobs
• Rural development
Supports the NDP objective to broaden
ownership of assets to historically
disadvantaged groups.
Supports the dti’s strategic outcomes
through oriented goals to:
• Facilitate transformation of the
economy to promote industrial
development, investment,
competitiveness and employment
creation.
• Facilitate broad-based economic
participation through targeted
interventions to achieve more inclusive
growth.
Supports IPAP by investing in industry and
priority sectors identi?ed in IPAP.
Supports the B-BBEE Codes by promoting
all elements (ownership, management
control, skills development, enterprise and
supplier development, and socio-economic
development).
Through its funding activities, the
NEF actively seeks to promote
transformation, broad-based
participation, industrialisation, and
SME development. The performance
of the investees’ business against
the elements of the B-BBEE Codes
is assessed as part of the merit of
funding all transactions.
The promotion of industrial
development in particular, is achieved
via the NEF’s Strategic Projects Fund,
which has as its core function, the
provision of Seed Venture Capital
Finance aimed at developing
industrial capacity within the
priority sectors identi?ed in the IPAP
including green industries, agro-
processing, automotives, biofuels,
the ?lm industry, and clothing and
textiles.
The promotion of rural development
is achieved via the NEF’s Rural &
Community Development Fund,
which is responsible for ?nancing
enterprises in the rural economy.
INTRODUCING THE NATIONAL EMPOWERMENT FUND
8
National Empowerment Fund Integrated Annual Report 2015
NEF Strategic Objectives and
Key Performance Indicators
Alignment with the NEF Act Alignment with Government Priorities,
Policies and Plans
NEF Activities
MAXIMISING THE EMPOWERMENT DIVIDEND
2. Invest in black empowered
businesses that have high
employment creating
opportunities.
2.1. Number of job opportunities
expected to be maintained or
created.
Contribute to the creation of
employment opportunities.
This is aligned with Government Priority to
create decent jobs.
Supports the NDP objective to reduce the
unemployment rate.
Supports the dti’s strategic outcomes-
oriented goals to:
• Facilitate transformation of the
economy to promote industrial
development, investment,
competitiveness and employment
creation.
• Facilitate broad-based economic
participation through targeted
interventions to achieve more inclusive
growth.
Through its funding activities, the
NEF actively seeks to promote
transformation, broad-based
participation, industrialisation, and
SME development.
The creation of employment
opportunities are assessed as part
of the merit and impact of funding
transactions.
3. Support the participation of black
women in the economy.
3.1. Percentage of portfolio owned by
black women
3.2. Percentage of committed deals
partially /wholly owned by
women
Not speci?cally de?ned as
a policy objective but is
considered to be part of
the broader objective of
transforming the economy.
Supports the dti’s objective to facilitate
broad-based economic participation
through targeted interventions to achieve
more inclusive growth.
The NEF sets a speci?c target to
support women-owned businesses,
which is achieved via the NEF’s
funding activities. Participation by
black women is assessed as part of
the merit of funding all transactions.
The Women’s Empowerment Fund
has also been recently introduced
to directly address the participation
by black women in NEF funded
transactions going forward.
4. Facilitate investment across all
provinces in South Africa
4.1. Maintain/increase percentage of
portfolio by value invested in EC,
NC,WC, KZN, NW, Mpumalanga,
FS and Limpopo
Not speci?cally de?ned as
a policy objective but is
considered to be part of
the broader objective of
transforming the economy.
Supports the dti’s objective to facilitate
broad-based economic participation
through targeted interventions to achieve
more inclusive growth.
The NEF seeks to balance the
geographic spread of investments
and contributions towards increased
economic activity across all provinces,
particularly in areas of regional
economic disadvantage. Targets
are set in relation to geographic
spread which attempt to match
the respective provinces’ relative
contribution to GDP and to surpass
this in areas of regional economic
disadvantage.
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NEF Strategic Objectives and
Key Performance Indicators
Alignment with the NEF Act Alignment with Government Priorities,
Policies and Plans
NEF Activities
OPTIMISING NON-FINANCIAL SUPPORT
5. Encourage & promote savings,
investment & meaningful
economic participation by black
people
5.1. Number of Investor Education
seminars held across the country.
Encourage & promote savings,
investment & meaningful
economic participation by black
people.
Encourage the development
of a competitive and effective
equities market inclusive of all
persons in the Republic.
Supports the NDP objective to broaden
ownership of assets to historically
disadvantaged groups, by promoting
savings and investment.
Supports the dti’s objective to facilitate
broad-based economic participation
through targeted interventions to achieve
more inclusive growth.
Investor education campaign.
Also achieved via the Entrepreneurial
Strategy (incubation and Business
Today entrepreneurship development
training).
Provide black people with
the opportunity of acquiring
shares/ interest in State Owned
Commercial Enterprises (SOCE’s)
that are being restructured or in
private business enterprises.
Supports the dti’s objective to facilitate
broad-based economic participation
through targeted interventions to achieve
more inclusive growth.
The NEF achieved this goal with the
Asonge share scheme.
The possibility of equity allocations
of Government’s shareholding in
non-strategic entities is currently
being explored as part of the NEF’s
recapitalisation. It must however
be noted that this policy objective
can only be addressed in line with
government’s broader policy for
SOCE’s.
6. Black economic empowerment
is advanced through funding
commercially sustainable
enterprises.
6.1. Number of Business Today
Training sessions provided.
6.2. Number of entrepreneurs referred
for business incubation
6.3. Number of social facilitation
sessions held with investees
Generally employing such
schemes, businesses and
enterprises as may be necessary
to achieve the objects of the
Act.
Supports the NDP objective to broaden
ownership of assets to historically
disadvantaged groups by investing in skills
development and by promoting sustainable
entrepreneurship.
Supports both the dti’s objectives to:
• Facilitate transformation of the
economy to promote industrial
development, investment,
competitiveness and employment
creation.
• Facilitate broad-based economic
participation through targeted
interventions to achieve more inclusive
growth.
Non-?nancial support activities
including:
• Mentorship.
• Entrepreneurial assessments.
• Incubation.
• Business Today entrepreneurship
training.
• Portfolio monitoring activities.
INTRODUCING THE NEF (continued)
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National Empowerment Fund Integrated Annual Report 2015
NEF Strategic Objectives and
Key Performance Indicators
Alignment with the NEF Act Alignment with Government Priorities,
Policies and Plans
NEF Activities
7. Establish the NEF as a credible
and meaningful development
?nance institution in the South
African economy.
7.1. Brand audit survey ?ndings
Not speci?cally de?ned as
a policy objective but is
considered to be part of
the broader objective of
transforming the economy.
Supports the NDP objective to broaden
ownership of assets to historically
disadvantaged groups.
Supports the dti’s objective to facilitate
broad-based economic participation
through targeted interventions to achieve
more inclusive growth.
This is achieved via Marketing &
Communication activities which seek
to increase awareness, and ultimately
the utilisation of the NEF’s products
and services. A broader impact is
achieved when funds are disbursed.
FINANCIAL EFFICIENCY & SUSTAINABILITY
8. Establish the NEF as a sustainable
DFI.
8.1. Percentage of portfolio impaired.
8.2. Target ROI before impairments.
8.3. Collections ratios.
8.4. Manage portfolio risk.
Not speci?cally de?ned as
a policy objective but is
considered to be part of
the broader objective of
transforming the economy.
Supports the dti’s objective to facilitate
broad-based economic participation
through targeted interventions to achieve
more inclusive growth.
This is achieved by ensuring that we
invest in transactions which have
economic merit, through active
?nancial management of the NEF
itself, as well as through portfolio
monitoring and support activities.
“
Black economic empowerment is necessary
not only to satisfy the imperatives of
the Constitution. It is necessary not only
to correct the wrongs of the past. It is
necessary and essential if we are going
to build a prosperous, sustainable and
equitable society.
The Hon. Deputy President Mr Cyril Ramaphosa, MP, at the Nelson
Mandela Bay, 25 October 2014
”
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B-BBEE CODES OF GOOD PRACTICE
Broad-based black economic empowerment (B-BBEE) remains a priority for the government and this has been re?ected in the recent amendments to the B-BBEE Act
as well as the changes in the accompanying Codes of Good Practice. The Codes of Good Practice serve as a framework that not only provides a generic scorecard but
also provides guidelines that ensure the implementation of BEE principles in a manner that is meaningful for broad-based empowerment.
The amendments to the B-BBEE codes, which came into effect from the 1
st
of May 2015, are aimed at accelerating transformation and placing greater emphasis on
black ownership. The new codes have reduced the number of elements from seven to ?ve, fusing together Management Control and Employment Equity; and Enterprise
Development with Preferential Procurement as follows:
Key element Description of key elements Impact of Revised Framework
Ownership This element is comprised of two components
• designates voting rights and
• economic interests
Intended bene?ciaries are black people and black women. The
importance of black ownership is underscored by the increase in
the number of points attributed to this element from 20 on the old
scorecard to 25 on the new one.
• This is a priority element and therefore the 40% subminimum under
the realisation points is applicable; failure to comply will result in an
automatic downgrade by 1 level.
• Black designated groups, Broad based groups and black entrants are now
incorporated into the main scorecard;
• Weighting for element increases from 20 points to 25 points;
• Various types of ownership are given speci?c points for better
differentiation
Management Control This element is comprised of seven categories
• Board Participation
• Executive Directors
• Other Executive Management
• Senior Management
• Middle Management
• Junior Management
• Employees with disabilities
Intended bene?ciaries are black people, black women and black
people with disabilities as de?ned in the Codes of Good Practice.
Furthermore this element has been aligned with Economically
Active Population (EAP) targets categorised by gender and race.
• This is not a priority element
• This element seeks to ensure that black people and black women are
appointed within the various levels in the organisation.
• Targets have been set for the various catergories
• The targets for each category have been further categorised by
demographic representation in terms of the EAP Targets.
Skills Development This element is comprised of three main categories:
• Skills development expenditure has been extended to include
external training of black people and black employees
• Learnerships, apprenticeships and internships
• Number of black people absorbed by Entity after learnership
programme
Intended Bene?ciaries are black people (employed and unemployed)
and black employees with disabilities.
• This element is opening opportunities for unemployed black people,
black people living in underdeveloped and rural communities and
black women by providing them with training and ensuring permanent
employment.
• As a priority element if an entity does not meet the 40% of the total
points on the scorecard excluding the bonus points they will be
downgraded by one level
• Bonus points are awarded to companies who ensure that the number
of black people under, learnerships, apprenticeships and learnerships are
absorbed into the economy or within the entity providing the training.
INTRODUCING THE NEF (continued)
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National Empowerment Fund Integrated Annual Report 2015
Key element Description of key elements Impact of Revised Framework
Enterprise and Supplier
Development
This element is comprised of three main categories with the fourth
qualifying an entity to bonus points
• Preferential Procurement
• Supplier Development
• Enterprise Development
Facilitating the graduation of an Enterprise Development
Bene?ciary to Supplier Development level (Bonus Point)
Employment creation as a result of initiatives undertaken by the
respective entities under Supplier Development and Enterprise
Development
Intended bene?ciaries are black owned, black women owned and
designated group suppliers that are 51% black owned EME’s and
QSE’s.
• This element is a priority element and therefore Entities that do not meet
the 40% subminimum requirement in each category under this scorecard
will be downgraded by one level.
• Generic Entities must ensure that they meet three of the ?ve
requirements in order to qualify as an Empowering Supplier
• QSE’s must meet at least one of the 5 requirements to qualify as an
empowering supplier
• Enhanced recognition for Black owned and Black women owned entities
(including EME’s);
Socio –Economic
Development
Under this element, ?rms will receive recognition for contributing
towards activities that facilitate socio-economic development
including but not limited to the provision of grants, guarantees or
developmental capital to bene?ciaries, training and mentoring that
will assist bene?ciaries increase ?nancial capacity.
Intended Bene?ciaries are black people/communities.
There have not been substantial changes to this element.
The total number of available points, as seen below has increased from 107 to 118. This will serve to mitigate any adverse effects of the revised codes.
Element Weighting Points – Amended Codes Weighting Points – Previous Codes
Ownership 25 20 + 3 Bonus Points
Management Control 15 + 4 Bonus Points 10 + 1 Bonus Point - Management Control
15 + 3 Bonus Points - Employment Equity
Skills Development 20 + 5 Bonus Points 15 - Skills Development
New Enterprise Development 40 + 4 Bonus Points 20 - Preferential Procurement
15 - Enterprise Development
Socio Economic Development 5 5
Total 118 107
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Key Revisions By Company Size
Exempt Micro Enterprises (EMEs)
Entities turning over less than R10 million a year
are exempt from being measured against a B-BBEE
scorecard and need only obtain a Sworn af?davit
con?rming their company’s Annual Total Revenue.
EMEs will be awarded BEE status according to their
ownership pro?le as follows:
Black Ownership BEE Status Procurement
Recognition
100% Black Owned Level 1 135%
>51% Black Owned Level 2 125%
Since the establishment of the National Empowerment Fund (NEF) in 2004 to early this year, 21% of the businesses it funded are owned and managed by black women.
“
Since the establishment of the National Empowerment
Fund (NEF) in 2004 to early this year, 21% of the businesses
it funded are owned and managed by black women. The
NEF recently established the Women Empowerment Fund,
whose ethos is “Fund a Woman is to Fund a Nation”.
Through this initiative, we intend to increase the funding
for women-owned business to a minimum of 40% in
the medium term. Given that our country comes from
the background of institutionalised racism in which the
economy was also structured to serve a few, South Africa
continues with economic transformation programmes
to expand the ownership of the economy to black South
Africans. One of our new programmes is to promote the
development of black industrialists. Our view is that
women should comprise a critical mass of bene?ciaries
in respect of the development of black industrialists. Our
target is 100 black industrialists over three years. We trust
that women will be key participants in this programme.
His Excellency President Jacob Zuma at the Africa for African
Women’s Conference, ICC Boardwalk Convention Centre, Port
Elizabeth, 08 March 2015
”
His Excellency
President Jacob Zuma,
President of the Republic
of South Africa
NATIONAL EMPOWERMENT FUND INTEGRATED ANNUAL REPORT 2014 15
GEARING BLACK INDUSTRIALISTS
FOR AFRICA’S GROWTH
CONTENTS
Foreword by the Hon. Minister of Trade and Industry 1
About this Report 2
Performance Highlights 3
Women Participation in the Economy 4
Introducing the National Empowerment Fund 6
Stakeholder Engagement 22
Overview of the Economic Environment 31
Report of the Acting Chairman of the Board of Trustees 32
Report of the Chief Executive Of?cer 36
Report of the Chief Financial Of?cer 41
Performance Review 50
Enterprise-Wide Risk Management 56
Investing in Human Capital 62
Governance 70
Assurance 74
Social, Environmental & Entrepreneurial Support 75
Pro?les of the Board of Trustees 77
Pro?les of the Executive Committee 80
Annual Financial Statements 81
Audit Committee Report 140
Investee Stories 141
Administration 160
GEARING BLACK INDUSTRIALISTS FOR AFRICA’S GROWTH
The image of industrial gears depicted on the front cover of this Integrated Annual Report 2015
conveys a unity of purpose, and is a metaphor for a nation hard at work to bring about radical
economic development and transformation. The NEF contributes towards this objective by providing
?nancial and non-?nancial support for small and medium enterprises, rural and community
development, the economic empowerment of black women and the creation of new manufacturing
and industrial capacity. The orange gear represents the NEF, which propels and drives the quest for
an inclusive economy. As the source of motion, as the motive-force of inclusive growth, the NEF
drives the aspirations of black South African entrepreneurs to become industrialists. Because they
are integral parts of a greater whole, these entrepreneurs are geared to become part of Africa’s
promise and resolve to grow into a global industrial power. A dynamic and multi-faceted engine of
hope, the NEF offers black entrepreneurs business-planning support, incubation and entrepreneurial
training, as well as innovative funding and mentorship support. This, then, is the narrative of a
development ?nancier that is committed to the success of its investees, South Africa’s development
and growth and the prosperity of the African continent.
Printed on environmentally-friendly paper
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FOREWORD BY THE
HON. MINISTER OF
TRADE AND INDUSTRY
NEF ANNUAL REPORT 2015
The National Empowerment Fund (NEF) is a statutory trust mandated to
promote and facilitate black economic participation in the economy through
the provision of financial and non-financial support to black empowered
businesses. In doing so, the NEF contributes to the dti’s objectives of
facilitating the transformation of the economy and broadening black
economic participation.
A notable contributor to this transformation of the economy, is the NEF’s
Strategic Projects Fund (SPF), which is an initiative aimed at entrenching
black entrepreneurial rights in early stage projects by identifying, initiating,
scoping and developing projects aligned to the Industrial Policy Action Plan.
SPF’s investment strategy includes investment in tourism and hospitality,
renewable energy, business process outsourcing, mining and mineral
beneficiation, agro-processing, infrastructure and strategic manufacturing
capacity. I am pleased to note that these projects, which are valued at
R25 billion have potential to create over 80 000 jobs, and offer the real
possibility to generate exports and beneficiation.
The recapitalisation risk currently faced by the NEF, which has resulted in
funding activity slowing down significantly during the 2013/14 financial
year, remains a high priority that we aim to manage with the expediency
it deserves. Given the valuable role that the NEF plays within the South
African economy, the dti is committed to support the NEF in its efforts to
obtain additional capital.
The executive and management teams’ efforts to improve efficiencies during
this time are commendable. The institutional knowledge and expertise
owned by the NEF in financing of enterprises across priority sectors of the
economy is valuable assets to the South African economy.
The development of this plan has presented an opportunity for the NEF
to reflect upon the achievements made to date as well as the critical
constraints facing the NEF. The NEF achieved its highest level of funding
during the 2012/13 financial year with more than R1.3 billion approved
to support 135 black businesses. Since inception, the NEF has supported
projects that are to create or maintain over 80 000 job opportunities. The
focus on entrepreneurship, rural and community development, as well
as the support of black entrepreneur in new industrial development has
resulted in the support of a number of projects of which we are proud. In
particular, the focus on SMEs has contributed towards the increase in the
number of business supported, thereby broadening access and participation
in the economy.
The Hon. Dr Rob Davies, MP
Minister of Trade and Industry
Government of the Republic of South Africa
The Hon. Dr Rob Davies, MP
Minister of Trade and Industry
MINISTER’S FOREWORD
2
National Empowerment Fund Integrated Annual Report 2015
T
his is the NEF’s ?rst integrated report, guided
by best practice as outlined in the Global
Reporting Initiative (GRI) guidelines and King III.
It is our primary annual report to stakeholders
that represents a balanced presentation of the
NEF’s ?nancial, economic, environmental and
social performance.
The report provides an overview of the NEF Trust
business activities and to a limited extent, a high
level overview of its operating subsidiaries for the
year ended 31 March 2015. A high level overview
of the two subsidiaries is provided on page 18.
The report covers the Trust’s and Group ?nancial
statements, overall performance against set targets,
impact of key indicators since inception and looks at
prospects for the next year.
The NEF has fully embraced its role of facilitating
equitable economic participation of black business
in the economy. We hope that this report will provide
a transparent overview of our mandate, strategic
objectives, the values that outline everything we
do, our stakeholder engagement processes, risks and
opportunities ahead. We trust the report further
outlines a clear picture of how we are shaping and
ful?lling our mandate of facilitating ?nancial and
non-?nancial support for black business and the
empowerment dividend/ social impact we have
gained through our various activities.
The report provides perspective of past and current
performance, while giving insight of future
prospects and addressing the short, medium and
long term account of various capitals employed in
the value creation activities. Our annual ?nancial
statements are prepared in accordance with
standards of Generally Recognised Accounting
Practice (GRAP), requirements of the Public Finance
Management Act (PFMA) of South Africa and the
National Empowerment Fund Act.
The NEF’s ongoing stakeholder engagements as
well as ongoing scanning of external macro factors
(mainly economic, regulatory, political factors)
allow us to identify material issues that inform the
content of our report and validate the importance
of what we communicate through this report. We
assess the materiality of issues to be included in this
report by referring to:
• Our Materiality Framework, which largely guides
?nancial materiality levels;
• Assessment of issues that would affect our
ability to be sustainable or that impact on our
ability to discharge our mandate; and
• Strategic risk environment.
The Board is responsible for ensuring the integrity
of this integrated report. The Board believes that it
has addressed all material issues and has presented
a balanced account of the NEF’s performance and
ability to create value over time through this report.
The ?nancial as well as material non-?nancial
information relating to all key indicators in this
report have been independently assured by our
external auditors, Sizwe Ntsaluba Gobodo. Our
internal auditors conduct quarterly reviews of our
performance indicators to give ongoing assurance
of the integrity of the information we provide to our
stakeholders throughout the year and at year end.
ABOUT THIS REPORT
g g
We welcome the views of our stakeholders on this integrated
report and the manner in which we approach strategic priorities.
Please send us your feedback to [email protected].
“
The institutional knowledge
and expertise owned by
the NEF in financing of
enterprises across priority
sectors of the economy
is valuable assets to the
South African economy.
The Hon. Minister of Trade and Industry,
Dr Rob Davies, MP, NEF Integrated
Annual Report 2015
”
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PERFORMANCE HIGHLIGHTS
Performance by Funds for year ending 31 March 2015
iMbewu
(SME)
Rural & Community
Development Fund
(Rural)
Umnotho
(Corporate Finance)
Strategic
Projects Fund
(Venture Capital)
Women
Empowerment
Fund
TOTAL
Approvals:
R181 million
Commitments:
R154 million
Disbursements:
R60 million
Approvals:
R33 million
Commitments:
R5 million
Disbursements:
R56 million
Approvals:
R244 million
Commitments:
R327 million
Disbursements:
R208 million
Approvals:
R166 million
Commitments:
R144 million
Disbursements:
R47 million
Approvals:
R271 million
Commitments:
R249 million
Disbursements:
R191 million
Approvals:
R895 million
Commitments:
R879 million
Disbursements:
R562 million
Job opportunities supported 33 763 in 2014/15
(Target 4 000)
New Jobs
32 820
Existing Jobs
943
“
Through the signi?cant changes
in the B-BBEE codes, government
encourages big business to support
and facilitate the development of
sustainable, competitive black-
owned business.
NEF Integrated Annual Report 2015
”
PERFORMANCE HIGHLIGHTS
4
National Empowerment Fund Integrated Annual Report 2015
WOMEN PARTICIPATION IN THE ECONOMY
26 % of portfolio owned by black women
47 % of committed deals in the year partially/
wholly owned by black women
26%
of portfolio owned
by black women
47%
of committed deals
in the year
partially/wholly
owned by black
women
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NEF Invested Portfolio by Sector since inception to 31 March 2015
Distributors, Dispatchers and Processors 1%
Energy 8%
Construction and Materials 13%
Chemicals & Pharmaceuticals 5%
Agro Processing 6%
Engineering 6%
Financial Services 1%
Food and Beverage 4%
ICT 3%
Retail 5%
Property 4%
Services 13%
Tourism and Entertainment 3%
Transportation 8%
Printing and Publishing 1%
Motor Industry 1%
Mining Industry 3%
Media 6%
Manufacturing 9%
NEF Invested Portfolio per Region by Value since inception to 31 March 2015
Western Cape 14%
North West 1%
Northern Cape 2%
Mpumalanga 4%
Limpopo 5%
Gauteng 45%
Kwa-Zulu Natal 18%
Free State 2%
Eastern Cape 9%
PERFORMANCE HIGHLIGHTS
6
National Empowerment Fund Integrated Annual Report 2015
INTRODUCING
THE NATIONAL
EMPOWERMENT
FUND
Vision
The National Empowerment Fund’s (NEF) vision
is to become the leading provider of innovative
transformation solutions for an economically
inclusive South Africa.
Mission
The NEF is a catalyst for Broad-Based Black
Economic Empowerment (B-BBEE) in South Africa.
We promote, enable, implement and develop
innovative investment and transformation solutions
to advance sustainable black economic participation
in the economy.
Mandate of the NEF
Established by the National Empowerment Fund Act
(NEF Act), Act No.105 of 1998, the NEF is a driver
and thought leader in promoting and facilitating
black economic participation. Government created
and mandated the NEF through the NEF Act to
grow black participation in South Africa’s national
economy. Subsequently, Parliament passed the
Broad-Based Black Economic Empowerment Act in
order to guide the process of crafting a growing,
inclusive and employment-generating economy.
Government discharges the implementation of
B-BBEE through the dti, and speci?cally through
its BEE Unit, which monitors the implementation
of policy, and provides practical guidelines for the
implementation of B-BBEE for industry.
Policy and Regulatory Framework
The NEF’s strategy and operations are informed by
various government policies, and especially by the
NEF Act. Other policies to which the NEF’s strategy
and operations are aligned include the various
policies and legislation directing macro-economy
and governance. These include:
• The National Development Plan
• Broad-Based Black Economic Empowerment
Act, and the B-BBEE Codes of Good Practice
• Industrial Policy Action Plan (IPAP)
• Public Finance Management Act, No. 1 of 1999
(PFMA), including National Treasury regulations
• King Report on Governance for South Africa
2009 (King III)
• Protocol on Corporate Governance in the Public
Sector, 2002
• Preferential Procurement Policy Framework Act
No. 5, 2000
In order to ensure the NEF’s ability to deliver a social
and economic impact as broadly outlined in the
NEF Act, the Executive and Board of Trustees have
translated these policy objectives into strategic
objectives which represent the NEF’s priorities for
the future. The strategic objectives are used to
monitor and review the performance of the NEF.
“
The NEF offers innovative solutions and a broad product portfolio for the needs of a
diverse range of business opportunities and objectives. These may be small, medium to
large, rural or urban, private or community-owned, start-up or expansionary.
Mr Rakesh Garach, Acting Chairman of the Board of Trustees, Integrated Annual Report 2015
”
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The following table outlines the link between the policy objectives as de?ned by the NEF Act as well as the Government priorities as outlined is various policies and how
they relate to the strategic objectives used for performance monitoring purposes.
NEF Strategic Objectives and
Key Performance Indicators
Alignment with the NEF Act Alignment with Government Priorities,
Policies and Plans
NEF Activities
ADVANCING B-BBEE
1. Provide ?nance to business
ventures established and
managed by black people.
1.1. Value of deals approved by the
NEF (R million)
1.2. Value of new Commitments
(R million)
1.3. Value of deals disbursed by the
NEF (R million)
Promote & support business
ventures pioneered and run
by black people.
Promote the universal
understanding of equity
ownership among black
people
Supports the following Government
Priorities:
• Creating decent jobs
• Rural development
Supports the NDP objective to broaden
ownership of assets to historically
disadvantaged groups.
Supports the dti’s strategic outcomes
through oriented goals to:
• Facilitate transformation of the
economy to promote industrial
development, investment,
competitiveness and employment
creation.
• Facilitate broad-based economic
participation through targeted
interventions to achieve more inclusive
growth.
Supports IPAP by investing in industry and
priority sectors identi?ed in IPAP.
Supports the B-BBEE Codes by promoting
all elements (ownership, management
control, skills development, enterprise and
supplier development, and socio-economic
development).
Through its funding activities, the
NEF actively seeks to promote
transformation, broad-based
participation, industrialisation, and
SME development. The performance
of the investees’ business against
the elements of the B-BBEE Codes
is assessed as part of the merit of
funding all transactions.
The promotion of industrial
development in particular, is achieved
via the NEF’s Strategic Projects Fund,
which has as its core function, the
provision of Seed Venture Capital
Finance aimed at developing
industrial capacity within the
priority sectors identi?ed in the IPAP
including green industries, agro-
processing, automotives, biofuels,
the ?lm industry, and clothing and
textiles.
The promotion of rural development
is achieved via the NEF’s Rural &
Community Development Fund,
which is responsible for ?nancing
enterprises in the rural economy.
INTRODUCING THE NATIONAL EMPOWERMENT FUND
8
National Empowerment Fund Integrated Annual Report 2015
NEF Strategic Objectives and
Key Performance Indicators
Alignment with the NEF Act Alignment with Government Priorities,
Policies and Plans
NEF Activities
MAXIMISING THE EMPOWERMENT DIVIDEND
2. Invest in black empowered
businesses that have high
employment creating
opportunities.
2.1. Number of job opportunities
expected to be maintained or
created.
Contribute to the creation of
employment opportunities.
This is aligned with Government Priority to
create decent jobs.
Supports the NDP objective to reduce the
unemployment rate.
Supports the dti’s strategic outcomes-
oriented goals to:
• Facilitate transformation of the
economy to promote industrial
development, investment,
competitiveness and employment
creation.
• Facilitate broad-based economic
participation through targeted
interventions to achieve more inclusive
growth.
Through its funding activities, the
NEF actively seeks to promote
transformation, broad-based
participation, industrialisation, and
SME development.
The creation of employment
opportunities are assessed as part
of the merit and impact of funding
transactions.
3. Support the participation of black
women in the economy.
3.1. Percentage of portfolio owned by
black women
3.2. Percentage of committed deals
partially /wholly owned by
women
Not speci?cally de?ned as
a policy objective but is
considered to be part of
the broader objective of
transforming the economy.
Supports the dti’s objective to facilitate
broad-based economic participation
through targeted interventions to achieve
more inclusive growth.
The NEF sets a speci?c target to
support women-owned businesses,
which is achieved via the NEF’s
funding activities. Participation by
black women is assessed as part of
the merit of funding all transactions.
The Women’s Empowerment Fund
has also been recently introduced
to directly address the participation
by black women in NEF funded
transactions going forward.
4. Facilitate investment across all
provinces in South Africa
4.1. Maintain/increase percentage of
portfolio by value invested in EC,
NC,WC, KZN, NW, Mpumalanga,
FS and Limpopo
Not speci?cally de?ned as
a policy objective but is
considered to be part of
the broader objective of
transforming the economy.
Supports the dti’s objective to facilitate
broad-based economic participation
through targeted interventions to achieve
more inclusive growth.
The NEF seeks to balance the
geographic spread of investments
and contributions towards increased
economic activity across all provinces,
particularly in areas of regional
economic disadvantage. Targets
are set in relation to geographic
spread which attempt to match
the respective provinces’ relative
contribution to GDP and to surpass
this in areas of regional economic
disadvantage.
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NEF Strategic Objectives and
Key Performance Indicators
Alignment with the NEF Act Alignment with Government Priorities,
Policies and Plans
NEF Activities
OPTIMISING NON-FINANCIAL SUPPORT
5. Encourage & promote savings,
investment & meaningful
economic participation by black
people
5.1. Number of Investor Education
seminars held across the country.
Encourage & promote savings,
investment & meaningful
economic participation by black
people.
Encourage the development
of a competitive and effective
equities market inclusive of all
persons in the Republic.
Supports the NDP objective to broaden
ownership of assets to historically
disadvantaged groups, by promoting
savings and investment.
Supports the dti’s objective to facilitate
broad-based economic participation
through targeted interventions to achieve
more inclusive growth.
Investor education campaign.
Also achieved via the Entrepreneurial
Strategy (incubation and Business
Today entrepreneurship development
training).
Provide black people with
the opportunity of acquiring
shares/ interest in State Owned
Commercial Enterprises (SOCE’s)
that are being restructured or in
private business enterprises.
Supports the dti’s objective to facilitate
broad-based economic participation
through targeted interventions to achieve
more inclusive growth.
The NEF achieved this goal with the
Asonge share scheme.
The possibility of equity allocations
of Government’s shareholding in
non-strategic entities is currently
being explored as part of the NEF’s
recapitalisation. It must however
be noted that this policy objective
can only be addressed in line with
government’s broader policy for
SOCE’s.
6. Black economic empowerment
is advanced through funding
commercially sustainable
enterprises.
6.1. Number of Business Today
Training sessions provided.
6.2. Number of entrepreneurs referred
for business incubation
6.3. Number of social facilitation
sessions held with investees
Generally employing such
schemes, businesses and
enterprises as may be necessary
to achieve the objects of the
Act.
Supports the NDP objective to broaden
ownership of assets to historically
disadvantaged groups by investing in skills
development and by promoting sustainable
entrepreneurship.
Supports both the dti’s objectives to:
• Facilitate transformation of the
economy to promote industrial
development, investment,
competitiveness and employment
creation.
• Facilitate broad-based economic
participation through targeted
interventions to achieve more inclusive
growth.
Non-?nancial support activities
including:
• Mentorship.
• Entrepreneurial assessments.
• Incubation.
• Business Today entrepreneurship
training.
• Portfolio monitoring activities.
INTRODUCING THE NEF (continued)
10
National Empowerment Fund Integrated Annual Report 2015
NEF Strategic Objectives and
Key Performance Indicators
Alignment with the NEF Act Alignment with Government Priorities,
Policies and Plans
NEF Activities
7. Establish the NEF as a credible
and meaningful development
?nance institution in the South
African economy.
7.1. Brand audit survey ?ndings
Not speci?cally de?ned as
a policy objective but is
considered to be part of
the broader objective of
transforming the economy.
Supports the NDP objective to broaden
ownership of assets to historically
disadvantaged groups.
Supports the dti’s objective to facilitate
broad-based economic participation
through targeted interventions to achieve
more inclusive growth.
This is achieved via Marketing &
Communication activities which seek
to increase awareness, and ultimately
the utilisation of the NEF’s products
and services. A broader impact is
achieved when funds are disbursed.
FINANCIAL EFFICIENCY & SUSTAINABILITY
8. Establish the NEF as a sustainable
DFI.
8.1. Percentage of portfolio impaired.
8.2. Target ROI before impairments.
8.3. Collections ratios.
8.4. Manage portfolio risk.
Not speci?cally de?ned as
a policy objective but is
considered to be part of
the broader objective of
transforming the economy.
Supports the dti’s objective to facilitate
broad-based economic participation
through targeted interventions to achieve
more inclusive growth.
This is achieved by ensuring that we
invest in transactions which have
economic merit, through active
?nancial management of the NEF
itself, as well as through portfolio
monitoring and support activities.
“
Black economic empowerment is necessary
not only to satisfy the imperatives of
the Constitution. It is necessary not only
to correct the wrongs of the past. It is
necessary and essential if we are going
to build a prosperous, sustainable and
equitable society.
The Hon. Deputy President Mr Cyril Ramaphosa, MP, at the Nelson
Mandela Bay, 25 October 2014
”
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B-BBEE CODES OF GOOD PRACTICE
Broad-based black economic empowerment (B-BBEE) remains a priority for the government and this has been re?ected in the recent amendments to the B-BBEE Act
as well as the changes in the accompanying Codes of Good Practice. The Codes of Good Practice serve as a framework that not only provides a generic scorecard but
also provides guidelines that ensure the implementation of BEE principles in a manner that is meaningful for broad-based empowerment.
The amendments to the B-BBEE codes, which came into effect from the 1
st
of May 2015, are aimed at accelerating transformation and placing greater emphasis on
black ownership. The new codes have reduced the number of elements from seven to ?ve, fusing together Management Control and Employment Equity; and Enterprise
Development with Preferential Procurement as follows:
Key element Description of key elements Impact of Revised Framework
Ownership This element is comprised of two components
• designates voting rights and
• economic interests
Intended bene?ciaries are black people and black women. The
importance of black ownership is underscored by the increase in
the number of points attributed to this element from 20 on the old
scorecard to 25 on the new one.
• This is a priority element and therefore the 40% subminimum under
the realisation points is applicable; failure to comply will result in an
automatic downgrade by 1 level.
• Black designated groups, Broad based groups and black entrants are now
incorporated into the main scorecard;
• Weighting for element increases from 20 points to 25 points;
• Various types of ownership are given speci?c points for better
differentiation
Management Control This element is comprised of seven categories
• Board Participation
• Executive Directors
• Other Executive Management
• Senior Management
• Middle Management
• Junior Management
• Employees with disabilities
Intended bene?ciaries are black people, black women and black
people with disabilities as de?ned in the Codes of Good Practice.
Furthermore this element has been aligned with Economically
Active Population (EAP) targets categorised by gender and race.
• This is not a priority element
• This element seeks to ensure that black people and black women are
appointed within the various levels in the organisation.
• Targets have been set for the various catergories
• The targets for each category have been further categorised by
demographic representation in terms of the EAP Targets.
Skills Development This element is comprised of three main categories:
• Skills development expenditure has been extended to include
external training of black people and black employees
• Learnerships, apprenticeships and internships
• Number of black people absorbed by Entity after learnership
programme
Intended Bene?ciaries are black people (employed and unemployed)
and black employees with disabilities.
• This element is opening opportunities for unemployed black people,
black people living in underdeveloped and rural communities and
black women by providing them with training and ensuring permanent
employment.
• As a priority element if an entity does not meet the 40% of the total
points on the scorecard excluding the bonus points they will be
downgraded by one level
• Bonus points are awarded to companies who ensure that the number
of black people under, learnerships, apprenticeships and learnerships are
absorbed into the economy or within the entity providing the training.
INTRODUCING THE NEF (continued)
12
National Empowerment Fund Integrated Annual Report 2015
Key element Description of key elements Impact of Revised Framework
Enterprise and Supplier
Development
This element is comprised of three main categories with the fourth
qualifying an entity to bonus points
• Preferential Procurement
• Supplier Development
• Enterprise Development
Facilitating the graduation of an Enterprise Development
Bene?ciary to Supplier Development level (Bonus Point)
Employment creation as a result of initiatives undertaken by the
respective entities under Supplier Development and Enterprise
Development
Intended bene?ciaries are black owned, black women owned and
designated group suppliers that are 51% black owned EME’s and
QSE’s.
• This element is a priority element and therefore Entities that do not meet
the 40% subminimum requirement in each category under this scorecard
will be downgraded by one level.
• Generic Entities must ensure that they meet three of the ?ve
requirements in order to qualify as an Empowering Supplier
• QSE’s must meet at least one of the 5 requirements to qualify as an
empowering supplier
• Enhanced recognition for Black owned and Black women owned entities
(including EME’s);
Socio –Economic
Development
Under this element, ?rms will receive recognition for contributing
towards activities that facilitate socio-economic development
including but not limited to the provision of grants, guarantees or
developmental capital to bene?ciaries, training and mentoring that
will assist bene?ciaries increase ?nancial capacity.
Intended Bene?ciaries are black people/communities.
There have not been substantial changes to this element.
The total number of available points, as seen below has increased from 107 to 118. This will serve to mitigate any adverse effects of the revised codes.
Element Weighting Points – Amended Codes Weighting Points – Previous Codes
Ownership 25 20 + 3 Bonus Points
Management Control 15 + 4 Bonus Points 10 + 1 Bonus Point - Management Control
15 + 3 Bonus Points - Employment Equity
Skills Development 20 + 5 Bonus Points 15 - Skills Development
New Enterprise Development 40 + 4 Bonus Points 20 - Preferential Procurement
15 - Enterprise Development
Socio Economic Development 5 5
Total 118 107
13
A
B
O
U
T
T
H
E
N
E
F
Key Revisions By Company Size
Exempt Micro Enterprises (EMEs)
Entities turning over less than R10 million a year
are exempt from being measured against a B-BBEE
scorecard and need only obtain a Sworn af?davit
con?rming their company’s Annual Total Revenue.
EMEs will be awarded BEE status according to their
ownership pro?le as follows:
Black Ownership BEE Status Procurement
Recognition
100% Black Owned Level 1 135%
>51% Black Owned Level 2 125%