Ntsika and Khula: briefing

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JOINT MONITORING COMMITTEE ON IMPROVEMENTS OF QUALITY OF LIFE AND STATUS OF CHILDREN, YOUTH AND DISABLED PERSONS

IMPROVEMENT OF QUALITY OF LIFE AND STATUS OF CHILDREN, YOUTH AND DISABLED PERSONS JOINT MONITORING COMMITTEE
13 February 2002
NTSIKA AND KHULA: BRIEFING


Chairperson: Ms H.I. Bogopane

Documents handed out:
Joint Submission by Ntsika and National Youth Commission
Presentation by Khula (see Appendix)
Integrated National Disability Strategy

SUMMARY
The two government parastatals; Khula and Ntsika, briefed the Committee on their activities to improve the quality of life and status of children, youth and disabled persons. Created by Parliament, they are primarily responsible for rendering services to small, medium and micro enterprises. Ntsika has a joint programme with the National Youth Commission to develop a framework encouraging youth to participate in the economic mainstream.

Presentation by Ntsika
Mr Gay Mokoena: acting CEO of Ntsika, explained that the organisation supports children, youth, and disabled persons. The organisation is involved in and is responsible for rendering services to SMME (Small, Medium and Micro Enterprises). The organisation tries to have an impact in this huge sector. Ntsika, created by Parliament to promote small businesses, delivers service through intermediaries.

At least 4-5% of South Africans are entrepreneurs, which is a small percentage as compared to other countries. South Africa does not have sufficient entrepreneurs and those few that are there need support and encouragement. Mr Mokoena explained that Ntsika impacts over 8 000 SMME's , which is 10% of the market that they should be serving. They have created 16 000 jobs and maintained another 6 000. Ntsika targets the following groups: rural entrepreneurs, female entrepreneurs, youth and people with disabilities. As far as Mr Mokoena is concerned, this is a scratch of a big sector. Ntsika's budget is R35 m per annum and renders them incapable of making big contributions on its own.

Ntsika is heavily involved in two of the above four target groups, namely, the youth and disabled persons. Ntsika's role in these groups is to provide management and entrepreneurial training, through support, transfer of skills and all non- financial activities. He concluded that the program is running quite successfully.

Mr Leema Mofokeng, made a presentation on the two target groups that Ntsika is heavily involved with, that is, youth and disabled persons.

Youth and Youth Programmes
Ntsika has a joint program with the National Youth Commission, developing a framework for the participation of youth in the economic main stream. A study was made in order to recognise young men and women entrepreneurs as a key to our country's unemployment solution. On the other hand it should not be assumed that all youth want to be entrepreneurs.

Mr Mofokeng outlined their youth programmes. Amadiba Adventures is a programme piloted in the Eastern Cape, dealing with touring in the rural areas. The majority of people working for the project are young people, providing employment for 50 youth. The European Union has invested about R20 m in the region to replicate eco- tourism in the region.

The Awareness of Entrepreneurship encourages the idea of viewing entrepreneurship as a career, using radio and television talk shows. Their target is to reach 6 million people within in a year.

The Entrepreneurship Education programme targets schools, using tools such as the theatre to encourage and create awareness among young people. The target is to reach 10 000 young people by the end of the year.

They started the Commercialisation of Sheltered Workshop because sheltered programs are not productive. They want to transform the workshops into viable units to promote employment. At present they are conducting research to look at possible intervention strategies to run the programs. So far they have studied the example of Ethiopia.

With respect to disabled persons the aim is to replicate or expand the programs that have always been used with disabled people. They are unable to identify the best practices that have been developed in the world to deal with the disabled. Most service providers and intermediaries do not have facilities to integrate disabled persons, the only program one can take a key from is Ethiopia.

The Ideas Awards for Disabilities recognises excellence. The award has two categories; entrepreneurs and income generation. They want to challenge stereotypes- that there are no entrepreneurs within the disabled. The awards will encourage the disabled peers who want to go into business.

Budget - Current Financial year (2001/2002)
Youth- R1,5 m
Persons with disabilities - R1,3 m

Anticipated Policy and Programs
(a) Focus

They are working towards the goal of all programmes reflecting 60% of the target groups. They want to replicate successful models. The commercialisation of sheltered programmes signals a move away from a welfare approach to a more business approach.

(b) Challenges

Mr Mofokeng said that we grow up in a society where people want to work for someone. People begin to engage in business as a last option. Ntiska want to shift the programs to training related in order to give the target groups market opportunities. Finance is a challenge to the sector. Linking stakeholders (those who give financial assistance and those who give non- financial assistance) is also a challenge.

Discussion
Mr Dithebe (ANC) asked to what extent the Amadiba Adventures project has contributed as a touring destination, and how many local and international tourists visit the project per annum. What percentages did this constitute? Of the 50 youth employed for the project, there is no mention of youth with disabilities. What is being done to integrate them?

Mr Mofokeng (Ntsika) said that Amadiba is not an area suitable for visiting or enjoyment but an Eco-tour, which is an educational touring area to learn about local plants and nature. None of the 50 youth are disabled.

Mr Gore (DP) agreed that entrepreneurship is an effective way to combat poverty. How could Ntsika help a youth residing in Gugulethu with entrepreneurship to reach his ideals.

Around the issue of sheltered workshops, how is Ntsika trying to commercialize the workshops? How are they dealing with the issue of AIDS?

Mr Mokoena said that for youth with such ideas, they have organisations such as MODE (Medunsa Organisation for Disabled Entrepeneurs) to deal with such people. They also have a toll free number that such youth can use to contact MODE, and the youth can be referred to the nearest organisation that can help him, as they deal with non-financial assistance. There are local business organisations that could assist such youth, such as the LBSC (Local Business Service Centre) in Soweto.

Ntsika have introduced the AIDS campaign into their programme but it is still too early to say whether they have made an impact.

Mr Gore argued that Mr Mokoena misunderstood his question, which related to the effect of the project on HIV/AIDS. The Chairperson refused to give Mr Mokoena the opportunity to respond, saying that the time to respond to that question is over.

Mr Raji (NCOP) (DP) asked which schools the entrepreneurship education programme will target out of the 10 000; rural schools, farm schools and so forth. Would schools for street children be covered by Ntsika's programs?

Mr Mokoena pointed out that there are various sectors they have to deal with and they put much emphasis on needy areas. They are also guided by government priorities.

Mr Morkel (NNP) asked whether the entrepreneurship workshops equip disabled people with the skills to take over the workshops. Are the disabled involved in training other disabled persons. Are the television talk shows accessible to the deaf communities?

Mr Mokoena responded that there is no one best right model to train the disabled. At the moment they are not training the disabled to take over the workshops.

Mr Mofokeng said that they have not yet investigated the use of a sign language interpreter yet but will do so.

Mr Dacamara (DP) asked what the international impact of projects like these are on our economy.

Mr Mokoena said that they do research to look at what impact they are making by commissioning auditors to go out and verify the figures. They have not done a macro impact in South Africa.

Secondly, what was the ratio of the amounts they quoted to Ntsika's total budget? How much money goes into these projects?

Mr Mokoena could not give the ratio of the amount they have quoted to Ntsika's total budget. He estimated that their operational budget is R20 m; their budget is by no means sufficient. With respect to research Mr Mofokeng (Ntsika) said that in five years time they are going to give the analysis of the research which they are doing with the University of Pretoria and others.

Mr Dacamara suggested that it might be better if the programs focus more on the new generation than on the older generation of the disabled.

Ms Gandhi asked what links Ntsika has with other projects? Does Ntsika have a budget for the disabled who have recently matriculated?

Mr Mokoena explained that the Department of Trade and Industry has fourteen institutions working on economic activities. Ntsika co-ordinates their activities with institutions such as the DTI and with Labour.

Ms Bogopane spoke in terms of her personal experience as a disabled person; in training courses you are trained as if you are not disabled, and the training is not relevant. They do not take cognisance of people with disability problems.

Mr Mofokeng responded that they commissioned people who are specialists to design programs suitable to the disabled. He pointed out that most disabled people belong to some organisations which are lobby groups. A lot of them do not have capacity to do training. Training these people is a radical shift from what they do.

Presentation by Khula
Mr Phuta Matlala Khula explained that most of the things about Ntsika also apply to them. One of the things which makes Khula different from Ntsika is that they provide credit for the disabled, working in conjunction with banks to do so.

Khula has an organisation called the National Trust Youth Commission. It provides financial assistance to rural women. This is done through a sister-organisation called Karabo. Through this kind of assistance a family that could previously afford one meal per day could now afford three. Projects relating to women are the most successful.

Discussion
The Chairperson said that she could not see a big difference between Ntsika and Khula except that one provides non- financial and the other provides financial assistance.

Mr Gore (DP) said that he knew that there had been some problems between Khula and Karabo. What has been done to stabilise the problem? How will the problem of the wholesale nature of Khula be solved?

Mr Matlala said that they have now come up with two ways of dealing with the problem, the first one being to do away with Karabo or to market their products more to make people aware of the products. Presently they are waiting on a report from the Office of the Presidency about their ties with Karabo. They are not happy with the Karabo Management and want a change in management.

Ms Gandhi asked if Khula had problems with the repayments of loans. This is because many businesses go bankrupt. Mr Matlala said that they have problems with repayments. Presently they are deciding on whether to put an end to loaning money.

Mr Dithebe (ANC) asked which specific programs Khula have put into effect to show that they are a successful organisation.

Mr Matlala said that they have introduced KhulaStart programs.

Mr Setona (ANC) (NCOP) asked who Khula's specific intermediaries are. Mr Matlala said that their intermediaries are banks, closed corporations and companies. They also use any civil society bodies available but the majority are NGO's.

The Chairperson asked how many of their employees are disabled persons.

Both Ntsika and Khula responded that their staff is not comprised of any disabled persons.

The Chairperson said that they should tell their bosses that they need to do something about the employment of disabled persons. Disabled persons should be given opportunities to be involved in their own projects and should be part of the decision- making. Both Ntsika and Khula are not implementing the Employment Equity Act.

The meeting was adjourned.

Appendix:

Submission by Khula Enterprise Finance Limited to the Joint Monitoring Committee on the improvement of Quality of Life and Status of Women, Youth and Disabled persons.

13th February 2002
Cape Town - Parliament of the Republic of South Africa.

Introduction

Khula Enterprise Finance Limited was created in 1996, as an outcome of the Consultative Conference held in 1995 on the State of Small, Micro and Medium Enterprise in South Africa. Khula as an implementing agency of the state was to partner Ntsika in promoting access to finance for SMMEs; with the later providing non-financial support.

Part of the outcome of Durban conference was that the state in pursue of creating an enabling environment for SMMEs growth, will seek partnership with Non-Governmental Organisations and Private sector. The SMME policy document clearly articulates the need for designated groups to be given priority by the state. These groups include amongst others, women, youth, disable people etc.

Policy approach

In purse of the implementation of the mandate, Khula has sought partnership with financial intermediaries. Khula provides funding (Business loans, Capitalisation loans, Pioneer loans, Equity funding, Credit Guarantees and Land Reform Credit Facility), mentorship, capacity building for RFIs and seed loans for start-ups RFIs. The Retail Financial Intermediaries (RFIs) in turn, finance SMMEs. The majority of these intermediaries are NGOs. Khula's target market is aimed at the lower end of the SMMEs market.

One of key objectives for intermediaries to access Khula's products is the undertaking that they will in turn ensure access to finance to women, youth and disable persons. All intermediaries are measured on the number of women beneficiaries in their portfolio of borrowers. In addition, Khula funded a specialised RFI for disable people, namely Karabo Finance, which has links with MODE, an NGO assisting disable people especially in training. On top, Khula funded The Nations Trust, a youth organisation.

Programmes

The programmes that Khula has followed since inception were in line with its mandate, i.e. actively enthuse banks/private sector and NGO to provide funding/access to finance to women, youth and disable persons. Khula has also run special workshops for women in business, this was to highlight to the public about the role women play in business, but more significantly, give confidence to women to managed their own enterprises. As the table below shows, increasingly more women have access to finance even within the banks, than was before Khula's intervention.

Together with UNDP, Khula created a specialised Micro-credit programme called KhulaStart. This programme is aimed primarily at women in rural areas. Details of the commitment are shown herewith.

Budget

Khula committed a start-up capital of R2.3 million to The Nations Trust; this was aimed at building the capacity of the organisation. A further R3.7 million has been committed to The Nations Trust to on lend to young people. The success of TNT has been largely because of the contribution by the private sector in providing expertise, and special mention for ABSA's Chairman Fund.

A further start-up capital of R1 million was committed to Karabo Finance. In additional, R1.7 million was committed to fund the loan book of Karabo.

In total, as at 31st December 2001, Khula committed more than R300 million for the intermediaries, including further committee of R356 million through the Credit Guarantee scheme, all in all Khula has committed more than R700 million within the sector.

Performance as at 31 December 2001 of the intermediaries; as summarized: -


Programme & Category


Impact & Outreach Indicators

1. Credit Guarantee Programme

 


1.1 Total committed guarantees


R356.7 million

1.2 No of participating banks

13

1.3 No of guarantees authorised

4 798

1.4 No of guarantees committed

1 743

1.5 Males

65 %

1.6 Females

35 %

1.7 Black

55 % (was 10 % during SBDC scheme)

1.8 White

45 % (was 90 % during SBDC scheme)

1.9 Urban

85 %

1.10 Rural

15 %

   

2. RFI Programme

 


1.1 Business loans approved


R295.2 million

1.2 Business loans disbursed

R183.6 million

1.3 Capitalisation loans approved

R40.8 million

1.4 Capitalisation loans disbursed


R25.4 million

1.5 Seed loans approved

R89 million

1.6 Seed loans disbursed

R74 million

1.7 Capacity building grants approved

R14, 4 million

1.8 Capacity building grants disbursed

R6, 7 million

1.9 No of RFI's

16

1.10 No of RFI clients

105 032

1.11 Males

33 %

1.12 Females

67 %

1.13 Black

95 %

1.14 White

5 %

1.15 Urban

70 %

1.16 Rural

30 %

1.17 First time borrowers

51 %

1.18 Manufacturing

21 %

1.19 Retail, service & small contractors

79 %

   

3. Khula Start (MCO) Programme

 


1.1 No of Khula Start established


22

1.2 No of Khula Start lending

17

1.3 Seed loans disbursed for on-lending to MCO's

R5 million

1.4 Seed loans disbursed for operating expenses to MCO's

R7 million

1.5 Capacity building grants for MCO's

R5.8 million

1.5 No of loans granted by MCO's

14 212

1.6 Males

13 %

1.7 Females

87 %

1.8 Black

100 %

1.9 White

0 %

1.10 Urban

5 %

1.11 Rural

95 %

   

4. Thuso Mentorship Programme

 

4.1 No of business plans approved

177

4.2 Rand value of approved business plans

R29.9 million

4.3 No of post-loan mentoring visits

395

4.4 Males

79 %

4.5 Females

21 %

4.6 Black

91 %

4.7 White

9 %

4.8 Urban

84 %

4.9 Rural

16 %

   

5. Land Reform Credit Facility

 

5.1 No of approved land reform loans

13

5.2 Rand value of approved loans

R36.6 million

5.3 No of beneficiaries

316

5.4 Males

56 %

5.5 Females

44 %

5.6 Black

100 %

5.7 White

0 %

5.8 Urban

0 %

5.9 Rural

100 %

   

6. Regional Equity Funds

 

6.1 No of Regional Equity Funds

2

6.2 Present capitalisation of each fund

R20 million

6.3 No of enquiries

679

6.4 No of deals to date

3

6.5 No of expected deals for 2001/2002

9

6.6 Rand value of budgeted deals for 2001/2002

R13, 5 million

   

7. Job Creation Statistics:

 

Gross estimated job creation figures: Khula's estimate based on figures supplied by clients and on UNISA Impact guideline ratios

928 894


Future Programmes

Khula will continue to provide the following programmes -to women, youth and disable people who want to own or expand their own enterprises- in the future:

Loans

Credit Guarantees - those who can access banking products

Equity funding

Mentorship

Capacity building for NGOs

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