Changing lives. Mrs Jafta

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2 Changing lives Mrs Jafta Lived in U Section Khayelitsha for many years Her shack had no running water or electricity She had no husband and three grandsons to support Her pension was inadequate and she collected used furniture to earn extra income With a loan of R3 000 she was able to build a 42m² By using a loan to increase her government subsidy, she was able to build the house that she wanted If not for her ambition to take her housing desires into her own hands and for Kuyasa she would not have been able to move out of her shack and begin to live comfortably for the first time in her life.

3 Presentation Outline 1. Context 2. Introduction to Kuyasa 3. Kuyasa s Expansion plan 4. Organisational Structure 5. Funding 6. IT and Systems 7. HR & Training 8. Marketing 9. Technical Assistance

4 1. The South African housing microfinance context

5 South Africa at a glance Population: 47.5 mil Emerged from Apartheid in 1994 with a housing backlog of 4 million and a racially segregated spatial framework skewed by Apartheid End of Apartheid system led to urbanisation and the growth of unplanned informal settlements, especially the Western Cape, Gauteng and KwaZulu Natal provinces

6 The Housing Finance Market Gap Market Micro Finance Market

7 Housing Microfinance: the lever to develop housing assets Financing complete units Economically active poor people: Finance needs are met incrementally and affordably Financial sustainability of provider is ensured through appropriate finance

8 2. The Role of the Kuyasa Fund

9 Kuyasa s Mission Kuyasa provides microfinance services to those with secure occupational rights who are excluded from formal finance because improving the quality of housing adds essential social value, and because no other appropriate sources of housing finance are available to low-income households.

10 75% women Kuyasa s clients 75% between years old 60% informally employed & pensioners 60% earning below ZAR1 500; 94% under ZAR3 500 Regular income required, derived from formal & informal employment; social security grants; remittances

11 Current Kuyasa s in brief Disbursed: ZAR35 million to over clients over 7 years Loan balance outstanding: ZAR10.5 million

12 Kuyasa s Development Impact clients and final beneficiaries female clients ZAR20 million in savings Added value to ZAR185 million subsidies House values improved from ZAR to between ZAR

13 Key lessons Product: development based on existing experiences, must evolve Collections: Relationship building & fieldwork Operations: Information management Sustainability window: 5 7 years Access to capital critical to support growth Effective micro finance practice requires strong & integrated social process

14 Challenges Appropriate replication and expansion strategy Staffing, Management and institutional capacity Funding and financing strategy Management of supply chain and partners

15 3. Expansion

16 Vision new loans from Outreach to 6 provinces & 9 cities Loan book grows to ZAR1,1bn staff Drivers Raise interest from 32% to 50% Expand Board & increase management capacity Harness technical assistance Project manage the expansion Fund loan book growth with debt Raise operating grant of at least ZAR22m

17 Organisational Structure Funding Wholesale IT and systems HR and training Marketing Technical Assistance Levers for growth

18 Back up

19 Current Head Office Executive Director PA to ED HR Co-ordinator Mkt Co-ordinator Research Operations Manager Financial Manager Internal Auditor 2 X Branch Managers 2 Financial Officers 3 Site Inspector 1 Audit Clerk Branch Structure

20 End state organisation structure: head office Executive Director PA to ED Operations Manger IT Manager HR Manager Finance Manager Credit Manager Internal Audit 15 X Branch Managers Systems developer Training manager 16 X Finance Officers 16 Credit Officers 4 X Product Developers Site Inspectors Branch Structure IT Officer Recruitment Manager 9 X HR Officers

21 End state organisation structure: Branch Branch Manager Training Officer 6 X Loan Team Leaders Branch Administrator 10 X Loan Officers Loans Administrator Site Inspector Savings Co-ordinator Branch Administrator

22 IT and Systems Phase 1: Consolidate data customise and automate reports Phase 2: Mobile technology Make Information available in the field and field info in the office Phase 3: Full Automation Mobile loan origination PDA Credit Score Automated Workflow

23 HR and Training Develop internal HR and Training capacity HR Co-ordinator & Training Co-ordinator Developed Broad Strategy for loans development officer training Strong induction programme in place since February Priorities to develop ongoing training of fieldworkers capacity and to develop training for Team Leaders and Branch managers Strong mentoring and support systems in place for field work since August

24 Marketing The development of a marketing strategy is underway A number of marketing and Branding activities are underway Current capacity is still being serviced by word of mouth

25 Current: Technical Assistance ING Bank: June visit to be followed up by November visit Rooftops Interns and IT systems switch over support New: Ilima Trust Old Mutual Planet Finance supported by EU DIG supported by Gates Foundation

26 Funding: Wholesale Institution Instrument Rate Current New ABSA Over draft Prime + 1 R2m R3m Investec Term 3yr Prime R5m FNB Overdraft Prime +1 R5m Deutshe Term 3yr Prime - 3 R1.5m Oiko Term 5yr Prime R0.5m R3m Tembeka Term 3yrs Prime R2m Ubutyebi Term 3yrs Prime - 1 R1m SAMWU Term 3yrs Prime + 1 R10m RHLF Term 3yrs Prime - 3 R1.8m R3.2m Total R6.3m R31.7m

27 Operating funds: Minimum: Target: Funding: Operational R 22m R200m Raised: R 5m Strategies: Western Cape Prov govt: Grant of R200 per loan: X R200 = R22m National Government: Grant of R500 per loan: X R500 = R200m