South African Micro-finance Apex Fund (SAMAF)
"Almost ten years after its liberation from white minority rule,
our country still faces many challenges. Many of our people are unemployed.
Many of our people continue to live in poverty. Violence against the person
in all its forms continues to plague especially those sections of our
population that are poor and live in socially depressed communities"
President Thabo Mbeki: State of the Nation Address, February 2004
Contents
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Introduction and Background
This report outlines the highlights of the establishment of the Apex
Fund. All aspects of the Apex Fund are covered in the Business Plan
and the other documents are available from the Apex Fund Office at the dti.
In March 2004, the Deputy Minister of Trade and Industry set up a Steering
Committee to look into the establishment of a Microfinance Apex Fund to
address access to affordable financial services for the poor. The South
African Micro-finance Apex Fund (SAMAF), commonly known as "the Apex",
has been established to address poverty alleviation and provide sustained
affordable access to financial services for the poor. The SAMAF now
has pro-poor micro-finance institutions in all nine provinces. Awareness
launches have been held in five provinces, and launches are planned in
all nine provinces by May 2006. It is hoped that SAMAF will be an autonomous
institution operationally independent of government, though during the pilot phase,
it will operate as a Trading Account under the dti.
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What is the APEX FUND?
The South African Micro-finance Apex Fund is a company that has been established
by the government to address poverty and unemployment through provision of:
- Access to affordable financial services.
- Institutional and client capacity building.
- Savings mobilisation through co-operatives and other formations
such as burial societies and stokvels.
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Vision
- To contribute to economic growth and poverty alleviation in South Africa by
becoming an effective facilitator of micro-financial services.
- To build a vibrant microfinance industry in South Africa.
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Mission
To provide professional and customized services to microfinance institutions through:
- Funding of institutional capacity building for partner organisations
and their clients in order to facilitate their participation in productive
economic activities.
- Savings mobilisation and provision of onlending capital to both
co-operatives and Retail Finance Institutions (RFIs) as a means
to broaden and deepen access to financial services to the poor
and smoothing their financial troughs for a better livelihood.
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Operations:
July 2004 - December 2004
Best Practice consultations
The following considerations assisted in instilling a holistic approach
into the mandate of the Apex Team:
- The declaration of 2005 as the UN International Year of Microcredit,
and the Apex initiative as custodian of this intervention in South Africa
- The decision by the Government to institutionalise Micro-finance with
special emphasis on developmental micro-finance
- The applicability of Microfinance to the implementation of the Millenium
Development Goals
One of the first tasks the project team undertook was to seek the Steering
Committee's approval to invite a team of experts from PKSF to share their
experiences in establishing and operating an institution whose mandate is
similar to that of the South African Micro-finance Apex Fund. The Apex
Fund approached the UNDP to finance the costs of the PKSF team. The Managing
Director of PKSF and two members of his top management team arrived in South
Africa in August 2004.
Ms. Msimang and Ximiya took the PKSF team to various rural areas in South Africa.
Ms Ximiya went to the Eastern Cape and KZN with one expert, while Ms Msimang
visited Mpumalanga and Gauteng with the other. The entire group visited the
North West Province. These visits were intended to expose the Bangladeshi
experts to the unique environmental and policy challenges in South Africa
because the Apex mandate is rural and peri-urban, S.A. differs significantly
from the PKSF situation. The experts spent two weeks with the Apex Team and
their report laid the foundation for the operation of the Apex Fund.
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SAMAF rationale.
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The majority of the S.A. population of whom 65% are deemed poor, are trapped in the
second economy (illustrated in the diagram) that is characterised by poverty. This economy is also
characterized by the severe structural weaknesses that underlie a large,
under-serviced, unmapped and poorly understood informal sector. This is the SAMAF
target arena.
The establishment of the SAMAF follows on Government's assessment of the needs
of South African society, and informed by past lessons about similar initiatives,
and the potential for future economic development and growth. The development gap
between the services of the various players led to the identification of the need
for institutional restructuring. Such restructuring should provide for a strategically
focused developer of micro-finance institutions, run on sound business principles, but
without losing sight of socio-economic objectives.
Initially, the SAMAF's activities focus on:
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SAMAF Operational Model
The Apex Fund will work through partner organisations to carry out its
mandate to reach the target at as close a local level as possible for
impact and outreach.
For savings mobilisation no particular model is preferred, instead
innovation and different approaches based on experience are encouraged.
The focus of the partnership organisation model is efficiency
for maximum outreach and sustainability through standardisation
of the operating model. By developing a standard operating model, SAMAF will
be able to manage the outputs of its client base more effectively. SAMAF will
also provide a backroom service in which all the client's and their clients'
details and transactions will be maintained by SAMAF. SAMAF will manage the
database, provide the operating system and maintain the operations. This will
ensure the integrity, accuracy and reliability of client's records and management
information. In addition, SAMAF will set the performance criteria and be in a
position to intervene through management, where corrective action is required.
Once the level of capacity has been raised and consistent output reached, the P.O.
may be responsible for their own operational reporting.
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Operating standards
Some of the operating standards the partner organisation should aspire to include:
- Large outreach
- Cost-effective lending
- Financial self-sufficiency
- Sustainability of the PO customer.
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The Apex Fund MIS and Risk Management for loans
The Apex operational model emphasises institutional and client capacity
building as a cornerstone for the success of the project. The monitoring
and evaluation of performance is key to the Apex risk management strategy.
After lengthy discussions with stakeholders, advisers and an investigation
into the appropriateness of an MIS system for Apex, a system called Microbanker
was procured for Apex and partner organisations to use as an accounting,
profiling and reporting system. The price was competitive and
the support very adequate. A key consideration for partners was simple operation,
accommodating a very large number of clients as the organisation grows.
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Financial Services Offered
- Micro Credit Loan Fund: This programme provides for loans of up to
R10 000 to households and micro entrepreneurs who depend on their micro
enterprises for their livelihood.
This fund comprises two products:
- Micro credit for micro enterprise development.
- The poverty alleviation fund for clients whose household income
is less than R1 500. The partner organisation will use a poverty
targeting tool for assessment.
- Institutional capacity building: Under this programme funds are
provided to strengthen the institution and ensure its long-term
sustainability.
- Savings mobilisation: This serves to promote and encourage the
creation of financial cooperatives and other savings
establishments such as stokvels and burial societies for the
accumulation of locally owned and invested wealth.
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Selection of Partner Organisations
The Apex Fund carries out its operations through various partner
organisations; therefore, their proper selection is crucial and
ongoing. Under this process, the Apex Fund appraises various
types of registered NGOs, local entrepreneurial agencies, voluntary
agencies and societies for suitability using standard criteria.
In appraising an organisation, clear guidelines are applied which
can be divided into the following areas: organisation, organiser,
management, governance, human resources, working area, field activities,
past performance, management information systems, accounting systems.
The objectives of SAMAF are to:
- Develop sustainable micro-finance institutions that can reach the
very poor in their areas of operation
- Facilitate training and capacity building for microentrepreurs and
financial co-operative clients (MFI clients)
- Provide back office service through a centralised information platform
for micro-finance institutions for research and data processing
- Provide mentoring, monitoring and regulatory services to micro financial
institutions within the Apex stable (partner 0rganisations)
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Activity Overview
During 2003, the Department of Trade and Industry conducted situational
audits around access to finance issues to determine the reach of its services
over the past ten years. The Apex Fund was established in response to the
findings in these audits.
Challenges around institutional capacity have been identified. SAMAF
has been set up to adhere to proven best practice where possible as well as
relying on innovative MIS systems in rural areas for monitoring and evaluation
impact. Institutional capacity strength is the cornerstone of the SAMAF model
as well as the scale for outreach and sustainability. SAMAF is piloting a
South African micro-finance model supporting by the following:
- Microcredit for poverty alleviation with a view to reaching the very poor
- Microcredit for micro enterprise and self-employment
- Provision of capacity building to ensure sustainability
- Use of technology (MIS) to manage and reduce the cost of access as
well as monitoring impact.
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Apex Footprint in 2005
Public Awareness Campaign
To date, the Apex Fund has been launched in five provinces. A launch involves:
- Identification of possible 'first impact' partner organisations institutions
in the province and explanation of a SAMAFoperational model to them.
- Formal communication with the Board of Directors of the FSC or MFI.
- Meeting with the Board of Directors, followed by the completion of a SAMAF
Partner Organisation form to facilitate SAMAF's understanding of the various
aspects of the organisation.
- If the FSC will partner SAMAF in hosting a provincial launch, certain community
liaison tasks are agreed upon upfront with its Board. This ensures that local
structures, including Traditional Authorities are informed and involved in SAMAF
activities from the outset.
- The local community establishes a Local Organising Committee to
take care of all local logistics of the launch, including security, catering and local
invitations, with facilitation of SAMAF.
- The Provincial Department of Economic Affairs and Tourism is advised of SAMAF's
involvement in the province, and requested to set aside a date for the launch of the
Apex Fund in their province.
- Once the date has been determined, and the correct level of representation
agreed on, both nationally and provincially, the Minister of Trade and Industry or the
Deputy Minister issues an invitation to the Premier of the Province and all stakeholders
to attend the launch of the Apex in the province.
- SAMAF ensures that its literature for the launch is available in at least one major local
language, as well as English.
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Post Launch interventions:
Once the launch has taken place, SAMAF engages the provincial and municipal structures
in he areas of operation of its partner organisation through the Samaf Consultative Forum.
This ensures that the provincial
functionaries understand how they can co-operate with SAMAF and their partners.. At an
institutional level, SAMAF then sets in motion all capacity and profiling activities as
per its operation model. Ideally, once capacity gaps have been identified and addressed,
systems put in place and economic activity bridges built, SAMAF's on-lending products are
disbursed. Once SAMAF is fully operational, depending on the seriousness of capacity gaps,
the projected period between initial assessment, capacity building and disbursement of
on-lending funds is three months.
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Samaf Launches in 2005
- On 13 May 2005, the National launch of SAMAF took place in Motswedi Village, 62 Km
outside Zeerust, North West Province.
- On 16 July 2005, SAMAF was launched at Mathabathe Village in Limpopo Province.
Mathabathe Village Bank was the host.
- On 26 August 2005, SAMAF was launched in Middledrift in the Eastern Cape. The
Middledrift Village bank was the host.
- On 5 October 2005 SAMAF launched in Siyanda Township, outside Upington in the
Northern Cape.
- On 2 December 2005, SAMAF was launched at the Fernie Village Bank, Gert Sibanda
District in Mpumalanga Province.
SAMAF will be launched in the remaining provinces between February and May 2006.
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Provincial responses to Apex awareness campaign
The following organisations that are involved in discussions with the Apex
Fund regarding support for their micro finance and enterprise activities in
their operational areas. Most of these organisations will form the core of the
SAMAF Portfolio. New Partner Organisations will be solicited deliberately, and
facilitated by SAMAF if their rural and per-urban outreach poverty profile does
not meet spontaneous expressions of interest. A case in point is the Northern
Cape Province.
| Province | Number of Institutions |
| Eastern Cape | 10 |
| Gauteng Province | 8 |
| Limpopo Province | 9 |
| KZN Province | 12 |
| Free State | 3 |
| Mpumalanga Province | 10 |
| North West Province | 8 |
| Western Cape | 3 |
| Northern Cape | The Samaf/ Provincial Consultative Forum
has received more than 800 individual applications |
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Challenges
The groundwork for the roll-out of the Apex Fund has been done. Provincial
representation of the Apex will be happening in the first quarter of 2006.
The most important challenges for Apex are:
- Retail capacity to ensure banking facilities are friendly and accessible to
the end-user and the PO
- Finding a way to scale up the activities of the Apex in the light of serious
capacity constraints and the time it takes to bridge them
- Identification of sustainable local economic activity to use as a springboard
for Apex interventions
- Post Bank alignment with Apex developmental agenda as well as other partnerships
i.e. Mafisa, IDT and other agencies.
Mpumulanga
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Motswedi Apex Launch
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Middledrif - Eastern Cape
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Limpopo
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Contact information
| Project Manager |
Ntombi Msimang |
| Tel. |
+27 (12) 394 5955 (Project Manager) |
| Tel. |
+27 (12) 394 1805 |
| Fax. |
+27 (12) 394 6955 |
| Email |
ntombim@khula.org.za |
| Postal address |
P.O. Box 28423, Sunnyside, 0132 |
|
