FINANCIAL SERVICES

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UMSOBOMVU YOUTH FUND ENTREPRENEURSHIP PRODUCTS
AND SERVICES TOWARDS EFFECTIVE PRACTICES

• FINANCIAL SERVICES

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OUR BUSINESS

• To provide finance to youth and women to start,
  expand or buy a business

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THE OBJECTIVE

• To facilitate and promote the creation of jobs
  and skills development for South Africas young
  people

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PROGRAM STRUCTURE
ENTERPRISE FINANCE
SME FINANCE
MICRO FINANCE CO-OPERATIVES
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TARGET GROUP FOR UYF FINANCIAL SERVICES

• Young people 18 35 years old
• Predominately out of school
• Predominately unemployed
• Catering for diverse cohorts of youth
• Skilled/ unskilled
• Rural/ peri-urban
• Youth with disabilities
• HIV / Aids
• Women of all ages (for business development
  support loan finance)

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Product Categories
LOAN RANGES
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PROGRAM STRUCTURE
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MICROFINANCE LENDING

• Defined
• The business of accessing finance to the low
  income/poor aimed at contributing to the
  reduction of their poverty and vulnerability.
• Objective
• To provide access to financial services for
  previously disadvantaged youth and women in a
  sustainable manner that changes their lives.

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MICROFINANCE

• Microfinance involves financial services for the
  excluded.
• Enterprise loans
• Consumer loans
• Savings and other deposit products
• Remittance transfers
• Payment services
• Insurance.

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Micro Loans Criteria
MICROFINANCE LOANS

• Owned by youth / women
• R500 to R100,000
• Interest rate based on National Credit Act
• Up to 3 years repayment period
• Security usually 3rd party surety
• Start-up and expansion
• Working capital (materials and expenses)
• Capital expenditure (equipment etc)
• Term loans and bridging finance

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OPTIONS

• Group based systems of existing or newly formed
  solidarity or trust groups.
• Individual loans but with very stringent
  supervisory and management systems.
• Village banking
• user owned, user financed and mostly user
  managed/governed associations.
• Self-help groups, stockvels, financial services
  associations, community based organizations,
  rotating savings credit associations,
  co-operatives

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MEASURABLES

• Institutional Strengths
• Institutional culture, structures, capacities,
  and operating systems
• Quality of Services and Outreach
• Focus on the poor, quick, simple and convenient
  access to small, short-term loans, to a
  significant expanding clientele
• Financial Performance
• Appropriate pricing policies, portfolio quality,
  self-sufficiency

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WHAT IS INVOLVED IN MICROFINANCE MANAGEMENT?

• Peer lending and structured disbursements
• Character assessment and graduated loan system
• Forced savings/insurance or group guarantee
• Small loan sizes
• Term structure of loans
• Loan approval process
• Central collection

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PERFORMANCE INDICATORS

• Portfolio quality
• Productivity and efficiency
• Financial viability
• Profitability
• Leverage and capital adequacy
• Scale, outreach and growth

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CO-OPERATIVES PROGRAMME

• Aimed at contributing to the development of
  policy and innovative lending programmes for
  effective management of co-operative enterprises
• Groups of young people ages (18 to 35) women and
  established co-operatives with active youth
  participation
• Excluding purchasing of property purely social
  co-operatives, liquor and tobacco co-operatives

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SME PROGRAM STRUCTURE
SME FINANCE
PARTNERS (Up to R10m)
UYF (R100,000 R5m)
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PROGRAM STRUCTURE
SME PARTNERS
OLD MUTUAL
FNB
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PROGRESS FUND

• PPP fund with First National Bank
• Funding for startup, expansion, buy-in, buy-out
• 26 or more youth/women shareholding
• Loans R100,000 R10m
• Repayment period up to 5 years
• Interest rate linked to prime

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GENERAL FUND

• Managed by UYF
• Funding for startup, expansion, buy-in, buy-out
• 26 or more youth/women shareholding
• Loans R100,000 R5m
• Repayment period up to 5 years
• Interest rate linked to prime

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SME LOANS

• Start up
• Expansion
• Buy-in/out

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PRODUCTS

• Asset Based Loans
• Bridging Loans
• Working Capital
• Equity Loans

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CRITERIA

• South African Citizen
• Black youth (18-35) women
• gt25 Shareholding
• Operationally involved
• Viable or potentially viable business
• Use of funds - assets, working capital, equity,
• Do not fund property, tobacco, gambling

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APPLICATION PROCESS
Application
Appraisal
Screening
Due Diligence
Approval
Commitment
Disbursement
Collection/Aftercare
Exit
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UYF VS BANK

• BANKS
• Collateral Required
• Own Contribution
• No repayment holidays
• Minimal mentorship
• Credit bureau listing
• Criminal record

• UYF
• Cash flow character based lending
• No minimum stipulation
• Capital moratorium considered
• Mentorship provision
• Will consider
• Will consider (youth in conflict with the law)