Bongumusa Ntuli

ChairpersonCebisa Financial Services Co-operative

+KZN Association of Co-operative Financial Institutions

+National Association of Co-op Financial Institutions of SA

Cell: 071-9315952 / 072-2478017Tel: 012 -346 6020Fax: 012 -346 5891www.nacfisa.co.za

‘Innovative ways to Sustain Local Economy’

MsunduziBusiness Informal Economy Day

08 May 2015

Socio-economic context of enterprises in SA

Why skills are important

Enterprise Management Core Competencies

What skills set are required

Are skills alone enough

Viable and sustainable enterprises

How to join Cebisa and gain financial freedom

TopicsTopics

Socio-economic context of enterprises in SA

Are South Africa’s enterprises in general and black owned in particular haunted by the ghosts of

apartheid past practices?

Or

Or South Africa’s enterprises owners just don’t have what it takes to succeed in business and be

called formal economy?

• Systematic enforced divisions and institutionalized unequal development and access to opportunities along racial lines resulted in inequality in all facets of South African life.

• The inequalities continue to play themselves out in spheres such as:

• Economic productive skills

• Economic infrastructure and services

• Financial services (access to affordable finance)

• Employment opportunities

• Health and education

Socio-economic context of enterprises in SA

R49bn - 2011

R56bn - 2012

R65bn - 2013

Profit of the big 5 Banks

-Commercial Banks-PROFIT AT ALL COST!!!

-Commercial Banks-PROFIT AT ALL COST!!!

-Commercial Banks-PROFIT AT ALL COST!!!

-Commercial Banks-PROFIT AT ALL COST!!!

R1.57 trillion

gross debtors book

R1.57 trillion

gross debtors book

Total outstanding unsecured credit

2007 – R 41bn

2012 – R159bn

2014 – R172bn

NCR: Consumer Credit Market report – June 2014

320%

Notification fee

Notification fee

Cash Deposit fee

Cash Deposit fee

Admin feeAdmin fee

Bounced debit order fee

Bounced debit order fee

WithdrawalWithdrawal

-Commercial Banks-TREE OF BANK CHARGES

-Commercial Banks-TREE OF BANK CHARGES

Inside branch fees

Inside branch fees

• The historical legacy continues after 21 years of democracy to sideline the black majority to a secondary class economy while the few neoliberal capitalists’ monopoly continues to thrive through the exploitation of:

• government,

• working class,

• social grant beneficiaries,

• small and micro enterprises,

• co-operatives and so on.

• Hence the continued need for practical steps and implementation framework that pays special and urgent attention to the promotion of active economic participation in the financial services sector by the historically marginalized population groups

Skills alone not enough…

Redressing the past

“the Year of the Freedom Charter and Unity in Action to Advance Economic Freedom.

The year of going the extra mile in building a united,

democratic, non-racial, non-sexist and prosperous South

Africa.

It is also the year of rededicating ourselves to eradicate racism and all

related intolerances in our country”.

JG Zuma, President of SA

2015 State of the Nation Address

‘People shall share in the country’s

wealth, and that banks and

monopoly of industry shall be

transferred to the ownership of the

people as whole and all other

industries and trade shall be

controlled to assist the well-being of

the people’

Unlocking of the potential of small, medium and micro enterprises (SMMEs), co-operatives, as among the state’s Nine Point Plan-

•revive township and rural village economy

•millions of jobs

•eradication of poverty

•reduction of indigent households

•payment for services

•reduction of crime

•elimination of violent protests

•social cohesion and equality

•economic inclusion

•economic growth

•security and stability

Redressing the past

Chicken and Egg Dichotomy

skills

finance

= freedom to act+

formal enterprise

formal enterprise

informal enterpriseinformal

enterprise

jobs =

Chicken and Egg Dichotomy

skills

finance

= freedom to act+

formal enterprise

formal enterprise

informal enterpriseinformal

enterprise

jobs =

Running your own business means having to wear all different types of hats

What Skills Set (Enterprise Management Core Competencies)

Are Skills Alone Enough?

Show me one viable and sustainable enterprise that has made it without access to finance…

ARE SKILLS BY THEMSELVES, A

PANACEA?

A viable business-•long-term survival, and its ability to have sustainable profits over a period of time

A sustainable business-•resiliency over time – can survive shocks•connected to healthy economic, social and environmental systems

South Africa needs

viable and

sustainable

businesses to

effectively deal with

poverty,

unemployment

and inequality

Business shocks

SUSTAINABILITY systems

economic

• Ownership of the means of production

• Access to economic productive skills

• Access to affordable capital & operational finance

• Access to markets for inputs and consumers

social• Active citizenry-

political and civic levels

• Pool of people with purchasing power

• Social stability

• Absence or low levels of crime

• Healthy communities

• Skilled and have the right mental attitude to work hard

environmental

• Supporting legislative framework

• Economic infrastructure

• Political stable communities

• Environmental safe business practices

• Corruption free access to opportunities

World Council for Economic Development (WCED), sustainable development is development that “meets the needs of the present without compromising the

ability of future generations to meet their own needs.”

Supply, Demand & Skills = Viability

DEMAND

• High demand – leads to profits: – More staff– Decent salaries– Business

expansion– More state tax

contributions

• Low demand – leads to death of business– Unemployment– Loss of income– No state tax

contributions

SUPPLY

• Raw materials / inputs:– Are cheaper in

large quantities– Large quantities

reduce costs of production

• Finished goods move quicker when– They are

affordable to end users

– Accessible to end users

MARKET: individuals and

enterprises

AFFORDABILITY

•Access to finance

•Salaries/wages

•Skills

Holistic Solving the Problem ofSupply, Demand & Skills = Viability

Co-operatives Act 14 of 2005o To promote the development of sustainable co-operatives

that comply with co-operative principles, thereby increasing the number and variety of economic enterprises operating in the formal economy,

o To encourage persons and groups who subscribe to values of self-reliance and self-help and who choose to work together in a democratically controlled enterprises, to register co-operatives and acquire a legal status separate from their members,

o To promote equity and greater participation by black persons, especially those in rural areas, women, persons with disability and youth in the formation of, and management of co-operatives,

 

Holistic Solving the Problem ofSupply, Demand & Skills = Viability

Co-operatives Bank Act 40 of 2007

o To Promote and advance the

o social and economic welfare of all South Africans by

o enhancing access to banking services

o under sustainable conditions,

o Promote the development of sustainable and responsible co-operative banks, and

o Establish an appropriate regulatory framework and regulatory institutions for co-operative banks that protect members of co-operative banks

…‘is a group of people voluntarily united to meet their common banking needs through a jointly and democratically owned and controlled financial institution’.

It offers its members a range of financial products and services such as savings, loans and transmission facilities, while upholding collective entrepreneurship and contributing to the development of communities.

Co-operative financial institutions accept deposits and make loans. But as member-owned institutions, they focus on providing a safe place to save and borrow at reasonable rates.

Co-operative Financial Institution

Unlike banks, co-operative financial institutions return surplus income to their members in the form of dividends.

Fees and loan rates at co-operative financial institutions are generally lower, while interest rates returned are generally higher, than banks and other for-profit institutions.

Co-operative financial institutions are democratically operated by members, allowing account holders an equal say in how the financial co-operative is operated, regardless of how much they have invested in the Co-operative financial institution.

Co-operative Financial Institution

CFI Registration Documents

CFI Model

Target Market Segment for Co-operative Banks

Social Grants Recipients

Social Grants Recipients

Agriculture Co-operatives

Agriculture Co-operatives

Housing Co-operatives

Housing Co-operatives

Consumer Co-operatives

Consumer Co-operatives

SMMEs SMMEs

UnemployedUnemployed

Clubs/StokvelsClubs/Stokvels

CBO/NGOsCBO/NGOs

Indigents Indigents

CFI

Trust/CPATrust/CPA

Worker Co-operatives

Worker Co-operatives

SocialCo-operatives

SocialCo-operatives

Services Co-operatives

Services Co-operatives

Street Traders & Vendors

Street Traders & Vendors

• Access to affordable finance by traders, vendors & suppliers

• Access to affordable finance by your customers / consumers

• Improved buying power increasing demand for goods

• Lifetime affordable ownership shares in a banking institution

• Borrow and paying yourself affordable instalments

• Benefiting from profits generated

• Benefiting from business skills development, coaching & mentorship

• Living generations legacy and opportunity to be listed on JSE

• Payment for services and reduced indigent persons

What will we benefit from joining and supporting establishment of co-operative

financial institutions

Mr. Kubheka

(MD: Xololomusa Contractors)

“…I have financial freedom

and peace of mind at CEBISA

as loans are approved within

24hrs to ensure my cash flow

is able to meet my entities

debts. No red tapes, no risk

factors, no discrimination.

No joy is biggest than

knowing that the low interest

I pay comes back to me as a

shareholder”

TestimonialTestimonial

Ms. Mbatha,

(works at Msunduzi

Municipality)“I was unable to obtain car

finance due to high interest

rates from other banks. I

was called high risk, but

CEBISA came to my aid.

Today I have a brand new

pair of wheels and a

reasonably low interest fee

and still have a disposable

income for my other

needs”

Buy mandatory shares = R100

Pay application fee = R100 =

Open savings account = R200

Complete application form

◦ID Copy and those of your beneficiaries

◦Commit to monthly savings of min R100

◦Waiting period of 6 months

R 400

How to join the How to join the 402 members of 402 members of Cebisa?Cebisa?

Bongumusa Ntuli

ChairpersonCebisa Financial Services Co-operative

+KZN Association of Co-operative Financial Institutions

+National Association of Co-op Financial Institutions of SA

Cell: 071-9315952 / 072-2478017Tel: 012 -346 6020Fax: 012 -346 5891www.nacfisa.co.za

‘You may now ask questions’

Thank you for your attention