Nick van Rensburg, Managing Director of Zimele Zimele Awards - - PDF document

Nick van Rensburg, Managing Director of Zimele Zimele Awards Breakfast Speech Ladies and gentlemen, good morning and a warm welcome to all of you. Slide 2: Partnerships are all about participation, associations, and joint interests. In 1989, pre-dating legal Black Economic Empowerment obligations by some 15 years, Anglo American established a small and medium enterprise development and empowerment initiative called Zimele. The

• bjective was to create sustainable, commercially viable enterprises and empowered

entrepreneurs to operate in the mainstream economy of South Africa. Over the past 22 years, this initiative has become a genuine catalyst for emerging black

• business. And there has been an exciting knock-on effect — sustainable job creation and socio-

economic development in predominantly rural and peri-urban mining communities. Slide 3: This is in line with Anglo American‘s aim to produce sustainable economic and social benefits for communities over the lifetime of our operations — and beyond closure. This reflects the South African mining industry‘s obligation to continue to uplift levels of wellbeing in mining regions and to stimulate and support long term local and regional development. Zimele is essentially Anglo American‘s enterprise development and investment arm. Our job is to create, nurture and develop commercially viable and sustainable small and medium

• enterprises. And we do this by providing empowerment opportunities for previously

disadvantaged South Africans. The name of our business reflects this very well. The word ‗Zimele‘ is derived from isiZulu and isiXhosa and means ―to be independent‖ or ―to stand on one‘s own feet‖. This is after all, the essence of enterprise development.

2 Slide 4: Job creation is an important driver of our enterprise development initiatives and to this end, we have committed to creating 25,000 jobs in over 1,500 companies by 2015. This is our commitment to the international Business Call to Action initiative in lines with achieving the Millennium Development Goals. A key focus of this commitment is creating jobs in our mining communities and poverty stricken, labour sending areas. Slide 5: This is being achieved through the setting up of small business hubs across the country. These hubs facilitate the contact we have with our communities and assist in establishing businesses in these areas. Currently we have 28 hubs in operation and hope to open eight more in the near future. Through a network of 36 hubs, it is estimated that we will be able to help create and sustain 28,000 jobs by 2015. The communities in the areas in which we operate are crucial to Anglo American‘s success. At the same time, we are often vital to growing their prosperity. This mutual dependence encourages us to make positive and enduring contributions to our hosts, since we recognise that being a good neighbour, is good business practice. Slide 6: And now I‘d like to zoom in a bit more closely on Zimele‘s work. I‘m very proud to be a part of this innovative intervention that has literally transformed the lives of many Historically Disadvantaged South Africans. Our input has improved not only their quality of life and future prospects — but also that of their families and their communities. Since we set up shop in 1989, Zimele has built up an outstanding track record of successful investments into SMEs across a variety of industries, by providing loan and equity finance to support start-up or expanding businesses. This has been achieved through our four funds, namely the Supply Chain Fund, the Anglo American Khula Mining Fund, the Community Fund and the Olwazini Fund. Each fund is specifically targeted at a different sector of the market and has its own mechanics – which I will go into detail about shortly.

3 Slide 7: Between 2008 and March 2011, Zimele has supported more than 845 SMEs which provide jobs to nearly 16,000 people and collectively turned over R1.8 billion. Anglo American has invested a total of R467-million into these enterprises. Of this we have achieved a loan repayment rate of 89 percent of the 1,097 transactions. It is wonderful to be able to report that of the total entrepreneurs Zimele supports since 2008, 36% of them were women and as many as 48% were youth. This is encouraging as the youth and women are important stakeholders in the success of the South African economy. A primary driver behind Zimele‘s beyond-expectation success has been our mandate to ensure that Anglo American‘s supply chain is transformed to reflect the demographics of the communities in which we operate. This transformation is critical to ensure the future sustainability of the local mining industry and its local communities. Slide 9 - 12: Anglo American‘s supply chain division is one of the key components of our enterprise development drive, and has demonstrated enormous progress over a relatively short period of

• time. Through supplier relationships, this division aims to establish new ways of working with

processes and associated behaviours. The vision here is to ultimately forge collaborative value, and relationships based on mutual respect and trust. To this end, Anglo American is working closely with government to realise shared goals, and sustain core values. This brings me to the first of our four funds. The Supply Chain Fund focuses on procurement and business development opportunities for black-owned and managed SMEs within our supply

• chain. The work of this fund involves assisting the procurement departments of our various

business units to identify potential BEE suppliers and then facilitating a match-up of business

• pportunities with black-empowered SMEs. In parallel, the Supply Chain Fund invests in equity

and advances loans to these businesses. Between 2008 and March 2011, the Supply Chain Fund invested R91-million in 42 companies, employing nearly 6,500 people with a collective turnover of R904-million. Kram Engineering, one of the companies that we fund through the Supply Chain Fund has achieved so much in such a little time since invested in them in 2006. The company produces wear resistant lining for mines and power stations and turns over of R49 million. Most importantly the company has created jobs for 63 people.

4 Slide 13 - 16: Next is the Anglo American Khula Mining Fund. This fund manages mining-related investments as a joint initiative with Khula Enterprise Finance Limited (of which I acknowledge their presence here today), a government-owned entity that promotes SME development. The fund handles exploration and mining related investments and is focused on the high risk phases of exploration and drilling, to bring these mining ventures to commercially bankable positions. The Anglo American Khula Mining Fund exists to increase the presence of black-owned mining companies and to provide the country with junior mining companies to find new mineral

• deposits. Since 2008 to 31 March 2011, we concluded 20 transactions in this fund with a

combined turnover of R491 million. One of the shining stars in our fund is African Nickel, which works at the Bon Accord Nickel prospect on the Barberton Greenstone Belt. The company is a successful collaboration with Anglo American, as we provide specialist Nickel expertise to the company. We have invested R18 million into the project. Slide 17 - 22: The third of our four funds is the Community Fund, which supports entrepreneurs and small businesses in the communities in which we operate. We achieve this by means of loan finance and hands-on guidance and support from our network of Small Business Hubs, which are staffed, managed and funded by our Platinum, Thermal Coal, Iron Ore and Diamond

• businesses. Our Community Fund has made a significant and tangible impact on the

communities near our mines by supporting small and medium enterprises and facilitating entrepreneurial opportunities and the subsequent creation of jobs. Since its introduction in October 2007, the fund has breathed new life into our enterprise development and empowerment work in South Africa, further making a reality of Zimele's philosophy of ―Independence through Enterprise‖. The Community Fund assists entrepreneurs with seed and working capital through loan finance at preferential interest rates. Beneficiaries must operate in

• ur business unit areas and comply with the black economic empowerment (BEE) criteria set by

the Mining Charter. The fund enjoys a loan recovery rate of 89 percent and we are averaging out at about two deals a day, and up to March this year, we had performed over 985 transactions. What sets the fund apart is our emphasis on mentorship, this ensures the success of the companies that we fund. These businesses need not be related to our business and as you can see they are diverse in

• nature. From medical, to recycling, to toilet hire and even funeral parlours. You name it, we

have funded it!

5 There are currently 28 small business hubs in existence and as you can see they are spread out across the country in key areas, many of which are poverty stricken and in need of an economic impetus into the community. Of our success in the Community Fund, we have Dr. Lorna Maphuthuma, a medical doctor that saw the opportunity to create a medical practice in the Burgersfort area. Through her perseverance and commitment to her trade, she has now managed to create a thriving medical

• practice. The practice is a centre of both hope and healing and offers a holistic approach to

medical matters by providing specialist services to the community. Slide 23 - 26: Finally, the Olwazini Fund is designed to assist women, the disabled and youth to establish and run their own small businesses within our mining communities. It is focussed on social and economic upliftment at a grass-roots level with entrepreneurial skills training as a starting point. Borrowing from isiZulu once again, ‗Zimele Olwazini‘ — loosely interpreted —means ‗to be independent through knowledge‘. This sums up the fund‘s strong entrepreneurial education

• imperative. It provides small business loans at preferential interest rates to individuals who

successfully complete our training programme. Entrepreneurs receive credits towards an NQF Level 2 qualification, and develop their own business plans with the assistance of mentors. Training is delivered in modules over the course of 12 months and participants are able to submit a business plan as a loan application to the fund within the first three months. The fund partners with NGO‘s, government and training service providers in order to affect greater change. This is how the Olwazini Fund works. It start with the process of sourcing entrepreneurs and assessing them according to set criteria. Thereafter, upon selection, these entrepreneurs take part in the training process where they receive the accredited qualification and generate a business plan. Their plans are then submitted to Zimele where they are evaluated. Successful business plans are then eligible for funding and the company will then be receive finance from us. Through the fund we have established relationships with over 300 entrepreneurs with 99 currently in training. These entrepreneurs are also mentored through the Vuka Mentorship Programme and all transactions are capped at R20,000 per proposal.

6 One of our success stories is Eunice‘s Coffee Shop and Chocolate Moulding, a small tuck shop in Ratanda which we helped develop into a coffee shop and chocolate moulding business. Through the business Eunice hopes to create more jobs and continue to service the community. Slide 27: Looking back over the years we have realised that enterprise development models needed to be more flexible and adjustable as we have learnt that it is the circumstances and situations that mould the companies we fund into successful enterprises. While there is no ―one size fits all‖ approach to developing businesses and entrepreneurs, Zimele is proud to have developed a highly effective formula for enterprise development. This formula is a strategic mix of financial support through equity or loans — and hands-on, incubator-style mentorship. Slide 28: Ladies and gentlemen, now that you have a better understanding of Zimele and our four funds, in conclusion, I would like to pay tribute to our 11 winners here today. All the companies and entrepreneurs that will receive awards today have exceeded in terms of the criteria that we have set. This includes BEE ownership, number of jobs created and sustained, repayment on loans, their corporate social investment initiatives, business performance and governance, including their alignment with Anglo American‘s values. I am very optimistic that South Africa‘s economy is benefitting not only through much needed sustainable job creation, enterprise development and long-term viable businesses, but that you have each distinguished yourselves as the best of the best with your entrepreneurship, business vision and endeavours to succeed. — Pause — Winston Churchill once said: ―If we are together, nothing is impossible. If we are divided, all will fail.‖ I am convinced that the making of this country will be in the enterprise development sphere. This is the legacy we want to leave behind. Thank you.