skip to Main Content

Report of the Chairperson of the Board of Trustees

Mr Rakesh Garach

(Chairperson: Board of Trustees),
National Empowerment Fund

April 2020-March 2021

The duty to set the bar high

Among the many imperatives that the National Empowerment Fund (NEF) holds dear, commitment to good corporate governance ranks supreme. As a development finance institution, the NEF has the duty to set a bar for its investees and indeed for society, inclusive of its stakeholders, with the equivalent obligation being the responsibility to respect and value the public resources entrusted to its care.

It is for this reason that yet another clean external audit, for the 18th year running, was achieved, this time under difficult circumstances as the

organisation worked digitally for the first time in its history. It is a moment to be proud of because like the writer, C. S. Lewis, states, “integrity is doing the right thing, even when no one is watching”.

Even though ethical, operational and financial rectitude have become second nature to the ethos of the NEF, we continue to celebrate this important constant because governance, perhaps more than any other national imperative, is a fundamental pillar that guarantees the maintenance of our country’s constitutional order.

The failure of governance, whether in the private or public sectors, or both, is a significant threat on various levels because it constitutes the betrayal of public trust and the promise of freedom; siphons resources from human, economic and national development, and corrodes societal and human mores.

Given our country’s overwhelming developmental deficit and our crises of inequality along racial, gender and geographic lines, corporate governance is a mainstay that cannot be allowed to fail and must be entrenched and protected at all costs. The NEF can be trusted as a bastion in that compact.

Economic overview

Outlook for the global economy remains uncertain due to the persistent mutation of the virus and weak vaccination coverage in some countries. Global economic growth is now projected to rebound strongly in 2021 to 6.0%, a level not seen in decades following a difficult 2020. Growth recovery in advanced economies is driven largely by fiscal packages and widespread vaccine coverage while resurgence of the manufacturing industry is a key driver of growth in China and India, among others.

The spill-over effects of improvement in advanced and emerging economies are beginning to be felt in Sub-Saharan Africa and South Africa. Albeit at a slower pace, South Africa’s growth projection for 2021 has also increased by 0.3 percentage point to 3.1%, buoyed by global demand of mineral commodities emanating from steel, cement and automotive industries. The year 2020 has caused severe damage to the domestic economy, resulting in a widening budget deficit and rising unemployment. Unemployment in South Africa increased to 32.6% at the end of quarter one of 2021 from 32.5% in quarter four of 2020. This reality manifests especially amongst black people and affirms the importance of the mandate of the NEF to grow black economic participation.

The financial year 2020/21 was marked by the devastating effects of the coronavirus which culminated in a hostile operating environment for households and businesses. The NEF together with its investees were not spared. This Integrated Report is a catalogue of the severe impacts of COVID-19 on the operation of the NEF and its investees, as well as the gallant responses crafted over the period to ensure sustainability of the institution and its funded portfolio.

Despite the challenging year which led to significant reduction in household consumption and gross fixed capital formation, the NEF managed to make notable impact on the lives of ordinary South Africans by continuing its funding operations, and significantly, supporting the country’s efforts to create jobs while responding to the pandemic.

The NEF swiftly introduced a number of measures such as repayment holidays to ensure that businesses owned and managed by black people, women and youth in particular continued to operate, demonstrating unwavering commitment towards economic transformation and inclusive growth.


Board of Trustees

The Board of Trustees of the NEF is appointed in terms of the National Empowerment Fund Act No. 105 of 1998. In accordance with legislative

injunction, the Board is required, among others, to act as the focal point and custodian of corporate governance by providing ethical and effective leadership; formulate, monitor and review corporate strategy, major plans of action, risk policy, annual budgets and business plans, and maintain the highest standard of integrity, responsibility and accountability, ensuring that it finds a fair balance between conforming to corporate governance principles and the performance of the NEF.

The NEF reports to the dtic, which during the period under review was among the clusters that were at the forefront of Government’s efforts to fight the pandemic. It is because of this herculean task that when the term of office of the previous trustees of the NEF Board expired in April 2020, save for the Chairperson and the Chief Executive Officer, the dtic could not immediately appoint new trustees to serve on the Board.

During this period, therefore, the only trustees on the Board were the Chairperson of the Board and the CEO in her ex officio capacity.

Following continuous interaction with the dtic as the parent ministry, the NEF is assured that appointment of new Trustees will be completed early in the next financial year. In the tradition of the NEF, we are confident that once again, the next Board will possess the appropriate balance of knowledge, skills, experience and independence required to objectively and effectively discharge its governance role in meeting the NEF’s strategic objectives.

Once completed, this will enable the reconstitution of Board Sub-Committees, whose responsibilities include adopting strategic plans, monitoring operational performance, determining the integrity of policy processes, risk management and internal controls.

Deployment of Trust Capital

An enduring challenge facing the NEF over the past decade has been uncertainty regarding the recapitalisation of the NEF to ensure that the organisation meets the historic mission of supporting black entrepreneurs and communities to become integral to the economic mainstream.

In this narrative, what has continued to confound many is the fact that the entity was last funded by the fiscus in 2010 to the cumulative tune of R2.47 billion, yet at year-end the NEF had approved funding in excess of R11 billion for black companies and disbursed more than R7.4 billion into the real economy.

The reasons are not hard to find. Over the years the NEF has leveraged over R9 billion in third party funding for the benefit of black entrepreneurs.

Well over R3.9 billion has been repaid by investees since operational inception in 2004 to date, and this continues even though as a patient-capital lender the NEF’s investment horizons are typically up to 8 years for regular transactions and up to 10 years for rural and industrial funding.

103 299 jobs have been supported, which is a significant contribution towards a key national priority.

Over R3.4 billion has been approved for the empowerment of black women entrepreneurs.

In terms of supporting black industrialists, the NEF can point to 24 strategic industrial projects valued at R13.2 billion, that have been developed together with local and international partners, with potential to support 52 000 additional jobs.

In reaching out to the NEf for the partnerships such as the CoVID-19 black business fund, the Economic Distress fund and the Women Empowerment fund, the Minister of Trade, Industry and Competition, Mr Ebrahim Patel, our Deputy Ministers, the DG and the dtic have reaffirmed Government’s abiding commitment to the historic importance of economic transformation. The NEf is grateful for this affirmation and support, as well as for the privilege to account to Parliament as the guarantor of our democracy.

Mr Rakesh Garach, Chairman, NEF Board of Trustees, 2021 Integrated Report

In a transaction worth over R1 billion the NEF Asonge Share Scheme made available more than 12 million MTN shares to over 87 000 investors comprising black individuals and groups. 49% of investors were women. This public share offer yielded the NEF over R1 billion, which, together with the loan repayments, was invested into the business funding imperative.

The net result of these strategic breakthroughs has been that following the R2.4 billion cumulative capitalisation, the NEF has more than doubled its initial capital and delivered key socio-economic benefits, in the process building a viable and durable institution whose net asset value exceeds R5 billion.

Strategic partnerships as the fuel for inclusive growth

Necessity is the fountain of invention and renewal. One of the outcomes of unrealised recapitalisation has been the gradual repositioning of the NEF as a partner of choice for government and private sector entities wishing to invest their resources for enterprise and supplier development purposes for beneficiaries within their areas of operation.

In 2011 the NEF established the Enterprise and Supplier Development Fund, fashioning a new and unique value proposition to attract revenue that would help the NEF fulfil its mandate of providing financial and non-financial support to black businesses and communities. Whereas in the beginning the attraction was the incentive of earning points for their empowerment scorecards, in time many corporates began to see value in partnering with the NEF to assist in the development and growth of sustainable small and medium enterprises that are black-owned.

These entities saw value in the NEF’s institutional fund management infrastructure, investment expertise, mentorship support and corporate governance track- record, as well as the benefit of ensuring that investments would be appropriately targeted, with a high probability for success and sustainability for investees.

The results have been phenomenal, and these partnerships include oil companies, retail giants such as Pick ‘n Pay, with whom the NEF has turned spaza shops into mini supermarkets, as well as a leading automotive manufacturer, Nissan. Others are the Transnet Ports Authority, Government departments such as Tourism, Arts and Culture, the Western Cape Department of Finance, Tourism and Economic Development, the Northern Cape Department of Finance, Tourism and Economic Development, the Ekurhuleni Municipality, among various others.

In recent times, the dtic has entrusted the NEF with no less R461 million for priorities that are discussed in various sections of this Integrated Report.


The NEF is deeply grateful to the dtic and the gallery of partners who have entrusted their resources in the ability of the NEF to help bring hope, resources and support to localities where the market failures that confront small businesses, are most severe in the case of black enterprises.

In reaching out to the NEF for the partnerships such as the COVID-19 Black Business Fund, the Economic Distress Fund and the Women Empowerment Fund, the Minister of Trade, Industry and Competition, Mr Ebrahim Patel, our Deputy Ministers, the DG and the dtic have reaffirmed Government’s abiding commitment to the historic importance of economic transformation. The NEF is grateful for this affirmation and support, as well as for the privilege to account to Parliament as the guarantor of our democracy.

Congratulations are also due to the CEO, her Executive Committee, the Management Committee and staff of the NEF, for delivering yet another sterling set of performance results in a year that has left the world in shock and disbelief.

Thank you for upholding the empowerment dividend and for your day-to-day commitment in advancing the socio-economic development of the historically marginalised.

Perhaps William Ernest Henley had the NEF in mind when he told posterity through Invictus:

“Beyond this place of wrath and tears Looms but the Horror of the shade, And yet the menace of the years Finds and shall find me unafraid.
It matters not how strait the gate,

How charged with punishments the scroll, I am the master of my fate,
I am the captain of my soul”.


Mr Rakesh Garach

Board of Trustees

Back To Top