The IDC

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The IDC
Loyiso Jiya Chief Economist Industrial
Development Corporation of South Africa Ltd 7
May 2002
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IDC - Corporate Profile ...

• Self-financing state-owned development finance
  institution
• Provides financing to entrepreneurs engaged in
  competitive industries
• Follows normal company policy and procedures in
  its operations
• Pays income tax at corporate rates and dividends
  to its shareholder
• Independent Board of Directors
• Reports on a fully consolidated basis, with its
  Annual Report freely available to the public

IDC Head Office Sandton
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Vision ...
To be the primary driving force of commercially
sustainable industrial development and innovation
to the benefit of South and southern Africa
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Mission ...

• Contribute to the generation of balanced,
  sustainable economic growth in southern Africa
• Economically empower the southern African
  population
• Promote entrepreneurship through the building of
  competitive industries and enterprises based on
  sound business principles

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Core Strategies ...
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Providing risk capital to widest range of
industrial projects

• Maintaining its financial independence
• internal profitability
• divestments from mature assets
• borrowings

Identifying and supporting opportunities not yet
addressed by the market
Establishing local and global involvement
partnerships in projects that are rooted in or
benefit SA and SADC
Building upon and investing in human capital in
ways that systematically and increasingly reflect
the diversity of SAs society
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IDCs Financial Results ...

• Financial year 2000/2001
• Financially strong
• Assets R30 billion
• Net income after tax and capital profits - R
  258 million

• Ranked 29th in South Africas Giants League
  i.t.o. assets

• Ranked 4th largest SA public corporation i.t.o.
  assets and 5th largest i.t.o net income

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IDCs Development Impact ...

• Created 89 000 additional jobs

• Assisted 2 109 industrialists
• Generated over US3.2 bn in additional annual
  export earnings
• Empowered the historically disadvantaged (31 of
  number of approvals in 2001)
• Facilitated development in rural areas
  (agro-industries, SDIs)

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IDCs Operational Structure ...
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Role of the Sectors Division ...
Financial and
Service sectors Raisibe Morathi
Funding

• Sectoral focus and specialisation
• Facilitate in sectoral development on a broad
  front ...
• through the use of IDCs basket of financial
  instruments
• through the participation in development
  initiatives within sectors

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Sectoral Business Units
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IDCs Focus Areas

• Empowering of emerging entrepreneurs
• Support manufacturing, tourism development,
  agro-industries and small-scale mining
• Regional (SADC and Africa) development
• New initiatives
• telecommunications and IT
• retail and service sectors
• government tenders
• venture capital
• Continue with the establishment of
  internationally competitive, large,
  resource-based beneficiation projects and
  downstream value-added industries

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Financial Products ...

• Equity
• Quasi-equity
• Commercial loans
• Wholesale finance
• Share warehousing
• Guarantees

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Financing Criteria ...

• Greenfield projects, expansions rehabilitations
• Relatively sizeable projects
• Economic merit (profitability sustainability)
• Developmental impact (jobs, value addition,
  exports)
• Fixed assets and the fixed portion of growth in
  working capital requirements
• Reasonable financial contribution from owners
• Security
• Environmental requirements

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Sectoral Exposure ...
IDC Financing by Sector Business Unit Approvals
July 1997 to June 2001
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Empowerment Financing ...
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SME Financing ...

• SME financings value - from 11 of approvals in
  1996 to 67.2 in 2001

• Since 1996 the IDC has approved finance worth
  more than R7.6bn to 1 823 SMEs, creating more
  than 54 538 jobs and generating export earning in
  excess of R10.2 bn

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IDCs Role in Projects ...

• Identify project opportunities
• Co-sponsor feasibility studies
• Source financial and operating partners
• Provide and arrange funding (e.g. export finance)
• Provide equity stake
• Assist with implementation via steering committee
• Serve on board of directors

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IDCs involvement in the rest of Africa ...
Promoting Investment in Africa ...
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IDCs involvement in the rest of Africa ...
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International Finance ...

• Export Finance Loans to foreign borrowers to
  facilitate purchase of SA capital goods
  services
• Import Finance Utilising lines of credit to
  finance the importation of capital goods
  services into SA
• Project Finance Sourcing and arranging funding
  from diverse international lenders for major
  projects
• Risk Mitigation Risk mitigation products to
  hedge structure political commercial exposure
  in SADC
• Trade Finance Pre post shipment working
  capital finance to exporters

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Concluding Remarks ...

• The IDC is at the front of industrial development
  in SADC
• We are moving into non-manufacturing activities
  that yield development and financial returns
• Highly profitable opportunities exist for
  investors in the South Africa
• Together we can turn big ideas into big business!

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Together we can turn big ideas into big business
www.idc.co.za