IDC Plans for 2008/09

1. IDC Plans for 2008/09 Geoffrey Qhena CEO 5 March 2008

2. Ntuso Forestry IDC’s Role • To support sustainable development, IDC invests in businesses showing economic merit. • Some businesses are not often funded because of perceived high risks: • IDC views this as a market failure; • IDC does more detailed assessments and funds investments which would not otherwise happen. • IDC plays a critical role in assisting industries to develop, in ways which meet South Africa’s needs: • ASGISA; • National Industrial Policy Framework (NIPF); • Industrial Policy Action Plans (IPAP). • Cooperate with national and provincial government, other development finance institutions (DFIs), and other COTII institutions.

3. IDC’s Vision, Mission, Objectives and Outcomes To be “the primary driving force of commercially sustainable industrial development and innovation to the benefit of South Africa and the rest of the African continent” Vision The IDC is a self-financing national development finance institution whose primary objectives are to contribute to the generation of balanced, sustainable economic growth in Africa and to the economic empowerment of the South African population, thereby promoting the economic prosperity of all citizens. The IDC achieves this by promoting entrepreneurship through the building of competitive industries and enterprises based on sound business principles. Mission Supporting industrial development capacity Objectives Promoting entrepreneurship Sustainable employment Growing sectoral diversity Regional equity Growing SME sector Industrialisation in the rest of Africa Broad-based black economic empowerment Outcomes Environmentally sustainable growth New entrepreneurs entering the economy

4. IDC Approvals by Sector (Share of total value, 10 months to end Jan 2008) 40% 35% 30% 25% 20% 15% 10% 5% Mining 0% Construction Basic metals Other services Financial services Healthcare services Telecommunications Transport and logistics Tourism and restaurants Textiles, clothing, and leather Chemicals and non-metallic minerals Agriculture, fishing and food processing Fabr. metals, machinery and transport equip Forestry, wood products, paper and publishing 2007/08 Review • Sector Development: • Sector development strategies aligned with National Industrial Policy Framework and Industrial Policy Action Plan; • Assisting the dti in further development of action plans; • Restructuring of operational divisions with an additional executive appointed to allow for more focus on industrial sectors (previously housed together with resources sectors) • Textiles and clothing now housed in a separate business unit to allow for greater focus on this industry; • Venture Capital business unit’s role changed to allow for direct early stage venture capital investments. • Regional Development: • Regional managers appointed in 7 provinces to allow for greater outreach and operational efficiency. • Job creation remained the most important targeted outcome in funding provided: • In line with government and ASGISA’s goals of halving unemployment by 2014; • Targeted jobs of 24 000 direct jobs to be created in South Africa.

5. Alice Kat Citrus 2007/08 Review (continued) • 10 month period up to end of January 2008 (net of cancellations): • R4.9 billion of IDC finance approved (2007: R3.9bn); • 120 approvals (2007: 170); • More than R20 billion total investment facilitated (2007: 10.0bn); • About 17 000 jobs expected to be created in South Africa (2007: 18 000); • 60% of number of approvals for SMEs (2007: 74%); • 70% of the number and 56% of the value of approvals for companies with more than 25% HDP shareholding (2007: 70% and 68% respectively). Note: Figures in brackets refer to the 10 month period up to end January 2007

6. 2007/08 Review (continued) Examples of some of the businesses supported: • Boat-building in the Western Cape • Commercial goat farming in the Northern Cape • Various mining projects in North West • Biomass fuel in Mpumalanga • Fruit processing in Limpopo • Electricity production in KwaZulu-Natal • Aeronautical components in Gauteng • Cherry growing in the Free State • Hospital facilities in the Eastern Cape IDC Value of Approvals by Province (10 months to end Jan 2008)

7. Capital Allocation by SBU (2008/09) Plans for 2008/09 • Directing investment towards targeted sectors taking consideration of NIPF, IPAP, ASGISA, etc: • Allocated more than R8.0 billion for investment in 2008/09; • Focus on: • Strategic industries; • Services sectors; • Downstream beneficiation; • Job creating industries; • Export-oriented businesses. • Increase targeted direct job creation in South Africa from 24 500 to 29 200. • Roll-out of regional managers will improve IDC’s reach into all areas of the country.

8. Holiday Inn Soweto Plans for 2008/09 • Continuing implementation of initiatives to improve efficiencies and enable the corporation to have a larger impact. • Develop an approach to the broader renewable energy industry, cleaner technologies, as well as other environmental initiatives. • Fully implement B-BBEE Codes of Good Practice throughout IDC’s operations. • Communication priorities: • Increase awareness of IDC’s role as a DFI in industrial & entrepreneurship development; • Differentiate the IDC from commercial banks and other funding institutions; • Build awareness for the regional offices among key stakeholders.

9. Amka Cosmetics Highlighted Focus Areas from Sectoral Development Strategies • Agriculture and Food • Biofuels • Cassava starch • Rooibos & Honeybush • Mining and Beneficiation • Diamond cutting and polishing • Jewellery • Steel manufacturing • Clothing and Textiles • Technical/industrial textiles • Raw wool • Mohair • Forestry, Wood and Paper • Afforestation • Furniture • Biomass renewable energy • Chemicals and Non-Metallic Minerals • Oil, gas and refining • Cement manufacturing • Plastics manufacturing • Metal Products • Aerospace • Motor vehicle components • Boat and yacht building • Infrastructure • Independent power producers • Nuclear energy • Mass transport infrastructure • Telecommunications infrastructure • Franchising • New franchise concepts • IT and communications • Business process outsourcing • Electronics • Healthcare • Pharmaceuticals • Telemedicine • Media • Animation studios • Low-budget motion pictures • Tourism • Arts and crafts • Business tourism • Other services • Maritime transport • Small and micro-finance

10. Project Lion - Merafe Regional Development • Regional offices to be established in Northern Cape, North West, Free State, Limpopo and Mpumalanga to complement offices in Gauteng, Western Cape, Eastern Cape and KwaZulu Natal. • Regional offices will have a more operational focus compared to the current marketing role: • Develop regional development strategies for IDC; • Assistance to clients in applying for IDC finance; • Coordinate pre- and post-investment support for clients. • Plan to establish 4 more development agencies, 2 of these being based in urban township areas.

11. IDC Interventions in Support of Apex Priorities Industry Policy Action Plans Energy security and ICT interventions Land and agrarian reform War on Poverty and second economy interventions Industry Policy Action Plans • Assist the dti in the finalisation of Industrial Policy Action Plans: • Identifying critical areas for intervention; • Identifying potential industry support measures; • Quantitative impact analysis of proposed incentives. • Contribute directly to the effective implementation of industry-specific action plans by: • Identifying and pursuing business opportunities that enhance cluster/sector/industry dynamics: • Industrial capacity expansion and diversification; • Downstream development, focusing on value-adding beneficiation; • Unlock upstream (resource) potential; • Enhance industrial competitiveness, to expand and diversify export sector and promote import replacement; • Potential for the adoption of cleaner technologies and recycling processes. • Where applicable, designing complementary IDC funding schemes in support of IPAP; • Maximising developmental impact of IDC interventions.

12. IDC’s Interventions in Support of Apex Priorities Industry Policy Action Plans Energy security and ICT interventions Land and agrarian reform War on Poverty and second economy interventions Energy security • Finance sustainable co-generation projects: • Enable sustained investment and security of supply in the long term; • Design scheme to address market gaps, particularly smaller projects; • Collaboration with Eskom re. technical evaluation of preferred bidders. • Catalyst for the use of alternative technologies (e.g. biomass and other renewable sources). • Support nuclear energy projects (e.g. PBMR, uranium beneficiation). ICT Interventions • Communications infrastructure financing (e.g. under-sea cable project, INFRACO).

13. IDC’s Interventions in Support of Apex Priorities Industry Policy Action Plans Energy security and ICT interventions Land and agrarian reform War on Poverty and second economy interventions Land reform support: • Collaborate with Dept of Land Affairs in developing new financial products to complement their new approach to post-settlement sustainability. • Development of large agro-industrial project establishment on, and procuring from communal or restituted land. • Support the Land Bank. Agrarian reform initiatives: • Continued support for high value, labour intensive horticultural sector. • Emerging farmer support through wholesale arrangements with commercial banks. • Implement biofuels projects as per approved Policy. • Commercialisation of the goat industry in Northern Cape. • Development of funding products for cooperatives. Other war on poverty/second economy interventions: • Support the establishment of micro-enterprises through participation in a micro-financing (entrepreneurial) venture. • Implementation phase of several Development Agencies and progress on others. • Identification of opportunities through regional offices. • Support for emerging entrepreneurs through pre- and post investment business support. • Rural tourism interventions (e.g. crafts, agro-tourism).

14. Thank You Industrial Development Corporation 19 Fredman Drive, Sandown PO Box 784055, Sandton, 2146 South Africa Telephone (011) 269 3000 Facsimile (011) 269 2116 E-mail callcentre@idc.co.za