SMME FAIR BEE CONFERENCE Pat Moodley Regional Manager – KwaZulu Natal

1. SMME FAIR BEE CONFERENCEPat MoodleyRegional Manager – KwaZulu Natal

2. The IDC: Corporate profile • Established in 1940, the IDC is a self -financing, State-owned development finance institution • The vision of the IDC is to be the primary source of commercially sustainable industrial development and innovation to the benefit of South Africa and the rest of the African continent • Provides financing to entrepreneurs engaged in competitive industries and enterprises based on sound business principles • Pays income tax at corporate rates and dividendsto the shareholder The IDC’s Head Office in Sandton (Johannesburg) • Aims to maximise developmental and financial returns within an acceptable risk profile

3. INDUSTRIAL DEVELOPMENT CORPORATIONYour partner in development finance 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 Local beneficiation Growing export sector

4. Financial instruments • IDC offers a wide array of financial instruments, including : • Equity • Quasi-equity • Commercial debt • Wholesale & bridging finance • Share warehousing • Guarantees • Export/import finance • Short-term trade finance • Venture capital • These may be provided singly or in combination Flexible deal structuring

5. Financingcriteria • Financial assistance is provided for the development of new projects, expansions or rehabilitation of existing projects • Projects must exhibit economic merit (i.e. profitable) • IDC finances fixed assets and fixed portion of growth in working capital requirements • Reasonable contribution expected from promoter/s • R1 million minimum • Security • Environmental compliance

6. Funding Broad-based BEE • IDC, as a major South African DFI, remains fundamental to the national agenda to realise BBBEE objectives • IDC has developed critical skills and experience in financing BBBEE • To augment these BBBEE objectives and remain a significant player in BBBEE funding, job creation and BBBEE remain the overarching factors in all our funding activities: • -facilitate ownership of businesses • - ensure transfer of skills to enhance management capacity and entrepreneurship • - advancement of HDSA employees (share and/or profit participation) • - employment equity • - procurement policies • -women advancement in business

7. Job creation potential according to enterprise size - - 7 7 7 6 6 6 5 5 5 4 4 4 Number of jobs / R1 mill output 3 3 3 2 2 2 1 1 1 0 0 0 Large Large Large Medium Medium Medium Small Small Small Micro Micro Micro Manufacturing enterprises enterprises enterprises enterprises enterprises enterprises enterprises enterprises enterprises enterprises enterprises enterprises average average (R13 m (R13 m (R13 m - - - R51 m) R51 m) R51 m) (R5 m (R5 m (R5 m - - - R13 m) R13 m) R13 m) (Sales < R5 m) (Sales < R5 m) (Sales < R5 m) (Sales > R51 m) (Sales > R51 m) (Sales > R51 m) Source: Stats SA SME development SME definition • IDC’s focus is on small- to medium-sized enterprises • A business is classified as small or medium enterprise (SME) if it fits (excluding the micro enterprise segment) any two of the following criteria: • Less than 200 employees • Turnover of less than R35 million • Less than R40 million in total assets

8. SME development (cont.) • Business support to SME sector: • Providing greater pre-investment support for high potential / high impact investments • Closer monitoring of clients • Providing technical support post-investment • Focused training to meet needs of specific entrepreneurs • Providing generic training and systems to support new entrepreneurs • Encouraging the development of women entrepreneurs • Encouraging the development of disabled entrepreneurs

9. Approach to provincial & local development • Unlocking investment potential to address inequitable regional socio-economic development • Exploiting comparative advantage in sectors • Addressing market gaps • IDC in discussion with provincial development corporations to address capacity building • Capacity building for third-tier government through development agencies: serve as a support and resource facility to fulfill IDC’s developmental role through the establishment of agencies (particularly in rural areas) Development agencies Approved agencies

10. New sectoral involvement • 1997 • Agriculture • Mining • Manufacturing • Property • Now • Agriculture • Mining • Traditional Manufacturing • Services - related • energy • tourism • IT • telecoms • motion pictures • healthcare & education • transport & storage • venture capital • International Finance • franchising • financial services • construction • 2010 • Other • public private partnerships • development agencies

11. Way forward Going forward, the IDC will focus on the following developmental areas, in pursuit of South Africa’s socio-economic objectives: • Targeting sectors that have strong growth and development potential • Financing viable and sustainable projects • Focusing on previously neglected areas • Placing emphasis on job creation • Promoting SME development and BEE • Engaging in creative investments that empower rural communities • Consulting and collaborating with provincial governments and other key role players • Your partner in development finance !

12. Thank you 199 Anton Lembede Street,Embassy Building, Office 2305,Durban Tel : (031) 337 4455