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Taking Leadership in Development - 2006/07

Taking Leadership in Development - 2006/07. Mr. Geoffrey Qhena Chief Executive Officer The Industrial Development Corporation of South Africa 10 March 2005. IDC’s Role. To support sustainable development, IDC invests in businesses showing economic merit;

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Taking Leadership in Development - 2006/07

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  1. Taking Leadership in Development - 2006/07 Mr. Geoffrey Qhena Chief Executive Officer The Industrial Development Corporation of South Africa 10 March 2005

  2. IDC’s Role • To support sustainable development, IDC invests in businesses showing economic merit; • Some businesses which may be viable are often not funded by commercial banks 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; • Supporting industrial policy development; • Sectoral strategy development and implementation • Downstream beneficiation • Cooperates with national and provincial government, DFIs, and other COTII institutions;

  3. IDC’s Objectives • IDC addresses South Africa’s social and economical development needs: • Regional • BEE • Exports • Etc. • Overarching objective of job creation; • Provide a path for people to move from the 2nd to the 1st economy; • Support industrial development in the rest of Africa.

  4. 2005/06 Review • Re-emphasised its overarching objective as job creation • In line with government and ASGISA’s goals of halving unemployment by 2014; • Indications are that approvals have the ability to create the 19 000 targeted direct jobs in SA • Target was significantly higher than that achieved in previous years; • Renewed focus on job creating investments; • Development of entrepreneurs; • Achieving these goals while remaining financially sustainable

  5. 2005/06 Review (continued) • Shift of emphasis from acquisitions to assisting BEE entrepreneurs to expand or start new businesses; • Ongoing involvement in PBMR and Coega anchor project; • Increasing attention on downstream beneficiation; • Continuing involvement in the film industry – resulting in critical acclaim for “Tsotsi”

  6. 2005/06 Review (continued) • 9 Months up to December 2005 (Gross values) • More than 140 approvals (R2.8 billion of IDC finance); • More than R13 billion total investment facilitated (total value of projects); • 19 000 jobs expected to be created through the approvals (70 000 including indirect jobs*); • 75% of number of approvals for SMEs; • 66% of the number and 46% of the value of approvals for companies with more than 25% HDP shareholding; • 56% of approvals have more than 50% HDP participation at senior management level. * Estimate based on economic multipliers

  7. 2005/06 Review (continued) South African Job Creation by Province • Some examples of businesses supported: • Stainless steel precision strip mill in the Eastern Cape; • Pharmaceutical manufacturing in the Free State; • Alliance with commercial bank to enable HDP contractors entry into goods transport sector; • Tourism and forestry related businesses in Limpopo; • Platinum and coal mining in Mpumalanga; • Chrome mining and non-metallic mineral products in North West; • Tourism and fruit production in the Western Cape; • Wholesale finance to financial institutions in Kenya and ECOWAS for on-lending to smaller companies.

  8. Competitive Financing for Development • Launched R 1 billion fund providing financing for 5 schemes: • Pro SME Jobs Scheme; • Pro BEE Expansionary acquisitions scheme; • Pro Franchise Scheme; • Pro Forestry Scheme; • Pro Orchards Scheme; • Loans priced at up to prime less 5%; • More than 60 applications received under the schemes; • R100 million approved, to create more than 2 600 direct jobs; • Fund expires December 2006.

  9. THE NGUNI CATTLE PROJECT • Aims • To assist in transforming traditional community farmers into recognizable breeders of Nguni cattle • To assist in transforming communities into sustainable commercial farming units • To assist communal farmers to enter global market • To improve household income in communities • Status • Initiated in the Eastern Cape with University of Fort Hare • Launched in North West and Limpopo Provinces • Launching in Free State and Northern Cape Provinces • Discussions in KwaZulu Natal Province

  10. Local Development Agencies • Aims: • Accelerate and equitably distribute economic development • Assist local and regional economies to achieve their full potential • Locally driven entities that identify and harness resources and opportunities • Focus on poor, rural communities or areas with high developmental opportunities and under-utilised assets • Programme includes : • Grant funding to municipalities under managed conditions • Capacity building and training for agencies and staff • Monitoring and evaluation • Research and best practice • Aftercare • Status: • 19 agencies financed; R25 million dispersed • Agencies distributed throughout country (7 in Eastern Cape, 1 Northern Cape, 1 Gauteng, 3 in KwaZulu-Natal, 2 in Western Cape, 1 in Free State, 1 in Mpumalanga, 2 in Limpopo, 1 in North West)

  11. Inputs to Government Initiatives • ASGISA – inputs into: • List of special provincial infrastructure projects (Deputy Presidency) • Impact of public sector CAPEX programme (DPE) • Downstream beneficiation strategy (DTI) • Compiling database of capital projects (DTI, DPE, National Treasury, Mintek) • Inputs into industrial policy development & sectoral strategies (DTI) • Assisting Market Access Unit of DTI • Steel supply chain evaluation (DPE) • Sectoral prospects publication (DTI, TIPS) • Administration of SPII, FRIDGE

  12. Cooperation With Other Entities • Other DFIs and COTII institutions • Lesotho National Development Corporation • Tshumisano Technology Support Programme • Ithala • MEGA • Free State Provincial Government • Mpumalanga Provincial Government • North West Government

  13. Plans for 2006/07 • Increase targeted direct job creation in South Africa from 19 000 to more than 21 000 • Allocated more than R6.2 billion for investment next year (IDC generated funds) • SHIP • Strategic High Impact Projects • Roadshows to be held this year: • Northern Cape Provincial Government • Eastern Cape Provincial Government • KwaZulu Natal Provincial Government

  14. SME Support • Between 65% and 80% of the number of IDC’s approvals are to SMEs; • To provide finance to a wider range of SMEs (especially new entrepreneurs), some gaps need to be addressed: • Lack of skills • Lack of necessary support systems • Lack of access to financial institutions • IDC plans to address these issues through a range of initiatives: • Training for clients • Business support programmes • Expanding IDC’s reach through chambers of commerce, NGOs, etc. • To be achieved through partnerships

  15. Some Large Projects Under Development

  16. Thank you

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