The IDCThe IDC

Loyiso Jiya

Chief EconomistIndustrial Development Corporation of South Africa Ltd

7 May 2002

IDC - Corporate Profile ...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 OfficeSandton

Vision ...Vision ...

“To be the primary driving force of commercially sustainable industrial

development and innovation to the benefit of South and

southern Africa”

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

Mission ...Mission ...

Core Strategies ...Core Strategies ...

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 SA’s society

4

IDC’s Financial Results ...IDC’s Financial Results ...

Ranked 29th in South Africa’s “Giants League” i.t.o. assets Ranked 29th in South Africa’s “Giants League” i.t.o. assets

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

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

Financial year 2000/2001

Financially strong Assets = R30 billion Net income after tax and

capital profits = - R 258 million

Capital and reserves

0

5000

10000

15000

20000

25000

1997 1998 1999 2000 2001

Financial year (1 jul to 30th June)

R m

illio

n

IDC’s Development Impact ...IDC’s Development Impact ...

• Assisted 2 109 industrialists

• Generated over US$3.2 bn in additional annual export earnings

• Empowered the historically disadvantaged (31% of number of approvals in 2001)

• Facilitated development in rural areas (agro-industries, SDI’s)

• Created 89 000 additional jobs

• Contributed 10% to manufacturing investment in productive capacity

Investments facilitated over the past 6 years:

14 strategic business units (SBUs), each focussed on specific

economic sectors

CEO / CEO / PresidentPresident

Khaya Ngqula

HR and HR and Corporate Corporate Support Support ServicesServices

Lesé Matlhape

21 departments are tasked with providing the necessary operational services to the SBUs

Marketing & Marketing & Corporate Corporate AffairsAffairs

Neo Sowazi

ProjectsProjects

Jaco Kriek

SectorsSectors

Andile Reve

ProfessionalProfessionalServicesServices

Geoffrey Qhena

Finance and Finance and FundingFunding

Gert Gouws

SectorsSectors

Raisibe Morathi

IDC’s Operational Structure ...IDC’s Operational Structure ...

Role of the Sectors Division ...Role of the Sectors Division ...

• Sectoral focus and specialisation

• Facilitate in sectoral development on a broad front ...

• through the use of IDC’s basket of financial instruments

• through the participation in development initiatives within sectors

ProfessionalProfessionalServicesServices

Geoffrey Qhena

Financial andFunding

Financial andFunding

Gert Gouws

HR, IT, Admin

Lesé Matlhape

CEO / PresidentKhaya Ngqula

Sectors

Andile Reve

Projects

Jaco Kriek

Service sectors

Raisibe Morathi

Metal- Based Metal- Based ProductsProducts

Jan Weys

ChemicalsChemicals

William Smith

Wood Paper, Wood Paper, OtherOther

Dean Webster

TextilesTextiles

Willie Fourie

Agro-Agro-ProcessingProcessing

Shakeel Meer

TourismTourism

Ben Nkosi

EmpowermentEmpowerment

Sonja Loggenburg

Entrepreneurial Entrepreneurial Mining & Mining &

BeneficiationBeneficiationMuvhango

Netshitangani

Techno-Techno-industriesindustries

Gerrit van Wyk

Wholesale, Wholesale, Guarantees, Gov. Guarantees, Gov.

TendersTendersTrevor Mashabane

Executive- SectorsExecutive- Sectors

Andile Reve

Executive- Service Executive- Service SectorsSectors

Raisibe Morathi

Sectoral Business Units…Sectoral Business Units…

IDC’s Focus AreasIDC’s 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

Financial Products ...Financial Products ...

Equity

Quasi-equity

Commercial loans

Wholesale finance

Share warehousing

Guarantees

Equity

Quasi-equity

Commercial loans

Wholesale finance

Share warehousing

Guarantees

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

Financing Criteria ...Financing Criteria ...

IDC Financing by Sector Business UnitApprovals: July 1997 to June 2001

Sectoral Exposure ...Sectoral Exposure ...

0 5 10 15 20 25 30 35 40

Agri-projects

Wholesale & Bridging Finance

Techno-industries

Entrepreneurial Mining & Beneficiation

Mining, Mineral & Energy Projects

Textiles, Clothing & Leather

Metal Based Products

Tourism

Chemicals, Rubber & Plastics

Agro-industries

Wood, Paper & Other

Empowerment

International Finance

Large Beneficiation Projects

% of total number approved

% of total value approved

Source: IDC

Empowerment Financing ...Empowerment Financing ...

Credit facilities for delivery on government

contracts

Wholesale financing

Warehousing of shares

Take-overs and acquisitions

Loan finance

Approvals to Empowerment (% of total No)

9%

14%

19%

27%

31%

0%

5%

10%

15%

20%

25%

30%

35%

1997 1998 1999 2000 2001

Financial year (1 jul to 30th June)

SME Financing ...SME Financing ...

• SME financing’s 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 SME’s, creating more than 54 538 jobs and generating export earning in excess of R10.2 bn

SMEs as % of total IDC approvals(value)

67.2

42.3

25.3

8.7

36.6

10.9

0

10

20

30

40

50

60

70

95/95 96/97 97/98 98/99 99/00 00/01

% SMEs

CEO / CEO / PresidentPresident

Khaya Ngqula

HR and HR and Corporate Corporate Support Support ServicesServices

Lesé Matlhape

Marketing & Marketing & Corporate Corporate AffairsAffairs

Neo Sowazi

ProjectsProjects

Jaco Kriek

SectorsSectors

Andile Reve

ProfessionalProfessionalServicesServices

Geoffrey Qhena

Finance and Finance and FundingFunding

Gert Gouws

SectorsSectors

Raisibe Morathi

• Focus on larger projects

• Prefer infant developments with regard to products and/or technologies

• Projects that require more active involvement from IDC

• Involved in all the stages of project development

• Focus on maximum development impact

Projects within the IDC ...Projects within the IDC ...

Units within Projects ...Units within Projects ...

ProjectsProjects

Jaco Kriek

Large Beneficiation

Carlos Galego

Minerals, Mining & Energy

Sipho Mkhize

Agri-Projects

Guy Clarke

Public Private Partnership

Monwabisi Manjezi

IDC’s Role in Projects ...IDC’s 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

IDC’s involvement in the rest of Africa ...IDC’s involvement in the rest of Africa ...

Promoting Investment in Africa ...

By providing consultancy services

By supporting development initiatives such as SDIs

By assisting in the financing of imports of South African capital goods & services

By identifying sound investment opportunities

By acting as a catalyst for investments in productive capacity

IDC’s involvement in the rest of Africa ...IDC’s involvement in the rest of Africa ...

Hydro power

Manufacturing

Mining

Phamaceuticals

Prawns

Hotels

Mining

Shoping Mall

Tea

Aluminium

Brewery

Cashews

Cotton

Heavy Minerals

Prawns

Sesame seeds

Sugar

Timber

Tourism

Sugar

TourismMiningDistillery

Tanning

Telcoms

Horticulture

Manufacturing

Parkade

Mining

Grape fruit

Manufacturing

Mining & Mineral beneficiation

Shopping Mall

Hotels

Port ExpansionHorti and Floriculture

Mining

Tourism

Current & potential Africa (excl. SA) projects ...

International Finance ...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

Concluding Remarks ...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!

www.idc.co.za

Together we can turn big ideas into big business