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PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS ( NATIONAL COUNCIL OF PROVINCES). Lumkile Mondi Chief Economist and Head of Research and Information Industrial Development Corporation of South Africa. Corporate profile.

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presentation to the select committee on economic and foreign affairs national council of provinces

PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS (NATIONAL COUNCIL OF PROVINCES)

Lumkile Mondi

Chief Economist and Head of Research and Information

Industrial Development Corporation of South Africa

corporate profile
Corporate profile
  • Self-financing state-owned development finance institution(Act No 22 of 1940)
  • 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’s head office in Sandton, South Africa

vision and mission
Vision and mission

“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 South Africa and Africa
  • Economically empower the South African and African population
  • Promote entrepreneurship through the building of competitiveindustries and enterprises based on sound business principles
operational structure
Operational structure

CEO/President

Khaya Ngqula

Manager in the Office of the CEO

Mnathi Mcambi

COO

Kutoane Kutoane

Corporate Secretariat

Nomini Rapoo

14 strategic business units (SBUs), focussed on specific economic sectors

Projects

Jaco Kriek

Services Sectors

Gerrit van Wyk

Industrial Sectors

Raisibe Morathi

Internal Audit

Eva Sam

Professional

Services

Geoffrey Qhena

Legal Services & General Counsel

Tony Tshivhase

Finance and Funding

Gert Gouws

HR and Support Services

Lesé Matlhape

Marketing & Corporate Affairs

Neo Sowazi

Business Planning and Strategy

Riaan Joubert

Information Technology

Joel Mpshe

Project and Structured Finance

Stephan Vermaak

Corporate Finance

Joanne Coetzee

slide5

Total Staff Complement

As at 31 May 2003 470

1

9

31

93

186

150

President/CEO

EVP’s/COO/CFO

SBU/Dept Heads

SAM/SPM/Specialists

Professional

Administrative & Support

slide6

Staff Composition : Male

May 2002 (Total Male 240)

May 2003 (Total Male 258)

slide7

Staff Composition : Female

May 2002 (Total Female 194)

May 2003 (Total Female 212)

slide8

Employee Age Profile

(48%)

(25%)

Number of staff

(18%)

(8%)

(1%)

Age

Average age : 38

core strategies
Core strategies

Provide risk

capital to a wide

range of

industrial

projects

Identify and

support

opportunities

not addressed

by market

Maintain

financial

independence

Establish local

and global

partnerships

in projects

benefiting

SA or Africa

Build on and

invest in

human capital

financial instruments
Financial instruments
  • Equity
  • Quasi-equity
  • Commercial debt
  • Wholesale & bridging finance
  • Share warehousing
  • Guarantees
  • Export/import finance
  • Short-term trade finance
  • Wholesale venture capital

Flexible Deal Structuring

the financing process
The financing process

Initial Screening

Basic Assessment

Term Sheet

Due-diligence

Decision-making

Legal Agreements

Disbursements

Post investment

management

the investment cycle

One Finance Entity

After-care

Business unit

investment

Divestment

(Debt repayment/ exit)

Funding

IDC

Interest / Dividends

  • Balance sheet
  • Borrowings
  • Mature investments
  • Development funds

Capital repayments (debt)

Proceeds from exit (equity)

The investment cycle
sectoral focus
Sectoral focus

Projects

Division

Oil, Gas & Related

Products

Oil, gas and upstream chemicals

Food, Beverages and

Agro-industries

Agriculture, food, beverage and marine sectors

Resources and

Beneficiation

Mining, minerals and metals

Private and Public

Partnerships

Private sector participants in e-government, energy, privatisation initiatives, transportation and IT and telecommunications

sectoral focus continued
Sectoral focus (continued)

Industrial Services

Division

Chemicals and Allied

Industries

Chemicals, rubber and plastics, non-metallic mineral products, textiles, clothing, leather, footwear

Basic iron and steel, casting/foundries, structural and other fabricated metals, machinery, motor vehicles, parts and accessories, and other transport equipment

Metal Based Products

Wood, Paper & Other

Forestry, logging, sawmilling and articles of wood, furniture, pulp and paper, articles of paper or paperboard and other manufacturing

Entrepreneurial Mining

and Jewellery

Junior mining, mining related activities, acquistions of mining assets by HDPs and jewellery

sectoral focus continued1
Sectoral focus (continued)

Services Sectors

Division

Hotels, guest houses and lodges, cultural villages, conference and convention centres; leisure and entertainment facilities and other unique tourism projects.

Tourism

Publishing of books, brochures, newspapers, journals, recorded printing of published materials, reproduction of printed materials and recorded media, films and video recordings, feature films, documentaries and television series

Media & Motion Pictures

Techno Industries

Information technology, telecommunications, electronics and electrical industries

Wholesale funding to intermediaries, who manage and administer finance on behalf of the IDC, on-lending to individual entrepreneurs

Wholesale & Bridging

Finance

Various venture capital funds focussed on technology, biotechnology, mining and empowerment

Wholesale Venture

Capital

Facilitation and funding of health, education and empowerment

Health and Education

empowerment strategy
Empowerment strategy

IDC (BEE) process of support through:

  • The continuation, implementation and procurement of
  • outsourcing policies and programs that encourage
  • the economicempowerment of the historically
  • disadvantaged people (HDP), emerging businesses
  • and entrepreneurs; and
  • Encouraging the entry of black empowerment
  • entrepreneurs into the new sectors of the economy
  • as well as the traditional industries and sectors
  • where entry barriers are noticeably high.
procurement from hdps
Procurement from HDPs

2002/03 Target:

Procure at least 55% of goods and services from companies with HDP ownership of more than 25%

2002/03 Achievement:

Procured R58.3 million (58%) from empowerment companies

2003/04 Target:

Procure at least 55% of goods and services from companies with HDP ownership of more than 25% and 30% from companies with HDP ownership of more than 50%

empowerment strategy1
Empowerment strategy

BEE funding is guided by the following imperatives :

  • Creation of ownership of businesses for HDP’s;
  • Management capacity and entrepreneurship through transfer of skills;
  • Advancement of HDP employees through share and/or profit participation; and
  • Adherence to the national BEE agenda affirmative action and procurement policies
empowerment strategy2
Empowerment strategy
  • Financed 625 (cumulative) black entrepreneurs
  • Approved R 5.6 bn (cumulative) to BEE
  • Increased BEE approvals from 3 entrepreneurs to 191 p.a
  • Increased value of approvals from R 61 000
financial track record

Income

2 000

1 500

1 000

R million

500

0

-500

98

99

00

01

02

Net attributable income

Operating income

Capital and Reserves

30

25

20

R billion

15

10

5

0

98

99

00

01

02

Capital and Reserves

Financial track record
  • 2001/2002 produced a record net attributable income of R 1.8 billion;
  • Balance sheet remains strong. Capital and reserves grew at an average rate of 18% per annum over the past five years to reach R 26.4 billion at the end of the 2001/2002 financial year.
developmental track record

Number and Value of

IDC Approvals

600

8

7

500

6

400

5

Number

Value (Rbn)

300

4

3

200

2

100

1

0

0

98

99

00

01

02

Number

Value

Jobs Created

30 000

25 000

20 000

Number

15 000

10 000

5 000

0

98

99

00

01

02

Direct Jobs Created

Developmental track record
  • In 2001/2002:
  • the IDC approved finance to the value of R 4.9 billion, representing 6.9% of private sector fixed investment in South Africa;
  • Assisted more than 500 entrepreneurs;
  • Finance to empowerment firms represented 37% of the number and 42% of the value of approvals;
  • IDC’s finance will create more than 23 000 new job opportunities.
nepad

Fully committed to the New Partnership for Africa’s Development (NEPAD)

Identifies sound investment opportunities

Assists in the financing of exports of SA capital goods & services

Provides consultancy services

NEPAD

A catalyst & partner for investments in productive capacity throughout Africa

nepad1
NEPAD
  • Sugar
  • Mining
  • Mining
  • Fishing
  • Energy
  • Pharmaceuticals
  • Mining
  • IT
  • Mining
  • Tourism
  • Pharmaceuticals
  • Energy
  • Mining
  • Telecoms
  • Petroleum
  • Tourism
  • Tourism
  • Tea
  • Coal
  • Tourism
  • Mining
  • Energy
  • Aluminium
  • Titanium
  • Cotton
  • Sugar
  • Aquaculture
  • Hotel
  • Mining
  • Horticulture
  • Tourism
  • IT
  • Table grapes
  • Mining
  • Food processing
  • Energy
  • Tourism
  • Aquaculture
  • Telecommunications
  • Wattle
  • Distillery
  • Frozen foods
  • Mining

Includes projects implemented, under implementations and under consideration

prospects for the future
Prospects for the future
  • Greater involvement in social services sectors such as healthcare and education;
  • Targeting poor provinces
  • Play a leading role in facilitating broad based empowerment;
  • Entrench IDC’s financial sustainability through improved internal systems;
  • Improved outward communication regarding IDC’s developmental role; and
  • Increased human resource development within the IDC to ensure continuation of the high levels of professionalism within the corporation.