SMME FAIR BEE CONFERENCE
Pat Moodley
Regional Manager – KwaZulu Natal
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
dividends to the shareholder
• Aims to maximise developmental and financial
returns within an acceptable risk profile
The IDC’s Head Office in Sandton (Johannesburg)
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.
Outcomes
Objectives
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”
Mission
INDUSTRIAL DEVELOPMENT CORPORATION
Your partner in development finance
Supporting industrial development capacity
Promoting entrepreneurship
Sustainable employment
Growing sectoral diversity
Regional equity
Growing SME sector
Industrialisation in the rest of Africa
Broad-based black economic empowerment
Environmentally sustainable growth
New entrepreneurs entering the economy
Local beneficiation
Growing export sector
Financial instruments
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IDC offers a wide array of financial
instruments, including :
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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
Financing criteria
• 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
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:
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facilitate ownership of businesses
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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
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SME development
SME definition
Job creation potential according to enterprise
size
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• IDC’s focus is on small- to medium-sized
• 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
Number of jobs / R1 mill output
enterprises
7
6
5
4
3
2
1
0
Large
enterprises
Medium
enterprises
Small
enterprises
Micro
Manufacturing
enterprises
average
(Sales > R51 m)
(R13 m-R51 m)
(R5 m-R13 m)
(Sales < R5 m)
Source: Stats SA
SME development (cont.)
Business support to SME sector:
•
Providing greater pre-investment support
for high potential / high impact investments
•
Closer monitoring of clients
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Providing technical support postinvestment
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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
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
A pplications receiv ed
and assessed
New sectoral involvement
1997
Now
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Agriculture
Mining
Manufacturing
Property
Agriculture
Mining
Traditional Manufacturing
Services - related
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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
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 !
Thank you
199 Anton Lembede Street,Embassy Building,
Office 2305,Durban
Tel : (031) 337 4455