Industrial Development Corporation
Portfolio Committee on Economic Development
Briefing on IDC’s Investment
Strategy
Leading
Industrial Capacity Development
2 June 2015
South Africa’s investment needs and challenges
2
SA fixed investment trends
• Private sector fixed investment has been fairly modest in recent years, investment in the
manufacturing sector almost unchanged over the period 2012 to 2014.
• A substantial rise in fixed investment spending by public corporations since the early 2000s as
Eskom and Transnet embarked on a massive drive to expand and improve the energy and
transport infrastructure networks.
• As some of the major projects near completion, the level of investment spending started to taper
off in more recent years.
• Investment spending by general government
gained momentum through the roll-out of much
need basic infrastructure.
• The following factors are among those impacting
on investment spending by the public sector:
– More limited fiscal space due to substantial
budget deficits and rising public sector debt;
– Cost of funding on the rise;
– Certain SOEs finding it
difficult to raise sufficient capital for their
investment plans.
3
Alignment of IDC’s investment approach to national strategies
4
Specific industry factors drive IDC planning for
investment in certain industries at the micro level
New Growth Path (Jobs drivers: Infrastructure, Agricultural value chain, Mining and beneficiation,
Manufacturing sectors, Tourism and high-level
services, Green economy, Knowledge economy, Social economy, African regional development)
IDC sector development
strategies (taking into account IDC’s
Priority sectors
identified in
industrial policy
ability to make a significant impact,
constraints needing to be unblocked,
opportunities in the industry etc.)
Projects being developed by IDC
Potential new
industries for
development not
covered in
industrial policy
Expectations for levels of
applications for funding from
entrepreneurs
Attractiveness of industry (job
creation ability, other development
outcomes risk, financial returns)
Other considerations
(economic conditions, typical
size of businesses in industry,
etc.)
IDC Investment
budgets per
industry
Potential to address development outcomes
Primary: Facilitate sustainable direct and indirect employment
Secondary:
• Improving regional equity, including the development of South
African rural areas, township economies, underdeveloped
provinces and industrialisation in the rest of Africa;
• Promoting entrepreneurial development and growing the SME
sector
• Transformational impact on communities and growing black
industrialists
• Environmentally sustainable growth
• Growing sectoral diversity and increased localisation of
production
5
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
IDC’s priorities are guided by relevant Government
policies
National Development Plan
National Infrastructure Plan
New Growth Path
National Industrial Policy Framework/
Industrial Policy Action Plan
+ others such as B-BBEE, mineral
development, tourism etc.
Agricultural Policy
Action Plan
Industry involvement
Industries covered by IDC investment as
well as the development outcomes to be
pursued in individual investments are
guided by government priorities.
Priority development
outcomes
6
Funding activity over 20 years of democracy
16
14
• Saldanha Steel
• Hulamin expansion
14
• Platmin
12
R billion
10
10
• Mozal
8
• Mozal II
8
6
6
4
4
2
2
0
-2
0
Value of IDC SA approvals (R billion in current prices)
Value of IDC total approvals (R billion in current prices)
SA real GDP growth (% change)
Financial year
-2
RDP
National
Policies
Percentage
12
• Ohrongo
Cement
16
• REIPPPP
• Scaw
NIPF & IPAP (revolving iterations)
ASGISA
GEAR
NGP
NIP
NDP
APAP
IDC
Strategies
Strategy for Growth
Leadership in Development
Leadership in
Industrial
Development
7
4
2
0
Alignment of historical funding approvals with
sector priorities
Sectoral distribution of South African
funding approvals
Funding to the manufacturing sector
(Avg. per year, 2014 prices)
(2005 to 2014)
1414
Food and beverages
R'bn
R'bn
88
4
2
R488m
Other services
1010
8
6
Clothing, textiles, leather and footwear
1212
R738m
R241m
Finance and
business services
R288m
Transport, storage
and communication
R2 718m
Wood products, pulp and paper
Chemicals, rubber and plastics and nonmetallic minerals
Basic metals
Fabricated metals and machinery
Trade and
accommodation
Transport equipment
R781m
66
44
R1 124m
R823m
R266m
R459m
R2 491m
Other manufacturing
Construction
R4 696m
Electricity, gas and
water supply
--
R2 988m
R404m
5%
10%
15%
20%
% of funding to manufacturing
25%
Manufacturing
22
R964m
0%
Mining and quarrying
Agriculture, forestry and fishing
2005 2005
to2005
2009
2009
toto2009
R529m
2010 2010
to2010
2014
2014
toto2014
• The revitalisation of the Industrial Policy Action
Plan in 2010 and the introduction of the New
Growth Path and National Development Plan in
2011 and 2013 saw increased direction in IDC
funding to priority industrial sectors.
8
Key differences between IDC funding and that of
commercial funders
IDC
Risk assessment
• Based on expectations for the future of the business – i.e. business
plan
• Strong security not basis for support (in the absence of future
viability, mandate fit etc.)
Products and structuring
• Repayment terms to suit the cash flow needs of the business.
• Moratoria on capital and interest repayments during construction
and early operations
Pricing
• Development impact taken into account along with cost of funding
and risk when determining pricing
• Subsidised schemes to achieve specific objectives
Post-investment
• Focusses on ensuring business sustainability in cases where the
business experiences difficulty
Stage of investment
• Invests in early stage projects, rapidly expanding and
developed/mature businesses including funding for distressed
businesses
Commercial funders
Risk assessment
• Based on historical performance of business
• Strong security basis for support
Products and structuring
• Long-term funding generally not covered
• Reduced equity instruments
Pricing
• Pricing based on risk and target returns
Post-investment
• Focussed on ensuring maximum recovery of funds
where business experiences difficulty
Stage of investment
• Prefer to get involved at a later stage when risks have
been identified and mitigated
9
Individual funding decisions
IDC Act: “that every application or proposal dealt with by it is considered strictly on its economic merits, irrespective of all
other considerations whatsoever”
Development return (as measured through Development Scorecard)
• Impact of funding through business entity
• Can be outcomes (jobs, rural development, black economic empowerment, etc.), and / or
• Development of new industries, strategic alignment, contribution towards industry development
goals etc.
• Where possible, IDC’s funding should be leveraged (syndication, other shareholder funds etc.)
Financial return
• Financial sustainability of business entity (measured through return on assets, return on equity)
• To IDC: debt and equity priced as per pricing model (deviations to be justified/motivated to
committee)
• Generally in projects IDC would negotiate equity right. In existing businesses, equity could be
proposed if the business is strategic for an industry that IDC wants to develop, if IDC plays a
catalytic role, to warehouse shares for BEE or for IDC to share in the future returns.
• Financial ratios – per broad sector; analysis across different ratios with mitigants where below
norms
• Own IDC equity generally have uncapped returns, with BEE funding returns mostly capped to
improve vesting.
• Decision based on future economic viability, not on strength of security
Approach
• Patient approach
– Long-term tenures
– Significant efforts made to restructure nonperforming clients where viability is evident
in the future
• Project development
– Project expenses impaired until project
completion/commissioning, then capitalised
– Generally, IDC seeks a technical/marketing
partner.
10
Challenges identified as part of Project Evolve
• Our investment portfolio needs to be focussed on those areas which
contribute to jobs rich industrialisation.
• We need to integrate developmental outcomes e.g. jobs, black industrialists
and community development into our funding operations.
• We know that our human resource capacity is vital and we need to it
competently to get the desired impact.
• We need to optimise our processes and systems to be efficient and effective
in our delivery.
With this we needed to change focus and prioritise and also be
clear on how we will implement this prioritisation.
11
IDC seeks to be at the centre of industrial capacity
development
Proactive industry developer
Govt.
Enabling
activity
Value
Chains
Producers
Industry
partners
Relevant
industry
body
Commercial banks
and other financial
institutions
RoA
To take greater leadership, forging strategic partnerships for developing the most important parts of the productive economy
To decide how to actively engage with other sectors of the economy to drive outcomes
12
Activities are focused on sectors where we can
achieve specific game changing impact
• Support expansion/ modernisation of operations in existing SA industries & across Africa
• Invest in growth sectors
• Assist in the financing of new industries
• Align with NDP, NGP and IPAP
Promote expansion and extension
of critical existing industries to
increase jobs and drive economic
growth
Support attractive and
high impact
opportunities outside
the Value chains
Build industries that
can become the basis
for future jobs-rich
industrialisation and
economic growth
Value chains
High Impact
New Industries
High Impact allows IDC to
fund high volume of
opportunities with minimal
effort, resulting in high
impact return on effort
New Industries are specific
sub-sectors which are based
on future trends and
innovation, and could develop
into significant opportunities
for SA
Value chains take advantage of economic
linkages and achieve the biggest overall return
on effort
Value chains should be based on sectors that
are large in terms of jobs and economic
importance, to serve as drivers of both shortand long-term job creation & growth
Industrial Infrastructure will be required to underpin the success of Value Chain New Industries activity
13
Investment budgets
Historical Approvals and Capital Allocated
Capital Allocation by SBU – 2014/15 to 2018/19
30
30 000
Historical actuals
25
Allocation - target
Estimate
25 000
Allocation - base
20 000
R'm
20
R'bn
Allocation - base
Allocation - target
15 000
15
10 000
10
5 000
0
5
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• IDC annual approvals over the past five years was 57% higher than the previous five years.
• Targeting to maintain and grow this to more than R100 billion over the next five years.
• Various interventions will be adopted to increase IDC’s pipeline and increase development impact, using the following
interventions:
14
Initiatives to increase industrialisation and development
impact
•
IDC's development initiatives are captured here and include:
•
Increase localisation through infrastructure development
•
Retail off take opportunities
•
IDC support for black industrialists
•
Support for companies in distress
•
African regional integration
•
South African spatial development
•
Development of new industries
15
Initiative 1: Localisation of infrastructure partnering with State Owned Companies
16
State Owned Companies and localisation
• In partnership with the PICC, the IDC has focused on three SOC’s (Prasa, Transnet and Eskom) which
form the bulk of the current infrastructure spend of the state. We have engaged with them on the
following areas:
Current spend
Analysis of current tenders and opportunities to support
localisation and constantly engaging with SOC’s
Future spend
Working with and assessing the SOC’s spend cycle to determine
opportunities for increasing local procurement
Black Industrialist opportunities
Analysing current and future spend to assist in the determination
of entry points for Black Industrialists in SOC supply chain
Future State Programmes
Providing early stage input in state programmes to influence their
localisation requirements (Coal RFP, Gas RFP and Nuclear
programme). For projects that are supported by IDC within these
programmes, IDC is setting higher thresholds for localisation and
BEE
17
Eskom has Identified 42 priority focus areas for
supplier development & localisation
• The IDC is working with Eskom’s Supplier Development and Localisation (SD&L) and Group Commodity
Sourcing Divisions to fast-track and promote localisation projects associated with Eskom’s capex and opex
spending, as well as linking opportunities to Black Industrialists
• A number of projects have been identified associated with generation (boiler and turbine systems), transmission
and distribution (transformers)
Component
Project Description
Boiler Tubes
Local manufacture of seamless boiler tubes
Transformers
Local manufacture of medium to high voltage transformers
Turbines
Local manufacture of turbine blades
Air Preheaters
Support the tier 2 and tier 3 components industry particularly
promoting the participation/formation of Black Industrialists
• Maintenance spending at Eskom is expected to progressively increase over the next decade, as many of Eskom plant
reaches end of life.
• Eskom is concerned by increasing costs of maintenance spending on imported items, and is therefore looking at the
establishment of a base of local industries to mitigate the exchange rate effect.
18
Transnet has identified 56 supplier development
opportunities within its rolling stock capex plan
• The IDC is working with Transnet’s Group Procurement to fast-track and promote rail and rolling stock localisation
projects associated with Transnet’s capex and opex spending
• Transnet has already issued the bulk of their rolling stock tenders to a number of companies. These companies
have made localisation commitments as part of the tender conditions
Component
Project Description
Train wheels
34” wheels
Bearings
Wheel bearings supply and refurbishment
Axles
Manufacturer of railway axles
Bogies
Manufacturer of bogies components
Coupling
Manufacturer of coupling systems
• The Localisation Unit is working with these companies to identify the support needed to fulfil their localisation
obligations
• This includes identifying opportunities for Black Industrialists in the Transnet supply chain
19
REIPPPP Rounds 1 to 3: IDC participation in support of
the development of a green industry
4%
SOLAR PV
IDC
10%
96%
• 33 Projects, 1484 MW
IDC
WIND
90%
Total Investment –
R42bn
CSP
IDC
Total bid
windows 1- 3
Investment
R117bn
Total Investment –
R41bn
HYDRO
IDC
22%
78%
• 22 Projects, 1984 MW
30%
70%
• 5 Projects, 400 MW
• 2 Projects, 14 MW
Total Investment –
R34bn
Total Investment R631m
20
IDC involvement in RE-related manufacturing
• The following projects are at various stages of the project pipeline, from those being built to those completed
and in production
Client Name
Technology
Value
(ZAR million)
Jobs
Capacity p.a.
144.5
191
120 MW
ILB Helios South Africa (Pty) Ltd
PV panels
Greenbro (Pty) Ltd
SWH geysers
4.3
24
n/a
Amisec (Pty) LTD ta Art Solar
PV panels
62.5
80
35 MW
LED Lighting South Africa
Energy eff. lighting
5.5
20
n/a
Hybrid Geyser
SWH geysers
8.2
27
1500 units
ILB Power Systems
PV inverters
20.0
37
60 MW
Eveready
Small wind towers
22.5
30
0.5 MW
Solaire Direct Technologies
PV panels
4.0
120
80 MW
DCD Wind Towers
Wind towers
14.1
203
110 units
21
Designated products offer an opportunity for
localisation and Black Industrialists
Recently announcements for new products being designated
• Construction materials
– Cement
– Fabricated structural steel
– Pipes and fittings
– Roofing materials
– Frames
– Sanitary ware
– Glass
Current Designated and Implemented Products
• Transformer components
• Conveyance pipes
• Renewable Energy manufacturers/assemblers are asking for
government intervention to ensure higher uptake of locally produced
components, possibly through designation.
Future potential
• RE components (solar and wind), power generation equipment (boiler
tubes, turbine blades, air heaters, isolators, heat exchangers etc.),
medical devices (syringes, scanners etc.), road studs, water and
sanitation (waste water pumps).
IDC is working with the dti on transformers, paint, flatboard, ceilings and partitioning, roof trusses and yellow metals. Yellow
metals have been accepted for designation by thedti based on a report by the Localisation Unit.
22
Localisation
SCAW Metals
Summary
• Scaw employs about 6 400 people, manufacturing grinding media, wire rod products, cast products, and rolled products. The
company’s products are important inputs into the construction, mining, power generation, rail and other sectors.
• IDC acquired Scaw from Anglo-American PLC in 2012 in pursuit of its strategy to intervene in the South African steel industry to
ensure competitively priced steel supplies to downstream industries to increase localisation.
• Scaw is well positioned to capture growth in the mining, railway and power generation sectors. It is the only producer of
locomotive frames in Southern Africa and one of a few in the world. IDC is currently involved in a process to modernise the
company.
Location
• Germiston, Gauteng with other parts of the group operating in Namibia, Zimbabwe, Zambia, Australia and Italy
IDC investment
• IDC’s exposure is R3.6 billion
Job creation
• No jobs were expected to be created immediately
when IDC acquired Scaw. There was a concern that
other bidders in the process would have dismantled
the plant and moved it offshore.
Ownership and BEE status
• 21% of the company is held by Main Street 510, a
BEE consortium. 5% of shares is held by an
employee share ownership plan, with the remaining
74% held by IDC.
Other impacts
• Localisation of inputs to infrastructure development.
Status
• Mature company
23
Women empowerment, localisation
Commuter Transport Engineering - CTE
Summary
• This company was established with a modest capital investment of R600 000 by Ms. Patricia Norris, a black woman and a loan
facility of R1.5 million from IDC in 2000.
• CTE has now grown into a formidable player in the Metrorail commuter coach rebuilding and refurbishment industry generating
record annual turnover levels, and providing employment to more than 1 000 people.
• With the IDC funding, the operations have expanded into KwaZulu-Natal and Gauteng.
• This company was the first and remains the only black woman wholly owned company to successfully contract with Passenger
Rail Agency of South Africa (PRASA) for the refurbishment of Metrorail coaches servicing the greater Cape Town Metropolitan.
• The Gauteng operations acquired from Union Carriage and Wagon was involved in the assembling of the Gautrain coaches and
manufacturing of over 1 000 electric/diesel locomotives for Transnet.
Location
• Touwsrivier, Western Cape
• Pietermaritzburg, Kwa-Zulu Natal
• Nigel, Gauteng
IDC investment
• Over the years the IDC has invested in various expansion programmes of the company totalling c.a. R350 million.
Job creation
• Collectively the CTE Group employs c.a. 900 people.
Ownership and BEE status
• This company was the first and still remains the only black
woman wholly owned company to successfully tender and be
awarded the coach refurbishment contract by PRASA.
Other impacts
• This investments facilitates increase localisation,
job creation, black empowerment.
24
Initiative 2: Retail off-take opportunities
25
Retail off-take opportunities (1)
The IDC has entered into preliminary discussions with various retailers for the local manufacturing of
the following:
• Solar Water Heaters in support of the government’s SWH rollout programme
• The Government has a target of rolling out 1 million solar water heaters.
• Solar water heaters are locally manufactured.
• Eco timber and furniture including those manufactured from invasive alien vegetation
• Whilst furniture is a growth area, there is a shortage of local manufacturers and designs and
innovation are poor. But these limitations can be addressed.
• The sector is labour intensive and would benefit from vertical integration.
• There is a gap in the market for outdoor patio furniture and work stations etc.
• There is a window that exists that makes local manufacture attractive - import duties, freight charges
and unfavourable exchange rate for importers.
• High demand for shutter ply used for foundations in the construction sector.
• Consumer electronics such as smart phones and EDTVs
• Significant opportunity exists for low cost smart phones.
• Africa is a continent with very high mobile phone penetration rates.
• Local manufacturers could potentially enter the cellphone market and would also be cost competitive.
26
Retail off-take opportunities (2)
• Fast Food Retailers:
• Potential to locally source furniture and interiors for food chains that have a presence outside of
South Africa and want to retain an authentic South African look-and-feel in their stores globally.
• A chain is planning to revamp all their stores with a new range of locally made furniture that
showcases South African talent and culture.
• The chain has already engaged designers of furniture and has prototypes ready.
• Agro-Processing
• Opportunities exist to integrate emerging farmers into the food retail value chain.
• Emerging farmers would need assistance with packaging their plans to achieve bankability.
• IDC would serve as a “go-between” between the emerging farmer and the large retailers to
ensure alignment between the retailers’ needs and the farmers’ offering.
27
Initiative 3: IDC support for black industrialists
28
Barriers facing black industrialists
The IDC has identified the following barriers which black industrialists are faced with when attempting to start or expand
businesses:
Access to capital
• Own contribution can be prohibitive.
• Lack of a track record and security hinders access to funding from banks.
Access to markets
• Black industrialists do not have long-standing relationships and networks in business that facilitate access to markets.
Access to opportunities
• Lack of experience, track records and reputation as well as access to information can restrict opportunities.
Access to Information
• Limited access to information in respect of available capital, opportunities and markets.
Capacity and skills
• New businesses have a high rate of failure, often due to a lack of management experience and skills despite the
necessary technical skills.
Continued monopolistic structures
• The monopolistic nature of certain industry structures continues to exclude new entrants.
29
IDC B-BBEE Strategy Framework
IDC is working towards the creation of an equitable society as envisaged by South Africa’s constitution by focusing on the role that it can play by
implementing its mandate of industrial development and through internal transformation
Internally focussed
initiatives
Strategies
Focus
areas
Objectives
Externally focussed initiatives
Broaden transformation Broaden participation in
of industry in all facets of economic benefits of
B-BBEE
industrial development
B-BBEE Codes of Good
Practice
Inclusive wealth
Growth of
businesses
with black
ownership
Increase participation of individuals in
the country’s industrial development
Ensure internal
transformation
Blackempowered
businesses
Black industrialists
B-BBEE Codes of Good
Practice
• Driving broad-based
• Funding communities to • Funding
transformation at our
take a stake in projects
businesses
business partners through
(start-ups, expansions).
with black
the Codes of Good
• Funding workers to take a
shareholding
Practice.
stake in businesses (start(start-ups,
• IDC as a B-BBEE
ups, expansions).
expansions).
facilitator.
• Increasing empowerment
of black women, the youth
and disabled.
• Supporting black industrialists to build new • Manage all elements of
capacity
IDC’s own B-BBEE rating
- Start-up
level
- Expansions
- Management control
• Expansionary acquisitions by black
- Skills development
industrialists
- Enterprise and supplier
• Supporting existing black industrialists to
development
grow their businesses through acquisitions
- Socio-economic
• Support potential black industrialists to
development
acquire businesses.
30
IDC’s definition of a black industrialist
A black industrialist is defined as a black entrepreneur who creates and owns industrial capacity and
provides long-term strategic and operational leadership to the business and is by definition not a portfolio or
purely financial investor. The following are characteristics of a black industrialist:
• Provides strategic and operational leadership to the business;
• Has a high level of ownership (>50%) and/or exercises control over the business;
• Identifies opportunities and develops business to take advantage of these opportunities (entrepreneurial);
• Takes personal risk in the business;
• Does business in manufacturing and in productive sectors identified in the NGP (jobs drivers), IPAP, APAP
and IDC focus areas;
• Makes a long-term commitment to the business and is not a short- to medium-term investor.
While there would be a desire to develop black industrialists that own 100% of the business, it is accepted
that this is not always possible since there may be a need to include other shareholders to attract relevant
skills and finance.
31
IDC Strategies for black industrialists
Assisting black industrialists with start-ups of new businesses and expansions of existing ones
• Emphasis on business development and assistance
Acquisitions of existing businesses by black industrialists
• Ensuring >50% of funding stays within business for expansion and/ or;
• Funding for strategic acquisitions >R 75 million
Addressing issues related to access of capital
• Low own contribution from black industrialist in exchange for tangible commitments and more use of
direct equity instruments
• Lowering cost of funding for black industrialists
Addressing issues related to access to markets
• Incubation strategies involving private partners or SOCs to support Black Industrialists
Addressing issues related to access to capacity and skills
• Strengthening of IDC’s business support programme for black industrialists
32
Targeted funding for black industrialists
• IDC is targeting to channel 22% of its overall budgeted investment over the next five years to black
industrialists;
• This equates to R23 billion;
• IDC has announced a special pricing regime for black industrialists:
• 150 basis points reduction on normal IDC pricing for all black industrialists qualifying according to
IDC’s definition;
• Additional 160 basis points available for other priority development objectives.
• IDC funding is available for all new entrants as well as established entrepreneurs to grow their businesses;
• Funding will be available to all sectors that IDC covers
33
IDC’s performance in funding BEE
IDC Funding for Black Empowered Companies
8
7
Between 25% and 50% black shareholding
>50% black shareholding
>25% black shareholding
•IDC’s initial approach to BEE was to fund acquisitions of
shares in existing companies by black shareholders.
•Some transactions funded up to 2008 included acquisitions
of shares included
 Metropolitan Life, MTN, Tourvest, Protea Hotels,
6
The Reclamation Group, Foodcorp, KWV,
FirstRand Exxaro, and Life Healthcare
•Value of IDC funding for black enterprises has been
4
increasing steadily over the past 20 years.
3
•The number of BEE transactions peaked in 2002, at close to
200
2
•Over the last 20 years the IDC has provided R28 billion to
1
black-owned businesses and funded over R53 billion to
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
R'bn
5
black empowered in total.
•Despite moving away from funding pure acquisitions, IDC
maintained high levels of BEE funding.
34
Empowerment in energy sector
Tshedza Mining Resources
Summary
• Tshedza Mining Resources (Pty) Ltd (Tshedza), has signed a 15-year coal supply and off-take agreement (CSA) with Eskom for its
newly developed Manungu Colliery (Manungu), also known as Eloff Colliery, in Delmas, Mpumalanga.
• The Colliery is contracted to supply 100% of its production to Eskom with an average of 1.62 million tonnes per annum (Mtpa) of coal for
the first three years to Kendal Power Station, followed by an average of 3 Mtpa to Kusile Power Station (scheduled completion mid2018) for the remaining 12 years of the contract.
• Tshedza will be one of the top four suppliers to Kusile Power Plant once it comes online, supplying between 15% and 20% of the total
coal requirement.
• IDC funding will be used for completion of the mine development, weighbridge and other infrastructure required to bring the mine to
production and for working capital, which will help finance the mine’s operating costs for the three months preceding first coal production
and sales.
Location
• Mpumalanga
IDC investment
• IDC approved – R210 million
Job creation
• The Company will initially employ 219 people ramping
up to 403 on full production in 2018
Ownership and BEE status
• Tshedza is 51% black owned and a Level 3 contributor to
BBBEE.
35
Empowerment in underdeveloped province
“Newco” (Pty) Ltd
Summary
• IDC initiated the project about three years ago, to produce packaging paper from waste paper.
• The project has an experienced operating partner with 51% shareholder, operator and the major off-taker of product. Construction will
commence in January 2016 and production is due to start during 2018.
• The project has various green energy components such as:
• Waste paper as an input material
• Base load electricity will be generated on site via a backpressure turbine fitted onto a slightly bigger coal fired boiler
• A semi-closed water loop, to ensure water consumption is kept to a minimum
• An energy efficient fibre production process to utilise around 10% newspaper waste also for input material
• The total development cost is around R1,8 billion. The shareholder/operator to introduce R250 million
• China Export- and Import Bank to assist with funding of the process equipment (Paper Machine) which is imported from China.
• Waste collection model to be integrated into the waste supply chain which will focus on “small-town” and rural area waste collection with
the focus on employing rural woman and the unemployed.
Location
• Mafube, Free State
IDC investment
• IDC provided R732 million for this investment
Job creation
• Will create 2 658 jobs (including construction
and waste collectors)
Ownership and BEE status
Black Industrialist
IDC
51%
49%
36
Empowerment in rural area through mining
Kalagadi Manganese
Summary
• The project entailed the establishment of a manganese mine, beneficiation plant and sinter complex in the Northern Cape.
• The Kalagadi Manganese Project consists of the establishment of a 3 million tonnes per annum manganese ore mine and a 2.4 million tonnes per
annum sinter plant (the world’s largest), at Hotazel in the Northern Cape.
• A further 320 000 tonnes per annum ferromanganese alloy production facility may be constructed at Coega in the Eastern Cape in the future.
• In 2009, the sinking of the mine shaft and the construction of surface infrastructure commenced. In the second half of 2010, the bulk earthworks for
the sinter plant was completed and in the first half of 2011 the construction of the sinter plant began.
• Total capital outlay of the project is R11.9 billion. R8.9 billion will be spent locally during the construction phase, followed by an estimated R7.6 billion
during the first full year of production.
• Although highly capital intensive in nature, the project will bring great benefit to the South African economy through its strong linkages with domestic
suppliers of goods and services.
• Kalagadi is set to not only generate increased economic activity throughout various sectors of the Northern Cape economy; it will also result in the
development of critical infrastructure
valued at about R460 million.
Location
• Hotazel, Northern Cape
Job creation
• 25 000 job opportunities (including construction jobs).
Other impacts
• Regional development
• Export earnings
• Women empowerment
37
Green Industry Development
Nobomate Material Recycling Facility
Summary
• Nobomate is owned by New GX Enviro Solutions and Logistics Holdings (New GX). New GX was established in 2011
and has interests in waste management, recycling, environmental consulting and bulk logistics.
• Nobomate provides waste management services to approx. 90 000 households in Regions 3 and 4 of the City of
Tshwane (“CoT”), comprising of Atteridgeville, Lotus Gardens and Olievenhoutbosch.
• These services include weekly removal of household waste, litter picking, prevention of illegal dumping and promotion
of community based recycling initiatives. There are approx. 300 000 households in Regions 3 and 4.
• CoT has an Integrated Development Plan (“IDP”) objective of reducing waste to landfills by 50% by 2016. In order to
support the realisation of this objective, the City has to start implementing appropriate measures and has to this
extent given Nobomate consent to establish a material recycling facility (MRF” at the Kwagga landfill buffer zone (as a
first of four planned such facilities).
• All recyclable waste from Regions 3 and 4 will be diverted to this MRF. Nobomate is a Management Contractor to the
CoT and this business model enables simultaneous delivery of waste management services, job creation opportunities
for local communities as well as development of SMMEs.
• The project is consistent with the CoT’s Vision 2055 and the
Green Economy Framework which aims to eliminate reliance on
landfills by moving up the waste hierarchy.
Location
• Attridgeville, Gauteng (Johannesburg)
IDC investment
• IDC approved R22.1 million
Ownership and BEE status
• 100% Black-owned (Black Industrialist)
38
Empowerment in the tourism industry
Tourvest Holdings
Summary
• Tourvest was established in 1997 through incorporation of a number of established tourism companies and was listed on the JSE.
• It is Southern Africa’s number one tourism group, offering a range of products and services that encompass the needs of all visitors to
Southern Africa. The group is made up of destination management, travel services, financial services, accommodation and activities,
souvenirs, crafts & curios, duty free, destination restaurants and jewellery. It is a proudly South African company with a global presence
spanning East and West Africa, Europe, the UK, India and the Caribbean.
• In 2008, IDC facilitated the acquisition of Tourvest by a BEE consortium led by Mr Robert Gumede. A total amount of R680m was
approved for the transaction which saw Guma Tourism Holdings take control of the company and IDC also taking a 13.24% equity stake.
Location
• Head office is in Houghton, Gauteng with operations all over South Africa, Southern, East and West Africa, Europe, UK, India and the
Caribbean.
Job creation
• The company currently employs over 4 000 people.
• There are well over 700 jobs created through the art and
craft sector, whereby the craft and curios sold by the company
are manufactured by women from the rural provinces such as
Limpopo.
39
Initiative 4: Funding for companies in distress
40
IDC’s Objectives in Providing Funding for Distressed
Companies and utilisation to end March 2015
• Ensuring liquidity by providing funding to companies that could not access credit from banks;
• Assisting companies that were successful before the onset of the crisis in 2008/9 to withstand the
impact of the recession and have the ability to continue growing once economic conditions improve;
• Reducing the quantum of job losses;
• Assisting companies to improve competitiveness and expand operations so as to be better
positioned to take advantage of an economic recovery;
• Funding to early stage project development to assist new projects that will need to satisfy economic
demand in the future.
41
Turnaround of distressed companies
Bell Equipment
Summary
• The IDC has over the past 5 years provided working capital and expansionary funding to Bell Equipment, a South African OEM
which has become a global player in yellow metal capital equipment industry. The IDC funding has allowed the company to
broaden its product range, increase local content and expand its market in the rest of Africa.
Location
• Richards Bay, KwaZulu-Natal
IDC investment
• Working Capital, Export finance, Guarantees and Capital finance facilities totalling R650 million.
Job creation
• The company provides jobs for c.a. 2 700 people.
Other impacts
• Apart from job creation and preservation, other key
developmental aspects from this investment include promoting
export revenue generation and imports substitution with positive
contribution towards the country trade balance. Regional
market integration and decentralised manufacturing
industrialisation are also promoted by this investment.
42
Turnaround of distressed companies
Sheraton Textiles
Summary
• The Sheraton Group has been operating in the household textile industry since 1922.
• During the financial crisis in 2008 and the ensuing recession, the company experienced difficult trading conditions, resulting in
IDC providing funding and taking a majority shareholding in the business.
• The company has traded profitably over the past 3 years and IDC is starting to explore opportunities to reduce its shareholding
Location
• Cape Town, Western Cape
IDC investment
• IDC has invested R72 million in the company.
Job creation
• The company employs
540 people.
Ownership and BEE status
• IDC owns 80% of the shares.
43
Initiative 5: African regional integration
44
Africa regional integration – Role for DFIs
•
Infrastructure
– If the whole of Africa could be at an infrastructure development level similar to leading economies, per capital
economic growth in the region would be 2.2 percentage points higher - a level of infrastructure comparable to
South Korea’s would yield additional growth of 2.6 percentage points
• ~50% higher than the average for Sub-Saharan Africa over the last five years.
– Estimates put the amount of investment required for Africa to develop infrastructure at c.a. US$90 billion per year
up to 2020.
– Biggest shortfalls in electricity generation – resulting in stunted industrial development.
– Low levels of development of transport infrastructure hold back intra-regional trade.
– Social infrastructure deficits such in healthcare and education is inhibiting human development.
•
Industrial development
– Economic growth in Africa has been driven largely by development of the resources industries.
– Lack of industrial development results in these resources being exported – opportunities to further increase value
addition and moving down the value chain is lost.
– Need to create industries that takes advantage of Africa’s comparative advantages to further increase growth.
45
IDC’s Rest of Africa Footprint (as at February 2015)
IDC’s exposure in the rest of
Africa
• 61 projects in 21 countries
• Exposure: R8.30 Billion
• Commitment: R12.30 Billion
----------------------------------------------------1. Angola
2. Botswana
• The IDC is
3. Congo, DRC
expanding its
4. Ethiopia
support to
5. Ghana
industrialise Africa
6. Ivory Coast
as a continent,
7. Kenya
based on
8. Malawi
integration within
9. Mozambique
regional value
10. Namibia
chains.
11. Nigeria
12. Rwanda
13. Senegal
14. Sierra Leone
15. Sudan
16. Swaziland
17. Tanzania
18. Togo
19. Uganda
20. Zambia
21. Zimbabwe
46
Industrialisation in the rest of Africa
Ohorongo Cement
Summary
• Ohorongo is Namibia’s only cement producer and owns the most modern cement plant in Africa.
• The 700 000 tpa plant started operating in December 2010 after a two year construction period.
• The plant supplies cement to Namibia as well as neighbouring countries.
• All raw materials required for the production process are sourced in Namibia.
Location
• Otavi, Namibia
IDC investment
• IDC’s total exposure is c.a. R370 million
Shareholding
• IDC – 16%; DBSA – 5%; Development Bank of Namibia – 9%; Schwenk Namibia – 70%
Other impacts
• Inputs into infrastructure development in the continent.
47
Industrialisation in the rest of Africa
Habesha Cement
Summary
• Habesha Cement Share Company (Habesha) was established to exploit a limestone deposit near Addis Ababa and to produce
cement for the Ethiopian market.
• The shares in the company were offered to the general public in Ethiopia and more than 16 000 shareholders contributed 53% of
the total equity required.
• In July 2012, PPC (with a 27% share) and the IDC (20% share) jointly acquired a 47% equity stake in Ethiopia’s Habesha
Cement Share Company (HCSCo). This allowed PPC to expand its footprint into the booming African market.
• The company is building a state-of-the-art cement plant with an annual capacity of 1.4 million cement tons at a cost of US $130
million to supply the fast-growing Ethiopian cement market. The possibility also exists to double the plant’s capacity to 2.8
million ton per annum over time.
• During November 2014, however, the IDC sold its 20% stake to PPC, which is now the majority shareholder with a 51% share in
the Ethiopia-based cement project.
Location
• Addis Ababa, Ethiopia
Other impacts
• Inputs into infrastructure development in the continent.
48
Examples of IDC Projects in the rest of Africa
Cimentos da Beira
• Cimentos da Beira is a cement production plant still under construction in the Mozambican port city
of Beira
• It consists of a cement clinker grinding and packing plant, with a design capacity of 800 000 tons a
year and will supply quality cement at a reasonable price to the growing local market and certain
export markets in landlocked Zimbabwe, Zambia, Malawi, as well as the mineral-rich Katanga
Province in the DRC
• IDC invested R151 million in the project. It has also provided funding for cement plants in Namibia
and Ethiopia
Namib Poultry Industries
• Namib Poultry Industries set up a new broiler, 20 kilometres north of Windhoek
• It consists of a chicken house, hatchery building and abattoir and is able to process 250 000
chickens per week
• IDC provided R150 million worth of funding to the project.
Metorex
• In 2007 IDC swapped its 30% shareholding in Chibuluma South (a copper mine in Zambia) for a
3.4% stake in Metorex Limited (a mid-cap diversified mining company with interests in Southern
African copper)
• In 2008 and 2010, IDC increased its shareholding in Metorex to 15.3% to assist the company to
complete its Ruashi Copper Project, taking its capital injection to R387 million
• In 2011, the IDC sold its investment in Metorex as our development role in the project was
accomplished.
49
Examples of IDC Projects in the rest of Africa
Matanuska Bananas
• Matanuska Mocambique Limitada was founded in 2008 and is located in Northern Mozambique,
100km from the deep-sea port of Nacala
• The project is set on 16 000 ha, with the first phase of the project aiming to establish 2 500 ha of
banana plantations by the end of 2015
• IDC had approved R247 million of funding for the project.
Cenpower
• Cenpower will develop, construct, own, and operate a 340MW combined-cycle power
generation plant near Tema in Ghana
• IDC has approved US$50 million in funding for the project as part of a group of local and
international commercial and development funders.
Africa Juice
• Africa Juice is a young company aiming to become a major exporter of fruit juices from Africa
• Their first project, in the Upper Awash region in Ethiopia, involved the privatisation, rehabilitation,
and expansion of an existing farm and the construction of a new fruit processing facility
• IDC approved R40 million for the project.
50
Examples of IDC Projects in the rest of Africa
Aya Investments
• Aya Investments is developing the 238 room hotel in Kampala, Uganda;
• The hotel is to be operated by Hilton once completed;
• IDC has approved more than US$80 million for the construction of the hotel.
51
Initiative 6: SA spatial development
52
Increasing industrialisation in SA
• IDC actively addressing industrialisation in underdeveloped provinces including biofuels, agroprocessing, pulp and paper, mining and renewables.
• IDC to increase engagement with Provincial governments to explore cooperation in line with
Provincial Growth and Development Strategies.
• IDC to increase awareness of its activities through road shows, regional campaigns and
advertising in local newspapers.
53
Provincial exposures
IDC Exposure by Province2
Provincial Contribution
to SA’s GDP
March 2015
2013
Limpopo
7%
at Cost (R55bn)3
Western Cape
10%
Western Cape
14%
at Market values (R88bn)4
Eastern Cape
7%
Western Cape
9%
Free State
1%
Mpumalanga
7%
Eastern Cape
8%
Northern Cape
21%
North West
7%
Gauteng
28%
Gauteng
34%
North West
11%
Gauteng
34%
KwaZulu-Natal
16%
Free State
2%
Northern Cape
13%
Northern Cape
2%
Free State
5%
Eastern Cape
9%
North West
7%
Mpumalanga
4%
Limpopo
12%
Kwazulu Natal
8%
Mpumalanga
2%
Limpopo
13%
Kwazulu Natal
9%
Source: StatsSA
2 – As a percentage of IDC’s South African portfolio excluding Sasol, BHP Billiton, Kumba Iron Ore, SAPPI, Arcelor Mittal SA and sefa
3 – Excludes undrawn commitments
4 – Includes undrawn commitments
54
Examples of IDC Funded Projects – Eastern Cape
R
Cradock
Molteno
Stutterheim
A R Komga
E
U
Grahamstown
Uitenhage
Oyster Bay R
East London
R
B
B
F Coega
Sector
Closest Town
Project Description
Port Elizabeth
A - Agriculture and agro-processing
B - Automotive
E – Ethanol
F - Food processing
F - Food processing
B - Automotive
R - Renewable energy: wind and solar
Stutterheim
Uitenhage
Cradock
Coega
Coega
Port Elizabeth
Grahamstown
Blueberries
Motor vehicle parts
Scale 1:6341020
Bio-ethanol
0 milk
30 60 90
150 km
UHT
Cheese
Catalytic convertors
Wind power generation
R - Renewable energy: wind and solar Komga
Wind power generation
R - Renewable energy: wind and solar Molteno
Wind power generation
R - Renewable energy: wind and solar Oyster Bay
Wind power generation
U - Tourism
Hotel
East London
55
Examples of IDC Funded Projects – Free State
W Frankfort
Kroonstad M
F Reitz
Sector
Closest Town
Project Description
A - Agriculture and agro-processing
A - Agriculture and agro-processing
F - Food processing
M - Mining
W – Wood and paper
Rouxville
Bethlehem
Reitz
Kroonstad
Frankfort
Walnuts
Vegetable oil
Chicken abattoir
Diamond mining
Kraft paper
Bethlehem A
Rouxville
A
56
Examples of IDC Funded Projects – Gauteng
Ga-Rankuwa
B
Johannesburg
T
H
W L
U
B
Springs
Germiston
Sector
Closest Town
Project Description
B - Automotive
B - Automotive
H - Healthcare
L - Metal products
T - Textiles
U - Tourism
W - Wood and paper
Ga-Rankuwa
Springs
Industria West
Germiston
Robertville
Rhodesfield
Longdale
Truck trailers
Mini-bus taxis
Pharmaceuticals
Iron and steel
Textiles
Hotels
Furniture
57
Examples of IDC Funded Projects – KwaZulu-Natal
L
Pietermaritzburg
L B
T C
T A Durban
W
Weza
C
K Richards Bay
Sector
Closest Town
Project Description
B - Automotive
Durban
Motor vehicle parts
C - Chemicals and plastics
Durban
Paint
K - Machinery
Richards Bay
Mining and construction machinery
L – Metal products
Richards Bay
Aluminium
C – Chemicals and plastics
Richards Bay
Phosphoric acid
L - Metal products
Pietermaritzburg
Aluminium products
B - Automotive
Pietermaritzburg
Motor vehicle components
L - Metal products
Pietermaritzburg
Railway coach refurbishment
T - Textiles
Hammarsdale
Textiles
T - Textiles
Phoenix
Textiles
T - Textiles
Phoenix
Footwear
T - Textiles
Pietermaritzburg
Textiles
T - Textiles
Pietermaritzburg
Footwear
T - Textiles
Pietermaritzburg
Footwear
W - Wood and paper
Weza
Forestry and sawmilling
58
Examples of IDC Funded Projects – Limpopo
Lephalale
Makhado
W
M
Tzaneen
A
HM
Phalaborwa
Sector
Closest Town
Project Description
A - Agriculture and agro-processing
Tzaneen
Citrus
H - Healthcare
Phalaborwa
Hospital activities
M - Mining
Lephalale
Coal mining
M - Mining
Phalaborwa
Iron briquettes
M - Mining
Groblersdal
Platinum mining
W – Wood and paper
Makhado
Wood products
M
Groblersdal
59
Examples of IDC Funded Projects – Mpumalanga
Sabie
W U
Hazyview
Sector
Closest Town
Project Description
L – Metal products
Middelburg
Stainless steel
M - Mining
Bethal
Coal mining
W - Wood and paper
Sabie
Forestry and sawmilling
U - Tourism
Hazyview
Game Reserve
M – Mining
Emalahleni
Mining services
Middelburg
L
Emalahleni
L
Bethal
M
60
Examples of IDC Funded Projects – North West
Ledig
M
M
Rustenburg
Mahikeng
H
Brits
M B
Sector
Closest Town
Project Description
M - Mining
Rustenburg
Platinum mining
H - Healthcare
Mahikeng
Healthcare activities
M - Mining
Brits
Ferrochrome
B - Automotive
Brits
Motor vehicle parts
M - Mining
Ledig
Platinum mining
61
Examples of IDC Funded Projects – Northern Cape
M
Hotazel
M
Kakamas
R
Pofadder
R Upington
M
A A
Postmasburg
R
Kenhardt
Douglas
Kuruman
Kimberley
M
A
R
Prieska
De Aar R
Sector
Closest Town
Project Description
A - Agriculture and agro-processing
Douglas
Table grapes
A - Agriculture and agro-processing
Kakamas
Citrus
A - Agriculture and agro-processing
Upington
Table grapes
A - Agriculture and agro-processing
Upington
Fruit
M - Mining
Hotazel
Manganese mining
M - Mining
Kimberley
Diamond mining
M - Mining
Kuruman
Mining services
M - Mining
Postmasburg
Iron ore
R - Renewable energy: wind and solar
De Aar
Solar power generation
R - Renewable energy: wind and solar
De Aar
Wind power generation
R - Renewable energy: wind and solar
Kenhardt
Solar power generation
R - Renewable energy: wind and solar
Pofadder
Solar power generation
R - Renewable energy: wind and solar
Prieska
Solar power generation
R - Renewable energy: wind and solar
Upington
Solar power generation
Scale 1:6341020
0 30 60 90
150 km
62
Examples of IDC Funded Projects – Western Cape
A Trawal
Atlantis
A Prince Alfred
T
Paarl
K A
Caledon
Cape Town Z C
R
A
Riviersonderend
Sector
Closest Town
Project Description
A - Agriculture and agro-processing
Paarl
Growing of fruits
A - Agriculture and agro-processing
Prince Alfred
Growing of fruits
A - Agriculture and agro-processing
Riviersonderend
A - Agriculture and agro-processing
Trawal
Vegetables,horticultural
specialities,nursery prod
Fruit
B - Automotive
Worcester
Motor vehicle bodies
C - Chemicals and plastics
Epping
Plastic products
I - LPG Storage terminal
Saldanha
LGP storage terminal
K - Machinery
Cape Town
Agricultural machinery
K - Machinery
Cape Town
Photo-volatic panels
K - Machinery
Cape Town
Medical equipment
R - Renewable energy: wind and solar
Caledon
Wind power generation
T - Textiles
Atlantis
Leather products
T - Textiles
Elsiesrivier
Clothing
Z - Motion picture production
Cape Town
Animation studio
Z - Motion picture production
Cape Town
Film studio
63
Green industry development built on
provincial resources
Karoshoek Solar One (Project Company) / Ilangalethu (Development Company)
Summary
• The roots of this project dates back to 2009 when Emvelo (a black owned company) initiated the project and invited Solel as a
technical partner.
• In 2010 Emvelo, Siemens (Solel’s parent company), IDC and DBSA formed Ilangalethu as the vehicle to develop a bankable 100
MW Concentrated Solar Power (CSP) project.
• IDC actively participated in the development of the project and the purchase of the land on which the plant is to be located, and
was one of the key sponsors in successfully bidding the projects under the third round of the REIPPPP.
• The project is amongst the first five CSP projects to be developed in South Africa. The IDC will participate as an equity investor
and senior debt lenders during the implementation of the project, and will also finance the BEE and community SPV’s to own a
30% equity stake in the project.
Location
• Upington, Northern Cape
IDC investment
• IDC has an exposure of R2.6 billion to the project.
• The project is one of 22 renewable energy projects that received successful bids under the REIPPPP for which IDC has provided
funding. in most instances, IDC’s funding included funding for community equity or black shareholding.
Job creation
• The project is expected to commence construction during 2015. Approximately 1 000 temporary jobs are envisaged to be created
during the 32 month construction period and about 80 direct permanent jobs during the operational phase (20 years).
• Additional jobs will be created by other industries and
companies that will provide ancillary services during and
after the construction period.
Ownership and BEE status
• The Project SPV (Karoshoek) has 15% broad-based
shareholding through the Community Trust and 15% black
shareholding. The BEE investor (Emvelo) is the
co-developer, key sponsor, and operational partner in the
project. Emvelo will also own a stake and participate as a
partner to the Engineering, Procurement and Construction
(EPC) contractor and Operation and Maintenance (O&M)
contractor.
64
Rural development through linkages
Coega Dairy
Summary
• Coega Dairy primarily produces long life milk (Ultra High Temperature).
• It was established in 2011 by the major commercial milk farmers in the Eastern Cape with the aim to expand the limited market opportunities
dictated by the multinational milk distributors. Coega Dairy also manufactures butter and amazi as smaller product lines.
• It is supplying raw milk in bulk to the next door Coega Cheese facility, which started operations in June 2013 and is 51% owned by Famous
Brands.
• IDC co-funded the start-up of both Coega Dairy and Coega Cheese, including the empowerment trust’s 38.6% shareholding of Coega Holdings
that has 49% share in Coega Cheese.
• Over the last two years Coega Dairy has developed into a significant player in the South African UHT market. It is the sole house brand
supplier for Shoprite-Checkers with a significant South African market share, including its “Coastal View” brand.
Location
• Port Elizabeth (Coega IDZ), Eastern Cape
IDC investment
• The total amount of funding approved by IDC is R107.3 million. An additional
R40 million was approved utilising dti’s Manufacturing Competitiveness
Enhancement Programme (MCEP) and R10 million utilising EDD’s
Agro-Processing Competitiveness Fund.
Job creation
• The companies employed 230 people directly. 100 people are employed
in services rendered to the company. The company estimates that 750
people are employed on farms from which it sources its milk. 170 of
these jobs would have been new jobs created due to increased demand
for milk in the area. The company sources its milk within a 200km radius
from its factory.
Other impacts
• The project replaces imports of mozzarella cheese. In addition, it
promotes rural development, especially in the rural areas from which
milk is procured. It further enhances inclusive development on
black-owned farms which benefit from the increased demand for
raw milk.
65
Rural and community development
Sihleza Forestry Company
Summary
• Sihleza, is a community-owned forestry development based in Umzimkhulu, south of KwaZulu-Natal (KZN).
• iNkosi Ngwadla, on whose communal land the project is located initiated the development of this project as far back as 2003.
However, lack of funds affected implementation.
• Following IDC intervention in 2010, this project which is now managed by a company in which the Community Trust is the sole
shareholder, became the first community-owned commercial forestry project to be developed using IDC grant funding.
• As part of the project development the community agreed to set a portion of their largely unproductive land aside for the
establishment of 345 hectares of commercial timber plantation projected to create 36 jobs, and once in rotation will generate an
annual income of approximately R5 million for the community.
• IDC funding has catered for the necessary working and capex requirement and Sappi has agreed to co-invest and match IDC’s
extent and terms of funding. It is anticipated that the first timber will be harvested in 2020. What makes this project even more
appealing is the fact that it is located adjacent to another successful community forestry project (Zintwala) which was partly
funded by IDC and mentored by Rural Forest
Management (RFM) .
• The two communities will therefore be able to
share resources and equipment and work
together particularly during the fire season as is
commonly done within the farming community.
Location
• Umzimkhulu, KwaZulu-Natal
IDC investment
• IDC’s exposure to the company is R6 million
Job creation
• 36 jobs expected when fully implemented
Ownership and BEE status
• Fully owned by the local community
Other impacts
• Rural development
Status
• The project will be implemented and managed by
the community company with support from RFM.
66
Township economy
Secopa Bathong
Summary
• Funded during 2013/14 SECOPA Bathong NPC is an incubation centre based in Soweto.
• Initially SECOPA was biased towards manufacturing enterprises, however recently its client base has gravitated towards a mix of
SMMEs in not only manufacturing but retail, construction, services, art, IT and other commodities.
• SECOPA has become a 1 stop shop for aspiring entrepreneurs in Soweto.
• IDC’s funding was applied for the purchase of machinery and equipment to assist businesses in leather products, printing, sewing
and plastic products businesses.
Location
Soweto, Gauteng
IDC investment
IDC invested R2.8 million through its Social Enterprises Fund.
Job creation
Businesses supported by the incubator had created more c.a. 160 jobs.
67
Township economy
The Soweto Hotel on Freedom Square
Summary
• IDC approved its first funding for the establishment of the hotel in February 2006.
• This 48 room, 4 star hotel is on the Walter Sisulu Square of Dedication in Kliptown, Soweto.
• IDC provided more than R40 million in funding for this hotel.
Location
• Soweto, Gauteng
Job creation
• The hotel employs more than 30 people
BEE status
• IDC is a 30% shareholder, with a black shareholders holding more than 50%
68
Initiative 6: Development of new industries
69
Development of new industries
• IDC is identifying and assisting with the development of industries that will be the cornerstones
of South Africa’s economy in the future;
• Identification and development of these industries can be driven by:
– Beneficiation of the country’s natural resources;
– Developing industries based on the ingenuity and creativity of our people;
– Areas for competitiveness where SA can build industries based on technology.
70
Green Industry Development
Chamber of Mines Fuel Cell Project
Summary
• The Chamber of Mines (Chamber) installed a 100 kW fuel cell at their building in central Johannesburg, as part of
supporting beneficiation of platinum. This also reduces their electricity purchases and provides power during grid
outages.
• Fuel cells utilise a platinum catalyst to operate efficiently and with South Africa having over 80 % of global platinum,
it is key for South Africa to assist to develop this market application. Greater use of fuel cells also opens the
opportunity for South Africa to beneficiate its platinum and localise the production of fuel cells. The key component of
fuel cells is the platinum containing stack and whilst fuel cells have lives of the order of 20 years, these stacks need
more regular replacement, and open up a specific opportunity for localisation.
• The IDC supporting their industrial partner Mitochondria Energy assisted in developing this project and provide a long
term green funded loan to finance the fuel cell. Fuel cells provide green power as they are efficient and produce no
harmful emissions such as would be the case from conventional power plants
driven by fossil fuels. Key support also came from the BEE fuel supplier, Egoli
Gas, and from the dti who provided finance to enable this project to be a
demonstration of fuel cells.
• This first commercial fuel cell project in Africa facilitates greater knowledge of
this technology and see in practice its reliability and flexibility.
Location
• Gauteng (Johannesburg)
IDC investment
• IDC approved R3.2 million in funding for the total project value of R15.3 million.
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Development of export markets
Robertson and Caine
Summary
• R&C is one of the world’s top two catamaran producers and is South Africa’s largest boat (catamaran) manufacturer
focusing on the export market.
• Robertson and Caine has been a client of the IDC since 2008 and has received funding support from the IDC over the
years to grow to their current position. R&C are embarking on an expansion plan to meet the increased demand from
TUI Marine (“TUI”). The luxury yacht orders will increase from 126 (delivered in 2014) to 188 in 2015 and 200 in
2016.
• This expansion programme includes improvement to the existing manufacturing facility located in the Western Cape as
well as expanding into a new factory located in Montague Gardens. The total expansion program will cost ca R110
million, with the remainder funded from cash flows generated by the business.
Location
• Western Cape
IDC investment
• IDC approved R45 million
Job creation
• 222 new jobs increasing the current 1 122 to
1 344
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Development of a local film industry
Cape Town Film Studios
Summary
• IDC originally approved funding for the establishment of the world class Cape Town Film Studios in 2010.
• The establishment of these studios would assist in attracting more large film productions to the country.
• Since the studios opened in November 2010, they have facilitated the filming of many Hollywood blockbusters (Safe House,
Chronicle, Judge Dredd, Mad Max 4).
• IDC’s partnership with the studios continued when IDC funded the construction of a water tank facility and beach reservoir in
2012. This enabled CTFS to attract productions requiring oceanic water and beach reservoir scenes. These unique world class
developments attracted the international high budget pirate themed Television series Black Sails, produced by the well known
Michael Bay (Transformers, Armageddon, Bad Boys, Pearl Harbour)
• Members of the international film industry regard Cape Town Film Studios as a world-class, state-of-the-art studio with a beach
reservoir unique in the industry.
Location
• Cape Town, Western Cape
IDC investment
• Initial funding for the studios was R70 million and the construction of the water tank facility was R14 million. Current exposure is
R69 million
Job creation
• Studio based productions create 3 times more jobs than location based productions because of the manufacturing style of
filmmaking.
• Since CTFS’s opening in 2010, productions
using the studio have spent over R1.6 billion and
created job opportunities for more than 30 000
people.
Ownership and BEE status
• Black shareholding of 56.9% through Videovision
Entertainment and HCI.
Other impacts
• Development of the film value chain.
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New Industries: e.g medical devices
Lodox
Summary
• Lodox is a proudly South African company that created the world’s first full-body, low-dose, digital X-ray imaging system.
Originally developed as a security tool in the diamond industry, Lodox Systems, through further development and research
created a product that has since made a huge advance in medical trauma management. The ability to provide full-body X-ray
images at an exceptional quality and minimal radiation dose in only 13 seconds is unique to the Lodox technology and is, as yet,
unmatched globally.
• IDC initially invested in Lodox in 2001 and is currently the largest shareholder and primary funder of the company, with a
shareholding of 93.44%.
• Lodox launched its new version of the machine, called the Xmplar-Dr in 2013. The first installation of the Xmplar-Dr was in Dr
Harry Surtie hospital in Upington Hospital in November 2013. The company was awarded a Top Innovation Concept award in the
Accenture Innovation Index Awards in 2013.
Location
• Johannesburg, Gauteng
IDC investment
• Total amount approved is R169 million
Job creation
• Lodox currently employs 31 people.
Ownership and Ownership and BEE status
• IDC holds 93.44% of the shares with the option to exit the
investment to a BEE party.
Other impacts
• In emergency trauma situations, the Lodox is life-saving
equipment as it allows for instant diagnostic information about a
patient’s injuries to be obtained. This allows trauma staff to
quickly provide the required treatment to the patient.
Status
• Lodox was recently awarded a bulk order of 12 units by the
Gauteng Department of Health. This will ensure that there is a
Lodox machine in every central, tertiary and regional hospital in
Gauteng.
• The company is pursuing similar bulk orders from the
KwaZulu-Natal and Western Cape provinces.
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Prospects
Thank you
Industrial Development Corporation
19 Fredman Drive, Sandown
PO Box 784055, Sandton, 2146
South Africa
Telephone 011 269 3000
Facsimile 011 269 2116
E-mail callcentre@idc.co.za
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