Possibilities in Eastern and Southern Africa
Thokoane Tsolo
Head: Africa Unit
ABC Meeting (Woodmead), 9 March 2011
 Established in 1940, the IDC is a self -financing, State-owned
development finance institution
 Provides financing to entrepreneurs engaged in competitive
industries and enterprises based on sound business principles
 Desired outcomes:
– Sustainable employment
– Regional equity (incl. development of the rest of Africa)
– Growing SME sector
– Broad-based black economic empowerment
– Environmentally sustainable growth
– New entrepreneurs entering the economy
– Increased localisation
risk risk
decreasing
 The vision of the IDC is to be the primary driving force of
commercially sustainable industrial development and innovation
to the benefit of South Africa and the rest of the continent
South Africa
IDC
Aaa
Aaa
Aa2
Aa2
A1
A1
A2 ‘06
A2
A3 ‘09
A3 ‘09
Baa1
Baa1 ‘05
Baa2 ‘03
Baa2
Baa3
Baa3 ‘95
Ba1
Ba1
Ba2
Ba2
Ba3
Ba3
B1
B1
B2
B2
B3
B3
Caa1
Caa1
Caa2
Caa2
grade
grade
Investment
Introducing the IDC
Credit strengths of IDC:
• Sound financials
• Fast-growing assets provide sizeable capital cushion
• Credit rating is A3 (on par with sovereign)
Introducing the IDC (cont.)
Greater importance on social and developmental objectives
Greater importance on financial objectives
Government / NGOs
DFIs
Commercial Financiers
• Non-commercial focus
• Fiscal transfers and grants
• Development objectives (social)
• Commercial and development focus
• Sharing risk
• Internally generated funds,
government funds, loans
• High commercial focus
• Private sector capital
• Financial objectives
• Known risks
• Industrial Development Corporation (IDC)
• Development Bank of Southern Africa (DBSA)
• African Development Bank
• etc.
• ABSA/Barclays
• Standard Bank
• etc.
IDC does not directly compete with any of these institutions, but encourages cooperation with them in order to
achieve its own mandate and goals
IDC’s strategic intent wrt regional development
Pursue a more pro-active approach encompassing:
 Dynamic involvement in large project-based investments with a long-term strategic potential;
 Catalytic leveraging of private sector investment, both locally/ regionally and beyond Africa, so as to:

expand and diversify regional productive capacity;

improve the competitiveness and innovativeness of industrial, mining, agricultural and other productive activities;

integrate value chains on a regional basis;

unlock latent potential through spatial initiatives;

enhance global participation by growing and diversifying trade capabilities;
 Co-financing infrastructure development, rehabilitation and logistic improvements, so as to:

lower production costs and barriers to trade (incl. transportation, energy and telecommunication costs) and improve returns;

improve access to abundant natural resources and unleash the potential of hinterland communities;

permit cost-effective access to intra- and extra-regional markets;

encourage resource-seeking, market-seeking and efficiency-seeking investment;

deepen integration through the sharing of production, management and operations of infrastructure facilities, hubs and SDIs;

enable the development of competitive, globally integrated regional value chains;
Eastern & Southern Africa (excl RSA) …
Indicative statistics:
Countries
25
Surface area
16 million sq km
Population
535 million
GDP (2010)
USD 654 billion
Exports (2010)
USD 174 billion
Imports (2010)
USD 177 billion
Sources: Economist Intelligence Unit; Quantec
Market perspective:
 COMESA (Common market for Eastern and Southern Africa)
 ECA (East African Community)
 IOC (Indian Ocean Commission)
 SADC (Southern African Development Community)
 SACU (Southern African Customs Union)
SADC development – the integrated value chain approach
Tourism
• Hotels
• Food and Bev
• Catering
• Laundry
• Curios
Petrochemicals
• Oil
• Paints
• Plastics
• Industrial textiles
• Chemicals
• Mineral extraction
• Mineral beneficiation (e.g.
– Diamond cutting & polishing
– Jewellery design
– Jewellery manufacture
Food (all countries)
• Agricultural inputs
• Farmers/Producers
• Processing
• Distribution
• Wholesalers
• Retailers
• Consumers
Textiles
• Cotton farming
• Spinning
• Manufacturing
• Design
SADC development – the integrated value chain approach (cont.)
Example: SADC integrated petrochemicals value chain potential
PRIMARY PRODUCTS 1
RAW MATERIALS
Petroleum
Gas
Refining
BULK FORMUALTION
LPG, petrol, diesel,
lubricants, tars, waxes
Fertilizers
Explosives
Paints etc.
Cracking/naphtha
Primary
chemical
processing
PRIMARY PRODUCTS 2
(FEEDSTOCKS)
Ethylene, Propylene
cellulose, fats, oils,
rubber, ammonia,
sulphuric acid etc.
SECONDARY PRODUCTS
Secondary
chemical
processing
Polythene, PVC, Nylon,
Polyesters, Rayon etc.
Tertiary
chemical
processing
FINE FORMULATION
Adhesives, Cosmetics,
Mining & Agro-chemicals,
pharmaceuticals
CONVERSION
Plastics: bags, pipes
Rubber: tyres, hoses
Textiles: industrial
clothing
Refineries
- South Africa
- Angola
- Namibia
- Mozambique
Oil and gas
- Angola
- Mozambique
- Namibia
- DRC
Chemicals processing
-South Africa
-Namibia
-Mozambique
-Zimbabwe
SADC development – the spatial development initiative approach
Source: Department of Transport
Current and potential IDC involvement …
EGYPT
• Agriculture/
Bio-fuels
Eritrea
• Mining
TANZANIA
• Sugar
• Rice
• Mining
• Port
• Tanzania-Kenya-Sudan
Corridor Road
• Dar es Salaam-IsakaKigali-Bujumbura rail
KENYA
• Sugar
• Wind energy
• Housing
construction
• Port
• Tanzania-KenyaSudan Corridor
Road
• Commuter rail
SUDAN
• Infrastructure
(Water)
• Building S.
Sudan
Ethiopia
• Agro-processing
• Power generation
• Cement
• Leather processing
UGANDA
• Hotels &
accommodation
• Mining
SEYCHELLES
• Hotels &
Accommodation
Zimbabwe
NAMIBIA
• Agric. / agro-processing • Mining
• Agro-industries
• Mining
• Hotels
• Gas development
•Infrastructure
(power and
BOTSWANA
transport)
• Mining
• Hotels &
Accommodation
• Restaurant
MALAWI
• Mineral
• Food and
beneficiation
Agriculture
• Retail
infrastructure
• Rice
D.R. CONGO
• Energy
• Mining
• ICT
•Infrastructure
•Hotel/
accommodation
Zambia
• Storage/
warehousing,
• Mining,
• Healthcare
MAURITIUS
• Air transport
Comoros
• Air Transport
LESOTHO
• Telecoms
• Mining
• Clothing
MOZAMBIQUE
• Mining
• Hotels
• Manufacturing (Textiles)
• Agro-processing
• Wood processing
• Energy
• Transport infra.
• Storage/ warehousing
• Rail
SWAZILAND
• Basic chemicals
•Mining
•Power generation
ZAMBIA
• Storage and
warehousing
Thank you
The Industrial Development Corporation
19 Fredman Drive, Sandown
PO Box 784055, Sandton, 2146
South Africa
Telephone (011) 269 3000
Facsimile (011) 269 3116
E-mail callcentre@idc.co.za