South Africa has been on a considerable growth path over the past two decades of democracy, and the Industrial Development Corporation has been in step with it all the way.
The past 20 years in South Africa have been an exciting time of real, vibrant growth. During these first two decades of freedom, the Industrial Development Corporation has been there every step of the way, making a significant impact on the country's economic expansion.
It has led the way in industrial development, and has been a critical role player in job creation, building on a strong foundation of know-how to help take the country to the next level.
Established in 1940, as the world was caught up in the Second World War, the IDC's key focus was to provide funding to businesses across different sectors of the economy and establish new industries to produce essential materials that had been imported, but which became scarce because of the war. The goal was to help meet four of the basic needs of South Africans – food, clothing, housing and transport.
Over the following decades, the IDC helped to build local industrial capacity, bringing a wealth of knowledge and experience to the new political dispensation in the early 1990s. As the country adapted to the new political and economic climate and emerged from international isolation, the IDC kept pace, spreading its footprint into the rest of Africa. At home, it began to expand its focus to smaller business to ensure a more democratic participation in the economy.
The IDC mandate changed over time, with an increased focus on project development and implementation.
The dawn of democracy
In the early 1990s, through the IDC, control of one of South Africa's biggest providers of insurance, Metropolitan Life, was transferred to the black community through a public offer of shares in a holding company. By 1994, the corporation had also provided loan finance to black businesses to take up shares in cellular telephone networks.
In line with its new mandate, from 1997, it turned its attention to small to medium enterprises. The following year, it set up a dedicated tourism department to build new tourist facilities. By the end of the decade, it had approved the development of a tanzanite mine in Tanzania with a South African partner and had financed 25 McDonald's franchise operations, as well as Nando's and AIB Bakeries.
Into the new millennium
As the world entered the new millennium in 2000, the IDC lead the way in development finance. It invested in growing number of local businesses as technological advances and green industries helped shape its strategic focus. Supporting the New Partnership for Africa's Development (Nepad), designed by former president Thabo Mbeki, in 2001 the corporation extended its mandate to include the rest of Africa.
Globalisation over the last decade helped to create new markets for South African industries and technology made it possible for local companies to tap into foreign markets. Yet while the economic boom of the 2000s was responsible for lifting millions of people out of poverty, it also had huge environmental consequences and raised demand for diminishing energy resources.
Again taking a leading role, the IDC emphasised environmental stewardship, signing up as a major partner of the World Summit on Sustainable Development in 2002 and formulating an environmental policy in 2003 to help guide its investments. Increasingly, the IDC saw job creation as an important measure of its success.
In 2005, it was recognised as the Top Development Financier at the Business Map Business Report BEE Awards and by 2007, it had begun setting up development agencies across the country to enable it to extend its reach into rural areas.
As with the diverse people who make up South Africa, the IDC's investment portfolio reflected a diverse range of industries – from manufacturing to film and media, from infrastructure to telecommunications. Significant investments were made in the 2000s, including two state-of-the-art ferro-chrome furnaces near Rustenburg, funding for YFM radio station and the establishment of Umicore Autocat, a company producing automotive emission control catalysts for the motor industry. The IDC also financed Hotel Rwanda, a film about the Rwandan genocide, and later approved funding for CNBC Africa, Neotel and the black economic partners of the Gautrain – Strategic Partners Group Concessions.
After the boom years of the early part of the century, the economic crisis of 2008 and 2009 hit the world. But the IDC took the bull by the horns and approved funding of R9.4-billion, which was expected to result in 25 000 jobs, of which 8 800 were saved as a direct result of financing to companies in distress during the 2009/2010 financial year. It also opened offices in all nine provinces to drive new business development in each region, especially in rural areas.
South Africa lost more than a million jobs after the economic meltdown, prompting the IDC to step up funding approvals – it okayed R8,4-billion worth of projects in 2011, and successfully intervened in the manufacturing sector, approving R539-million for businesses in the clothing and textiles sector. The latter had been hit particularly hard by cheap imports. The corporation led the field in job creation, creating and saving over 31 000 jobs. It also invested R1.7-billion in the motor vehicle industry.
Then, in 2012, the IDC began to emerge as a leader in the development of green industries. It formed the Green Industries Strategic Business Unit, resulting in investments in 12 projects that received preferred bidder status in the first round of the national government's Renewable Energy Procurement Programme. The IDC's Green Energy Efficiency Fund to provide low-cost funding to businesses to implement energy-saving technologies was launched in the same year, and the corporation was involved in setting up Coega Dairies, the long-life milk facility in the Eastern Cape's Coega Industrial Development Zone.
More recently, the fragility and uncertainty in the economic landscape has continued into the 2012/2013 financial year. But the IDC has continued with its mandate to ensure South Africa is on the path to achieve rapid, sustainable and inclusive development. Taking note of the impact it had made in meeting its mandate already, the government appointed the corporation to co-ordinate planning of the Saldanha-Northern Cape Corridor and the Green Economy Strategic Integrated Projects. The corporation is also co-ordinating opportunities for localisation across all SIPs, leading to the establishment of a local assembly facility for minibus taxis in partnership with China's BAW.
As South Africa celebrates 20 years of freedom amid signs of a recovery in the global economy, the IDC will continue to play a leadership role in shaping its industrial landscape, increase industrial financing activities, and implement sector development strategies, again supporting the government to meet the objectives of its New Growth Path and Industrial Policy Action Plan. The IDC's industrial capacity development activities are also aligned with the National Development Plan 2030.