About IDCS A C U
The Industrial Development Corporation of South Africa – Financing Schemes
The Industrial Development Corporation of South Africa (IDC) is a 100% Government owned development finance institution. It was established in 1940 to promote and to finance industrial projects in South Africa. In 1997 its mandate was amended to include projects in the Southern African Development Community (SADC) region; and in 2000 the mandate was extended to cover the entire African continent.
Although Government owns 100% of the IDC, we are a self-financing organisation and are totally independent of Government in this regard. We raise funds through the local and international bond markets, as well as by taking up equity in some of the projects that we finance in South Africa and the rest of Africa.
In our effort to fulfil the mandate given to us by Government, we seek to participate in projects that are potentially financially sustainable in the medium to long term and would have a positive development impact in the host country, South Africa and the region . We look to finance new, expansion or rehabilitation projects in the following areas:
- Mining and mineral beneficiation;
- Industrial infrastructure (power plants, transport infrastructure, telecommunications etc)
- Oil and energy;
- Manufacturing/ fabrication
- Agro-processing
- Tourism (hotels, eco-tourism, etc);
- Healthcare;
- Education;
- Information and communications technology;
- Forestry and related industries (wood, paper, etc)
IDC funding for projects in these areas may be provided in the form of project finance, export finance, or a combination of both.
Under the Project Finance Scheme: In SACU , for new projects, we are limited to consider projects with a minimum size of R5 million (i.e. total project cost). In this regard, the IDC can finance a maximum of 50% of the total project cost. We require that the promoters make a tangible financial contribution to the project.
If it is an existing company that requires funding for expansion or rehabilitation, then the requirement is that the current company should have an existing asset base of at least R2,5 million. In this event the minimum that the IDC would consider funding with regard to the expansion may not exceed the existing asset base plus any additional investment that the promoters may make towards the expansion or rehabilitation.
Under the project finance scheme, the IDC's financial contribution may be in the form equity, quasi equity, loans or any combination hereof. Our equity participation may not exceed 30%, and would include an exit strategy.
Since the IDC does not operate or manage projects, we will insist that a reputable management/operating partner is on board from the onset; we may also insist that such a partner be prepared to take a significant equity stake in the project.
It is important to note that the conditions of the project finance scheme are not necessarily applicable to the export finance scheme, which is intended to promote the export of South African capital goods and related services.
Under the Export Finance Scheme: The export finance scheme covers any product or service that is considered to be South African. In this regard, the IDC can finance up to 85% of the total South Africa contract in terms of goods and services purchased from South Africa. To qualify as South African, the goods and services in question must have at least a 50% South African value-added content.
The minimum export order size that the IDC would consider financing under the export finance scheme is the US dollar equivalent of R10 million (ten million South African rands).
Our approval of an export finance order is conditional on, among others, the IDC receiving political risk insurance cover from the Export Credit Insurance Corporation (a South African company), and on the IDC satisfying itself with regard to the buyer or the seller's capacity to repay the loan.
If the IDC cannot look at project finance, we may still be able to provide export finance. In addition it is possible to combine the two schemes to finance one project.
For further information and elaboration, please contact:
Ms Lebo Nchang
SBU: Africa Unit
Tel: +27 11 269 3649
Fax: +2711 269 3230
Email: lebon@idc.co.za
