COMPANY OVERVIEW

 OUR BUSINESS MODEL

MAKING TRADE-OFFS

In an environment where various forms of capital are scarce there are many competing needs from multiple stakeholders. To create value for our shareholder, trade-offs are made. This requires us to proactively make tough decisions to allocate resources effectively to the strategic focus areas that will deliver the most value in the long term.

The primary trade-offs that are made and the respective rationales are presented below.

SELECTED PERFORMANCE INDICATORS

 

OUR STRATEGY

The IDC’s strategy is focused on the need to maximise development impact through jobs-rich industrialisation and competitiveness improvements, achieving other development outcomes, and ensuring the long-term sustainability of the Corporation by addressing specific issues related to financial capital, our human capital, stakeholders, the natural environment and by increasing the efficient use of resources.

Our strategy development is a continuous process with a formal annual review. These reviews take into account changes in the operating environment and are guided by robust discussions by the Board, executive management as well as other senior management. Strategies targeting specific industries and functional areas are developed with inputs from experts in their respective fields throughout the Corporation.

Details of the pillars of our strategy and how they address different aspects of our business model can be seen on page 6 of this report.

PROJECT EVOLVE

To enhance certain aspects of our strategy, as from April 2015, we implemented a project to prioritise industries so as to ensure that we increase our effectiveness and maximise our impact on the economy. The selection of these priority industries was based on assessments of South Africa’s current and long-term growth potential, our ability to make a meaningful impact, and their alignment to government priorities. Three value chains were identified where our proactive support could make the largest impact on direct and indirect job creation through increased competitiveness, the development of downstream industries and higher levels of exports – especially into markets in the rest of Africa.

In addition, we are assuming a greater role in proactively nurturing and developing industries that might not currently play a significant part in the South African economy, but have the potential for growth in the future. New sectors that derive their strength from innovation, science and technology are particularly important. Another priority area aims to address the negative impact that the infrastructure backlog has on the development of industry. We are targeting infrastructure projects that can unlock industrial development.

Projects in the rest of Africa are supported where they benefit South African industry through procurements from local businesses, local ownership, or forming part of a regional value chain.

Project Evolve also identified opportunities to increase the IDC’s operational efficiencies and effectiveness.


PRINCIPAL OBJECTIVE AND DEVELOPMENT OUTCOMES

The funding that we provide to businesses is directed at increasing investment in industrial sectors. Our investments are aimed at expanding capacity in productive sectors, enhancing value addition to raw materials, improving the competitiveness of industries, increasing exports and import replacement, and integrating value chains across borders.

It is through these investments and the resulting enhancements to industry, that development outcomes that deal with the socioeconomic issues facing the country are addressed.

OPERATIONAL STRUCTURE

The Corporation consists of 11 divisions, each headed by a Divisional

Executive reporting to the Chief Executive Officer (CEO).

Four of these divisions are directly involved in transactions, performing due-diligences on businesses applying for funding and developing projects. These divisions consist of individual units focusing on specific value chains and industries, with applications and projects pertaining to a specific industry being handled in the relevant unit. This approach allows the units to specialise and build industry expertise.

These operational units are supported by four divisions that provide support in terms of:


  • The legal aspects of transactions
  • Assisting with business turnarounds
  • Strategy formulation
  • Supporting targeted groups of entrepreneurs
  • Assessing internal and external risks.

Other corporate support functions such as ensuring compliance, providing secretarial services, IT services, risk management and others are also performed in these divisions.

Three divisions provide administration and support functions related to finance and funding, corporate affairs and human capital, with the internal audit function reporting operationally to the CEO.

Our funding for Fair Price Furnishers, with its 100% black ownership, supported the company to increase its capacity. Fair Price Furnishers manufactures a range of furniture products for low-to middle-income groups. IDC's funding enabled the company to purchase plant and equipment to expand its operation in Brits, North West. The funding created 183 jobs.

PRINCIPAL OBJECTIVE AND DEVELOPMENT OUTCOMES