This value chain includes mining and the manufacturing of basic metals, metal products, machinery, motor vehicles and components, and other transport equipment.

With global demand and prices for commodities and basic metals subdued over a large part of the year, mainly as a result of lower input requirements in China, the mining and metals processing industries have been under pressure. This is evident in the mining industry’s value add contracting by 4.7% during 2016 following the rebound experienced in 2015. The domestic steel industry has also been severely impacted, with ArcelorMittal SA continuing to post losses and Evraz Highveld Steel still under business rescue. A drop in capital expenditure by the private sector and public corporations as well as reduced consumer spending impacted downstream industries negatively.

Our activities in this value chain are aimed at ensuring a globally competitive downstream metals industry. We achieve this through direct intervention in valueadding industries and by developing basic metals industries so that competitively priced inputs can be supplied.

The mining industry, as a key supplier of raw materials to the metals and other downstream industries throughout the economy, is also an important consideration in our strategies for this value chain. Apart from the potential benefits that a competitive mining sector can bestow on downstream industries, it assists with the development of rural communities where projects are implemented in a sustainable manner.


The gross value of funding approved in 2017 for this value chain increased by 41.7% to R8.5 billion (2016: R6.0 billion). Funding for both downstream and upstream industries increased, although despite this increase in funding approved, funding disbursed declined by 28.5%.

In support of our drive to develop downstream sectors, the motor vehicle industry saw a R1.6 billion boost in funding approved. Our proactive activities to attract investment by OEMs resulted in the partnership with Chinese vehicle manufacturer BAIC Group to establish a new car plant in Port Elizabeth. The benefits of this investment will be further leveraged through commitments to increase local content during the construction and operational phases of the plant.

The R0.9 billion increase in funding for the fabricated metals industry was largely driven by continued support for Scaw Metals. During the year, we were able to complete negotiations for the restructuring and introduction of strategic partners into this subsidiary, which recorded a loss of R787 million during 2017 (2016: R1.1 billion). The proposed transaction is awaiting regulatory approval. We envisage that, when implemented, this will result in significant improvements in the business and a turnaround in its financial performance. We also continued to support Scaw to comply with environmental regulations and perform remedial work.

Levels of funding for the industry were also boosted with the approval of funds for a new aluminium beverage can factory to be built in Germiston by a Black Industrialist.

Funding for the mining industry increased by R1.3 billion. This resulted from the restructuring of existing facilities and additional funding for the Kalagadi Manganese project in the Northern Cape. Full operation of the mine was hampered by delays, but construction of the mine, plant, and connecting infrastructure has now been completed and the project is ready to start operation in full.

With the unwinding of Exxaro’s BEE transaction, we approved funding for the replacement BEE transaction to ensure that Exxaro maintains a significant level of black shareholding. In support of our strategy to ensure security of supply for energy minerals, we continued to provide funding for a number of coal projects that will supply Eskom.

The momentum in levels of funding for the machinery and other transport equipment sector could not be maintained, with a R0.8 billion decline in the funds approved for these industries. Despite the decline, we continued our support for the industry with funding approved for several projects. This included funding for Black Industrialists to acquire an engineering firm specialising in the design and manufacture of pneumatic cylinders and the manufacturing of valves, electric transformers, electrical and solar geysers and rolling stock components in support of infrastructure programmes.


In response to the crisis experienced in the steel industry, government established the Steel Industry Task Team in 2015. We are active participants on this team, which is seeking ways to improve competitiveness in this industry.

We also continued engagements with Eskom, Transnet and the Passenger Rail Agency of South Africa (PRASA) to increase levels of local content in their capital investment programmes, and with automotive assemblers to increase the local manufacturing of components for motor vehicles.


The employment impact of the transactions that were approved during the year will be felt through an expected 8 982 jobs to be created (2016: 6 881) and 268 jobs to be saved (2016: 1 000). Our commitment towards transformation in the industry is evident, with 54% of the value of funding aimed at black-empowered companies (2016: 42%). This is further illustrated through levels of funding for Black Industrialists and women- and youth-empowered businesses increasing in comparison with 2016 by R1.7 billion, R1.9 billion, and R94.7 million respectively.


Despite the challenges experienced in segments of the value chain, our role as a countercyclical and long-term funder allows us to find ways to address these. In addition, we continue to identify various opportunities in the value chain that can lead to new investment (see page 34).

Given this, we are targeting the provision of R6.6 billion in funding for these industries in 2018. While we expect to reduce funding for capital-intensive sectors to some extent, we are aiming to increase funding for the more labour-intensive sections of the value chain.


Primary industries such as agriculture, forestry, and fishing, as well as the manufacturing of food products and beverages form part of this value chain.

South Africa’s agricultural production has been severely affected by the worst drought on record, with most summer crops having recorded sharply lower output levels in 2016 compared to 2015.

The adverse effects of this have been felt in downstream sectors, with production growth in the food processing sectors underperforming the average for manufacturing as a whole. In contrast, the beverages industry has been outperforming, recording high rates of production capacity utilisation as well as the highest level of business confidence of all manufacturing sub-sectors.


Our approach to this value chain is to focus on the development of downstream industries. This not only adds value to primary agricultural produce, but also increases demand in the more labourintensive primary sector, thereby stimulating employment. We do fund projects in the primary sector where there is a shortage of inputs into the processing industry, or where a new high-value crop is being introduced in the country.


During the year under review, we approved R203.4 million for projects in this value chain utilising the IDC’s own funds (2016: R632.4 million) before cancellations. An additional R79.1 million was approved utilising funds under management by the Corporation (2016: R15.7 million), predominantly the Agro-Processing Competitiveness Fund (APCF).

Cancellations of funding that had previously been approved resulted in a reduction of 79% in the net amount of funding for this value chain compared to 2016. Despite the lower levels of funding approvals in 2017, the disbursement of funds, including funds approved for projects in previous years, increased by 5% to R542.5 million.

In support of our aquaculture strategy we approved funding for a project to set up a commercial fresh water aquaculture operation utilising local catfish species near Graaff-Reinet in the Eastern Cape. We have been involved in the development of this project from an early stage, a demonstration of how our proactive industry development approach is resulting in bankable funding opportunities.

Participation by Black Industrialists in the meat products industry is increasing, with funding approved during the year expected to enable the expansion of operations of a black-owned abattoir in Klerksdorp in the North West.

In another transaction, we are assisting with the diversification of the agro-processing industry by funding the establishment of a black youth-owned company that will be producing pet treats in Sebenza, Gauteng, particularly for export markets.

The year saw us continuing support for several projects in the horticulture industry that produce nuts and berries.


Apart from the drought conditions, there were other major challenges experienced by some parts of the value chain, in particular the poultry industry, during the year. Beset by increased competition from imports, the industry has been facing cut-backs in production as well as job losses. We are participating in the joint public and private sectors’ Poultry Industry Task Team, identifying opportunities to increase competitiveness in the industry.

The year also saw the launch of another leg of government’s Operation Phakisa, focusing on the agricultural sector. We are participating in some of the initiatives, particularly in those focusing on the integration of small-scale cattle farmers in formal beef value chains, soybean and oilcake production, and the participation of small-scale producers in formal white maize value chain and horticulture.


Transactions that were concluded during the year are expected to create 585 jobs (2016: 1 379 created) and save 438 (2016: 519 saved). This was significantly lower than the expectations that we had for this value chain and was in line with the lower levels of funding activity experienced during the year. This had an impact on our transformation activities in the industry, with the value of funding for blackempowered and women-empowered enterprises and for Black Industrialists declining, compared with 2016. Funding for youthempowered enterprises increased to R78.5 million (2016: R20.1 million).

We view the agro-processing and agriculture value chain as playing an important role in the South African economy and acknowledge the need to realise its full potential in alleviating the high levels of unemployment in the country.

We are expanding our internal capacity to increase our levels of funding in the value chain to a targeted R2.1 billion and to further develop the opportunities that we have identified.


The manufacturing of petroleum, basic chemicals, fertilisers, agro-chemicals, paints, pharmaceuticals and other medical products, soaps and detergents, plastic products, and other related products is covered in this value chain. We also include storage and distribution of oil and gas as part of the value chain’s activities. Compared with most other manufacturing industries, the chemicals industry showed good performance in 2016, with the volume of production increasing by 3.9% compared with 2015 levels. An upward trend in production levels was evident in all sectors of the value chain except for downstream plastic products.

Our goal in the development of the value chain is to enhance the competitiveness of downstream industries, including pharmaceuticals and other consumer products. In doing this we also consider the importance of the basic chemicals industry in the development of other sectors such as the agriculture and metals industries.


We approved R2.9 billion in 2017 for the funding of businesses in this value chain compared with R4.8 billion in 2016. This reduction should be viewed in light of the R4.0 billion that was approved for the recapitalisation of our subsidiary Foskor in 2016. Funding for all segments of the value chain, except for fertilisers, increased significantly. The net value of funding approved, after cancellations, was R2.1 billion.

We have been supporting this sector for a number of years as a means of diversifying South Africa’s energy mix and the largest portion of the new funding approved was for storage and transport of oil and gas, with R1 015.9 million approved (2016: R107.6 million) for such activities. Two significant projects have been approved in this sector with the first involving the establishment of a black-owned crude oil storage facility at Saldanha Bay. This, as well as other local facilities and the recently completed Sunrise Energy Liquefied Petroleum Gas (LPG) import and storage terminal, also funded by the IDC, is positioning Saldanha Bay as an energy minerals transshipment hub. The second significant project that we funded in this sector in 2017 entails the establishment of a pipeline and compression infrastructure to distribute natural gas from wells in the Free State to industrial users.

As part of our strategy to develop more labour-intensive downstream industries, we provided funding for a company manufacturing plastic solar geysers. This innovative product previously received assistance from government in the form of grants from the Support Programme for Industrial Innovation as well as funding from the Technology Venture Capital Fund. We are also continuing our support for the development of a technology that processes waste plastic in landfill sites to produce high grade chemical fluids.

Our strategy to increase local manufacturing and to support local brand development in the consumer products market was further enhanced through funding for a young black woman who produces hair products.

Although we did not approve additional funding for Foskor in 2017, we have been working with the company to develop plans to improve efficiencies so as to return the business to profitability. As a result of weak phosphoric acid prices, currency volatility, as well as outdated plant and equipment, Foskor posted a loss of R902 million for the year (2016: loss of R568 million). Due to these continued tough trading conditions for Foskor, we had to increase our impairment in the company, resulting in impairments in our chemicals portfolio increasing from 10.0% at the end of 2016 to 24.3%.


Our team played a significant role in assisting with the development of the latest iteration of the Industrial Policy Action Plan relating to chemicals industries. We continue to engage with both the private sector and other public sector players to improve the environment for the development of the industry and to identify growth opportunities.


There was a substantial increase in development outcomes achieved in the year, with funding approved expected to create 1 148 jobs (2016: 738) and save 21 (2016: 569). R1 109.8 million of the funding that we approved was for companies with at least 25% black shareholding, assisting with black economic empowerment in the industry. The funding approved for Black Industrialists increased to R383.9 million (2016: R217.8 million), for women-empowered businesses to R218.6 million (2016: R106.8 million), and for youth-empowered businesses to R110.1 million (2016: R3.9 million), further supporting transformation in the industry.


Our strategies for the development of the upstream portion of the value chain focus on establishing capacity that enhances the competitiveness of the economy through linkages with other value chains. The agricultural value chain is targeted through our support for the fertiliser industry. The focus on gas as an energy source can have benefits for a wide range of industries.

We are also targeting the competitiveness enhancements in the downstream chemicals industries by localising production of inputs for these consumer goods. Our downstream activities aim to increase the local production of these goods and localising the production of pharmaceuticals. We are targeting R3.2 billion in investment in the value chain in the 2018 financial year.


Infrastructure plays a critical role in the development of a competitive economic industrial sector. To address this, we provide funding for economic infrastructure that unlocks industrial development.


The value of funding approved for infrastructure development, before cancellations, reached R2.1 billion in 2017, similar to the value approved in 2016.

The bulk of the funding is for the electricity generation sector, with financing approved for two coal-fired independent power stations to contribute to South Africa’s energy generation mix. One of these will be constructed in the Waterberg area of Limpopo and the other in Mpumalanga.

Although implementation of the REIPPPP is being delayed, funding has been approved for four projects seeking to participate in the second round of the Small Projects Renewable Energy Procurement Programme. This programme provides opportunities for smaller companies with the focus on South African companies generating less than 5MW to participate in South Africa’s energy generation sector. Preferred bidders have not yet been announced and the funding approved for these projects is not included in the figures provided in this report.

Funding for transport and logistics was allocated predominantly to a black-owned company that provides rail maintenance services for Transnet. We have further made strides in supporting a black woman-owned construction company that is supporting the execution of a transmission line. In addition, we have supported a 100% black youth-owned company servicing the rollout of fibre to homes.


Although infrastructure developments do not typically create many direct jobs during the operational phase, construction of these projects can create jobs in the short to medium term. Projects for which funding was approved during the year are expected to create 2 846 full-time equivalent jobs, a marked increase over the 1 591 for 2016. Of the funding that was approved in this sector 95% was for black-empowered companies, with our funding for the participation of youth and women in the sector also increasing.


We are taking a more focussed approach to our support for industrial infrastructure projects, with expectations that funding for this sector will reduce to a targeted R2.5 billion in the 2018 financial year.


The clothing, textiles, leather and footwear industries remain significant employers in manufacturing. We remain committed to supporting these industries despite the challenges that most of its segments have experienced for many years.

Our support includes close cooperation not only with the industries themselves, but with government, labour and retailers to build competitiveness in this sector.


Our net funding approved for businesses operating in the clothing, textiles, leather and footwear industries in the year under review declined by 22% to R433.5 million (2016: R553.7 million). A large portion of approvals in this industry is in the form of payment guarantees, which means that disbursements are typically significantly lower than approvals.

Of the total funds approved in the clothing, textiles, leather and footwear industries, 72% (R311.0 million) was for companies operating in the textiles industry. Considering that we are one of the larger funders of the industry, most of the new funding approved was for existing clients, including funding for a business operating from Zwelitsha, Eastern Cape, that we helped to establish in the 1940s. Other niche textile companies that we supported included manufacturers of nylon webbing and inner curtains.

In 2017, R89.5 million was approved for the clothing industry, one of the most labour-intensive sectors in the economy. We continue to assist distressed companies that show a high likelihood of a successful turnaround.


The funding approved for the clothing, textiles, leather and footwear industries during the year is expected to create 852 jobs, 40% more than the 608 of 2016. Despite lower levels of overall funding, our funding for black-empowered companies, Black Industrialists, and youth-empowered companies increased by 25%, 49% and 43% respectively.


For 2018, we are aiming to increase levels of investment in this industry to more than R700 million in order to support the creation of sustainable employment and continued improvement in competitiveness in these industries.


Since IDC started to provide funding for the media industry in 2001, we have been instrumental in the revival of the South African film industry. In addition to financing film production, we also provide funding for studio infrastructure, as well as radio and television broadcasting.

Film production employs numerous people across a wide spread of skill sets. These include make-up artists, set-builders, camera operators and others during production, with an even wider range of skilled individuals employed during post-production. To build sustainable employment opportunities for these individuals, a continuous stream of movies needs to be in production.


During the year we approved R207.6 million in new funding for this sector before cancellations (2016: R266.5 million), with the largest portion being for film and video production. An amount of R350.3 million, including funds for transactions approved in previous years, was disbursed in 2017 (2016: R54.8 million).

The funds approved for film and video production are for the production of a television series, a full-length 3D animated film, and three lower-budget films that will be licensed for broadcast by pay television. We also continued to support a black-owned broadcasting group that has interests in a number of radio stations in Gauteng, Limpopo, the Free State and the Eastern Cape.


The funding approved in 2017 will create 126 new jobs (2016: 546 new jobs). These numbers have been adjusted as the production of individual films does not create permanent employment opportunities. Although levels of funding for black-empowered companies, Black Industrialists, and youth entrepreneurs have declined compared to 2016, we continue to have an impact on transformation in the industry. Funding for businesses in which women have a significant interest has increased.


We are planning to maintain similar levels of funding in this industry to those recorded over the past two years, with an investment target of R252 million set for 2018.


The largest portion of IDC's funding activities is aimed at establishing new capacity or upgrading capacity in existing sectors.

In our New Industries unit, we promote the establishment of industries that are new or emerging to South Africa so as to ensure that the economy is ready to absorb work seekers in the future.


During the year we approved R227.2 million before cancellations in funding for new industries, 52% higher than in 2016. Disbursements increased by 10% to R110.9 million.

Significant transactions included funding for:

  • A company that produces light-emitting electronic devices using standard silicon-based manufacturing processes
  • The commercialisation of a valve for toilet cisterns that is less prone to leaking
  • A company that will produce metal-mould tooling using additive manufacturing.

In addition, we have allocated funding to support several of our existing clients in the medical equipment and other industries.


The businesses that we have supported to date are typically start-ups focusing on the commercialisation of new technologies and have not yet entered a significant growth phase. As a result, the number of jobs being created during this early stage of development is fairly low, with 478 new jobs being created in the businesses that we funded in 2017 (2016: 39 new jobs). We have also been assisting Black Industrialists, providing R31.4 million in funding, with youth entrepreneurs receiving R107.9 million.


As with the value chains, there are several sectors in this area that we are proactively targeting. These are:

  • Additive manufacturing
  • Fuel cells
  • Inputs for renewable energy generation
  • Energy storage
  • Medical devices
  • Nanotechnology
  • Machinery and components for purifying natural gas.

We are reviewing our approach to the development of new industries to ensure that we can keep pace with the requirements of innovators and entrepreneurs. We aim to approve R345 million in this area in 2018.


In addition to the support for industries covered in previous sections, we also provide funding for other manufacturing industries, tourism, construction, and ICT.


The value of new funding approved during the year increased by 69% to R2.2 billion (2016: R1.3 billion). The value of funding disbursed increased from R1.2 billion to R1.3 billion.

The tourism industry was supported with funding for a new luxury hotel in Umhlanga Village in KwaZulu-Natal and a mid-market hotel in Mthatha in the Eastern Cape. ICT, another services industry that holds potential to create large amounts of jobs, was supported with funding for a large local IT company to allow it to execute contracts.

In the manufacturing sector, funding was approved for the expansion of a porcelain tile manufacturer in Bronkhorstspruit, Gauteng, contributing to investment in the non-metallic mineral industry. Other contributions to manufacturing include funding for establishment of a new tissue paper mill, and for modernisation of production equipment at a leading paper sack manufacturer.

Funding was also approved for the establishment of a materials recovery and waste transfer station, as well as for a number of smaller start-up waste treatment centres.

The construction industry was supported with funding for, inter alia, initiation of a new innovative roof manufacturing facility.


Funding approved during the year is expected to create 3 185 jobs (2016: projects cancelled that would have created 725 jobs) and save 1 930 jobs (2016: 762 jobs saved). The higher level of jobs is also being achieved at a lower cost than previously.

Funding for black-empowered companies, Black Industrialists, women entrepreneurs and youth entrepreneurs increased significantly as we ramped up funding for economic transformation.


We are targeting to keep the value of funding for these industries at similar levels in 2018.