03 Sep IDC funding boosts rural employment
The Industrial Development Corporation (IDC) grew its funding activity by 55% to R13.5 billion, while the number of funding approvals rose by 33% to 293 in the financial year ending on 31 March 2012.
It is the corporation’s highest ever level of investment in the local economy, making a considerable contribution to job creation, says IDC Chief Executive, Geoffrey Qhena.
The rise in the number of approvals in the year under review will help to create or sustain about 45 900 local jobs, compared to 39 400 in the previous financial year. Of particular significance, Qhena says, is that 48% of these jobs will be based in rural areas and were largely created by IDC’s investment in mining, agriculture and renewable energy sectors. As a result, 99% of funding approvals went towards projects aligned to objectives of the New Growth Path (NGP) and the Industrial Policy Action Plan (IPAP) policies.
“Our objective is to grow the local economy through the development of industrial capacity, with job creation as a critical outcome and, where possible, benefitting communities in far-flung areas, in line with the objectives set out in the NGP and IPAP,” says Qhena adding that as part of a broader strategy to grow South Africa’s industrial base, the IDC is focussing on expanding the fabricated metals, capital and transport equipment industries on the back of the planned capital expenditure programmes of state-owned companies (SOCs), Transnet, Prasa and Eskom among other public sector entities.
This massive capital expenditure and infrastructure development programme, together with the operational requirements over a longer term, present an exceptional opportunity for the IDC to participate in projects that seek to promote downstream beneficiation and localisation. To this effect, the development funder is already a key participant in various strategic infrastructure initiatives spearheaded by the Presidential Infrastructure Coordinating Commission and rolled-out through the associated Strategic Integrated Projects. Other areas of future focus for the IDC include investing in the development of a local antiretroviral pharmaceuticals industry; the expansion of the motor vehicles and components industry; and value addition in the agricultural and mineral value chains.
In addition, the IDC continues to play a critical role in South Africa’s transition to a green economy, having approved R5, 2 billion in funding for ventures that received bid awards in the first round of the Renewable Energy Procurement Program (REPP).
“To ensure that rural based or marginalised communities benefit from this transition to a green economy, 12 of the renewable energy projects funded by the IDC will have Broad-Based Black-BBEE participation, whose objective is to benefit rural communities,” says Qhena.
Despite the slow economic recovery and the impact of the persistent Eurozone sovereign debt and banking crises, the IDC has not scaled back on its risk appetite, a factor that Qhena cites for the increase in impairment levels. However, he is encouraged that the IDC’s funding schemes, including the distress fund structured to assist businesses in financial distress, have contributed towards preserving local production capacity and stemming job losses.
“A stable Eurozone is critical for our country’s economic growth and job creation targets, considering that Europe is a major destination for our exports. The difficulties facing local manufacturing reflect the challenges confronting exporters to this region, naturally impacting on the performance of our client base, the overall demand for IDC funding and, by extension, on our balance sheet.”
Despite the economic challenges, Qhena remains upbeat regarding the fulfilment of the IDC’s mandate to grow the economy. “The road ahead may be fraught with challenges, but our human capital wealth, solid financial position and our steely resolve to contribute to local and the continent’s social and economic development places us in a strong position to make a difference.”
For more information, please contact:
Public Relations Manager – IDC
Tel: +27 (0) 11 269 3282
Cell: +27 (0) 82 880 6074
Head: Corporate Communications
Tel: +27 11 269 3891
Cell: +27 78 801 4072