31 Jul IDC approvals jump to R15.3 billion for 2017 financial year
The Industrial Development Corporation (IDC) continues to be counter-cyclical in the current economic environment. In 2017, the IDC demonstrated…
The Industrial Development Corporation (IDC) continues to be counter-cyclical in the current economic environment. In 2017, the IDC demonstrated its ability to support industrial diversification of the local economy and recorded impressive growth, driving transformation in the economy while remaining financially sustainable.
Highlights in the 2017 financial year include profit growing to R2.2 billion, an increase in funding approvals to R15.3 billion, with marked increase in approvals for black industrialists, other black entrepreneurs, women and youth entrepreneurs. IDC approvals are expected to create 18 192 new jobs and support the retention of 2 675 jobs that would otherwise have been lost.
“The balance sheet remains strong with assets growing to R129.8 billion mainly driven by 11% improvement in the listed portfolio as well as new approvals,” said IDC Chairperson Busisiwe Mabuza.
The IDC achieved commendable outcomes in a year characterised by high levels of uncertainty and slowing growth momentum,” said Mabuza “The IDC continues to play a counter-cyclical role during an economic downturn”.
IDC CEO Geoffrey Qhena said the weak economic conditions, low business and consumer confidence, the impact of the drought as well as relatively low commodity prices and demand made this a particularly difficult operating environment. “Naturally, these factors impacted negatively on our business,” said Qhena.
In spite of the challenging economic environment, the IDC has seen an improvement in overall performance as a result of its proactive investment approach.
The Corporation recorded a significant improvement in group profit to R2.2 billion compared to the previous year’s R223 million, despite losses of R902 million and R787 million in Foskor and Scaw Group respectively. The process to conclude the restructuring of Scaw is being finalised and is expected to result in the introduction of strategic equity partners for its main operating divisions.
Seventy five percent of approvals will be utilised for capacity for new start-ups and capacity expansions. In supporting companies navigate the challenging economic conditions, 13% of funding approved went to companies experiencing difficulties.
As a result of the economic environment, total funding disbursed during the year decreased marginally to R11 billion from R11.4 billion in 2016, as clients delayed the implementation of investment plans due to the challenging economic environment.
“Supporting the creation of black industrialists has been a strategic imperative for the organisation and this has not changed,” Qhena said.
As part of this initiative the IDC approved R4.7 billion in 83 transactions for black industrialists, representing a 68% increase.
The IDC also approved R2.3 billion for youth-empowered and youth-owned businesses in 52 transactions, up from R970 million in 19 transactions in 2016. In addition, approvals to women-empowered businesses almost tripled from the previous year’s R1.1 billion to R3.2 billion.
“Supporting the growth of black business, including empowering women and youth entrepreneurs, is viewed as a lever for the increased participation of black industrialists in the economy, thus contributing to its transformation,” Qhena noted.
“We will, however, strive to ensure timeous investment flows into the economy in order to expedite developmental impact,” Qhena said.
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