27 Oct IDC Approves R746 Million for Covid-19 Economic Relief
14 September 2020 – The Industrial Development Corporation (IDC) has approved R746 million and disbursed R440.8 million as part of government’s Covid-19 economic relief measures.
Following the onset of Covid-19 in South Africa, the IDC established three interventions in March 2020. Each intervention was designed to address specific needs of businesses that would help mitigate the impact and spread of the pandemic as well as help businesses with much needed working capital as liquidity challenges increased emanating from an enforced economic lockdown. The funds include, the Covid-19 Essential Supplies as well as the Distressed Fund and Small Industrial Finance Distressed Fund. In addition, IDC also played a significant role in social relief through donations to humanitarian programmes.
“Our specific interventions are informed by our mandate to play a countercyclical role in times of a crisis such as this one, as well as our understanding of the impact of the pandemic to the economy, our clients and the IDC itself,” said IDC CEO TP Nchocho.
The Covid-19 Essential Supplies Fund (R800 million) was structured to provide funding to companies that manufacture or would import essential products on an urgent basis to combat the Covid-19 pandemic.
This R800m package is made up of a R300 million MCEP facility provided by the Department of Trade, Industry and Competition (limited to locally manufactured products) and R500 million of the IDC’s funds ring-fenced for this purpose.
An amount of R536 million (67% of allocation) has since been approved to 15 companies, of which R431 million has been disbursed. Funding approved to date has supported companies producing amongst other products:
- Tissue products
- Rapid test kits
- Surgical masks
- Packaging for medical products
“Traction from the distress fund was originally flat owing largely to the effect of the lockdown on clients, the appetite to further extended themselves financially and the and the lending criteria that we adopted. We received many applications, but most of them did not meet our criteria. We have observed a rising increase in the number of distressed companies in need of support and in response we have now expanded our qualifying criteria with regard to the distressed fund,” said Nchocho adding that the Corporation would also be expediting disbursement of these funds to qualifying clients. The result is that the Distress Fund has now approved R160 million to four clients and currently has a pipeline of transactions worthy R180 million. Approvals have supported companies in the textiles, aerospace and machinery and equipment industries.
Nchocho is emphatic on the IDC’s counter cyclical role adding that the Corporation has in the past demonstrated its ability to rise to such a challenge. At the height of the global economic meltdown in 2009, the Corporation ramped up its capital injection into the economy from R8.5 billion in the preceding year to R10.8 billion. In all, R6.1bn went towards assisting distressed companies over the years immediately after the economic meltdown.
“The challenge we face now is much bigger than the 2009 financial crises hence the need for an agile response by both the private and public sectors to help off-set both the short-term and long effects of this pandemic.”
The Social Relief Contribution is a mix of the IDC’s contribution to the Solidarity Fund, R4.8 million, and R5 million donated to Gift of the Givers. The IDC staff played their part as they rose to the occasion and contributed R282 000 towards the Solidarity Fund.
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