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Investing in the economy

Development funds

The Development Funds Department (DFD) provides funding support to projects that have a high development impact. It achieves this by managing higher risk-taking funds and disbursing these funds into deserving projects.

DFD manages IDC ring-fenced and third party funds which are allocated to development needs not typically addressed through the standard IDC funding mechanism. The funding schemes support the aims of the New Growth Path (NGP) set out by the Economic Development Department (EDD), which emphasises technological innovation, growth, employment creation and equity.

Funding methods

The capital is deployed against strict investment guidelines towards addressing a specified, targeted developmental need. A variety of tools such as softer pricing, structuring terms and relaxation of financial and other norms are used to meet the objectives of the scheme. The capital may be off-balance sheet or on-balance sheet funds. Many of the investment funds under management, being fairly new funds that will not reach maturity in the short term, are difficult to assess for financial sustainability. The funds provide varying degrees of non-financial support through funding shop-floor training and upskilling, mentorship and coaching at employee level and management.

This promotes empowerment and sustainable industrial capacity. In the period under review, a significant number of funds have migrated to the IDC SAP system while other funds are largely in the process of being migrated. This migration will be completed in the early part of the 2012/13 financial year. This will assist in improving turnaround times and communication to clients, tracking of information and improved portfolio reporting to stakeholders.

Summary of development funds managed

More informtion
is available on the web at www.idc.co.za/IR2012
  Fund       Purpose     Instrument  Size  
of fund  
 Amount  
committed  
since inception  
of fund as at  
31 March 2012  
  Cross-sectoral funds              
  1   Unemployment Insurance Fund (UIF)     Assist companies that save and/or create jobs at < or = R450 000 per job     Loan R4bn   R2.4bn  
  2   Gro-e     Assist companies that create jobs at < or = R500 000 per job     Loan/Equity R10bn   R1.9bn  
  3   Women Entrepreneurial Fund (WEF)     Assist female entrepreneurs to start or expand their businesses     Loan/Equity R300m   R49.5m  
  4   People With Disability Fund (PDF)     Assist entrepreneurs with disabilities to start or expand their businesses or to acquire businesses     Loan/Equity R50m   R9.7m  
  5   Development Fund (DF)     Assist workers to acquire meaningful stakes in IDC-funded transactions     Equity/Quas R350m   R202.2m  
  6   Community Fund (CF)     Assist marginalised poor communities to acquire meaningful stakes in IDC-funded transactions     Equity/Quas R150m   R77.8m  
  7   Equity Contribution Fund (ECF)     Assist new-entrant black entrepreneurs with their equity contributions with regard to IDC funding requirements     Equity/Quas R150m   R88.2m  
  8   Risk Capital Facility (RCF)     Assist with equity-type funding to BEE-SMEs that create jobs     Equity/Quas R841m   R624m  
  9   Technology Venture Capital (TVC)     Commercialisation of innovative products, processes and technologies     Loan/Equity R33m   R5.7m  
  Industry/sector-specific funds              
  10   Agro-Processing Linkages Scheme (APLS)     Promote agro-processing and rural development by linking established agro-processors with resource- poor farmers     Loan/Equity R100m   R28m  
  11   Agro-Processing Competitiveness Fund (APCF)     Facilitate increased competition, growth and development in agro-processing sector through provision of finance to non-dominant players     Loan/Equity R250m   R69m  
  12   Clothing and Textiles Competitiveness Programme (CTCP)     To improve the competitiveness of the local clothing and textiles sector          
  12.1   Clothing and Textiles Competitiveness Improvement Programme     Improve product, processes and people on a cluster basis     Grant R181m   R147.6m  
  12.2   Production Incentive Programme     Funding provided to individual companies for plant and equipment upgrade     Grant R2.5bn    R1.2bn  
Note
* All the funds are on-balance sheet except the APCF, CTCP, RCF and TVC.