Directors’ report


The Industrial Development Corporation of South Africa Limited (the IDC) was established in 1940 by an Act of Parliament. It is a registered public corporation and a schedule 2 listed entity in terms of the Public Finance Management Act (PFMA) and the related Treasury regulations. This report is presented in accordance with the provisions of the prescribed legislation and addresses the performance of the IDC as well as relevant statutory information requirements. The Board of Directors is the accounting authority as prescribed in the PFMA.

Nature of business

The IDC is a self-financing, state-owned, development finance institution, that provides financing to entrepreneurs engaged in competitive industries, follows normal company policies and procedures in its operations, pays income tax at corporate rates and pays dividends to its shareholder.

The IDC’s vision is to be “the primary driving force of commercially sustainable industrial development and innovation to the benefit of South Africa and the rest of the African Continent”. Its objective is to lead industrial capacity development.

Performance management

The IDC’s performance indicators reflect the Corporation's goals as set out earlier in this integrated report. Measures related to its key objective of industrial capacity development are integrated with other indicators measuring its contribution to its development impact, financial sustainability and efficiency, stakeholder, customer and employee relations, as well as innovation.

The IDC’s performance evaluation focuses primarily on the financing activities undertaken by the IDC and its dedicated wholly-owned financing subsidiaries.

The performance measurement system ensures that the IDC remains aligned with its mandated objectives. Performance indicators are reviewed every year to account for changes in the external and internal environment and ensure that long-term objectives will be achieved.

Performance indicators are measured and reported to the IDC’s Executive Management and Board on a quarterly basis. Regular activity reports and management accounts ensure that deviation from the target paths can be detected and corrected if necessary.

The IDC’s performance management system rewards employees who exceed targets. The achievement of the targets represents the expected level of performance. Performance targets are set on the corporate, team and individual levels and performance linked remuneration is based on the achievement of these targets.

The measurement of performance is reviewed by external auditors to ensure that the targets are achieved according to the original intentions and that the overall performance is a fair reflection of the Corporation’s activities during the period under review.

Performance Indicators The IDC has adopted a balanced approach in measuring performance and adapted the principles of the balanced scorecard to cater for its own objectives and operations. IDC measures indicators in seven areas. These include:
  • Industrial capacity development;
  • Development impact;
  • Financial sustainability and efficiency;
  • Human capital; and
  • Stakeholder relations.
Performance against predetermined objectives

The IDC’s targets reflected its commitments to increase investments levels in support of implementation of government policy.

Overall, mixed results were achieved when considering performance against targets, with actual achievements exceeding targets in some areas while lagging in others.

Industrial capacity development

The value of funding approvals for the year declined to a small extent from the record R13.5 billion achieved in 2012 to R13.1 billion. Agreements for funding transactions, including unsigned agreements from previous years to the value of R13.7 billion were signed during the year. This was 12% below the targeted R15 billion. The highest level of investment approvals related to the mining and minerals beneficiation industries and can be attributed to the funding for Scaw and the Palabora Mining Company. As in 2012, a large portion of funding was earmarked for renewable energy generation projects where the outcome of the second round of the country’s Renewable Energy Independent Power Producer Procurement programme was announced in the current year. The level of funding disbursed increased significantly from R8.4 billion in 2012 to R16.0 billion in 2013.

Progress with respect to long-term industry interventions is measured through achievement of milestones towards the ultimate implementation of projects. Good progress was made for initiatives related to studies aimed at establishing regional value chains in the textiles industry as well as reducing broadband cost and increasing broadband penetration. Significant progress was also made for initiatives to reduce prices of steel to the local industry. Although funding for projects was approved to aid localisation of manufacturing for inputs for renewable energy projects, as well as large SOCs’ capital expenditure programmes, work on a comprehensive strategy for localisation is still on-going. This work will be aided by the localisation office that was established during the year. Initiatives for the establishment of a local plant for the manufacturing of active pharmaceutical ingredients for anti-retrovirals progressed slower than planned due to delays in negotiating the necessary agreements with government, and the technical partner in the project not being able to provide their requisite equity contribution. Other areas where a significant portion of milestones set during the year could not be achieved included milestones related to the domestic production of malt, establishing new forestry areas, as well as the development of a beach resort in KwaZulu-Natal.

At the start of the year, several projects from different industries were identified which were targeted to start production during the year. These projects each play a large role in a specific sector and are related to industry development initiatives. Eight of these projects started operations during the year. Implementation of four of the others is progressing well. The projects that started operations include a chicken abattoir, a dairy, an adventure sports tourism facility, an iron ore mine, a cement plant, a detergent manufacturer and a rolling stock leasing company. Projects which were not fully implemented, but where significant progress was made included a soy crushing plant, a vaccine production facility, a manganese sinter plant, and an iron producer.

Coega Dairy Holdings

The IDC has identified increased competition in the dairy value chain and import substitution in the cheese industry as key sector development goals. We also singled out the need for increased farmer (and specifically B-BBEE) participation in dairy value-adding initiatives.

Windtown Lagoon Resort 

The newly built Windtown Lagoon Resort and Spa reflects the IDC’s focus to funding community-based projects that have potential to create employment opportunities in far-flung regions.

R13.1 billion
R16.0 billion
18 922
3 950
© The IDC 2013. All rights not expressly allowed are reserved. P.O. Box 784055, Sandton, 2146, South Africa