Components for renewable energy

The Integrated Resource Plan for electricity generation in South Africa was promulgated in May 2011, and foresees the creation of 9 200MW of new wind power generation capacity, plus 8 400MW of photo-voltaic and 1 000MW of concentrated solar power generation capacity over the period to 2030.

Investing in the economy

Summary of operational performance

Metal, Transport and Machinery Products SBU
Performance   2010   2011   2012   2013  
Total value of financing approved (Rm)  714   2 104   1 700   1 721*  
Total number of jobs expected to be created or saved   2 690   6 050   6 861   5 638  
Impairments as a % of outstanding book (at cost excluding undrawn commitments)  20%   19%   13%   13%  
*Approvals of R207 million utilising the MCEP are included.  
Focus areas
Inputs in SOE Capex programmes  
Automotive components  
Medium and heavy commercial vehicles   


2009   2010   2011   2012   2013  
  • Number of applications from distressed companies increases
  • Renewal and extension of the MIDP for the auto sector
  • Competitive Supplier Development Programme for SOEs
  • Launch of IPAP2
  • Key industries for development under IPAP2 identified
  • Funding to Ford Motor Company SA and first tier local suppliers for the new T6 Ranger for the global market
  • Promulgation of the PPPFA by the dti
  • Designation of local products for public sector procurement
  • Launch of the Automotive Investment Scheme to promote new investments
  • Announcement of the renewable energy IPP giving visibility to market for localisation of components
  • Successful launch of the Stock Boat Programme in conjunction with the dti
  • Formation of the Joint Aerospace Steering Committee
  • APDP comes into effect
  • Directive on the control of the exportation of scrap metal gazetted
  • Announcement of Alstom as the successful bidder for R5bn PRASA rolling stock recapitalisation programme


Recent performance  

Although growth in the sector has been tepid post-recession, there are some encouraging prospects. The lingering effect of the recession is still apparent in various sub sectors of the industry including amongst others low levels of volume uptake of components by OEMs in the automotive sector, suppressed capital investment by the mining sector resulting in low demand for mining equipment and machinery.

The current fragile state of the industry is evident from the current impairment provision as a percentage of total exposure, up from 8,3% in 2009 to 13% in 2013. This percentage peaked at 20% in 2010 when South Africa particularly began to experience the adverse impact of the economic recession in October 2008.

However, the expeditious roll-out of the public infrastructure investment program and the State Owned Companies (SOCs) capital expenditure programmes underpinned by robust localisation and local content measures seem to have achieved the desired stimulatory effect in rekindling private sector investment. This view is supported by the fact that 62% of the SBU’s approvals in value terms in the year under review has been committed to infrastructure-related projects. In addition, applications for funding especially those relating to green field projects point to a favourable future outlook. Even more encouraging is the increase in the number of applications for expansionary as opposed to distress funding characteristic of the SBU post-recession. The fact that the local automotive components industry is still dominated by imports further present opportunities for localisation and growth of the industry.


A huge skills deficit particularly in technical areas such as welding, toolmakers and artisans continue to plague the industry. Furthermore rising costs of inputs such as steel and electricity are slowing the recovery momentum thus stifling growth of the industry. The prolonged financial crunch in traditional export markets, notably Europe, remains a concern.

Strategy and prospects  

Being one of the more mature industries in which the IDC invests, the industry boasts reasonably good manufacturing capabilities. The IDC hopes to improve the industry’s trade deficit by optimising export levels and promoting localisation.

Through the SBU, the Corporation will continue developing the R7billion multi-model OEM project in East London, set to house diverse OEMs and localise the assembly of passenger cars currently being imported.

The project is expected to create at least 1 800 new direct jobs. The Corporation will continue to support government and SOC infrastructure spend by providing competitive finance and proactive project development in complimentary fabricated metals, capital and transport equipment sectors, and stimulate localisation by supporting new and existing component suppliers in the renewable energy generation and energy efficiency programmes. Indeed the development of a local, greener economy has opened up substantial components manufacturing opportunities.

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