CASE STUDY

Agribank of Zimbabwe

As part of the pan African regional integration and industrialisation through development finance initiatives, IDC has developed programmes to contribute to an enabling environment for development finance institutions (DFIs) outside South Africa by providing lines of credit to the DFIs, as well as capacity building.

Investing in the economy

Summary of operational performance 

Strategic High-impact Projects (SHIP) SBU
Performance*       2012   2013  
Total value of financing approved (Rm)      1 561   192  
Total number of jobs expected to be created or saved       2 670   627  
Impairments as a % of outstanding book (at cost excluding undrawn commitments)      5%   8%  
*SHIP did not have an investment mandate prior to 2012  
Focus areas  
Cross-sectoral projects 
Industrial infrastructure  
High impact logistics  


Highlights  

2012   2013  
  • SHIP business unit’s mandate expanded to allow for direct funding
  • Establishment of first rolling stock leasing company in Africa, Thelo Rolling Stock
  • Bamboo value chain study
  • Li-ion battery value chain analyses
  • Local assembly facility for minibus taxis in partnership with China’s BAW and end-user facilities put in place
  • Compilation of bamboo industry development
  • Completion of pilot projects for green transport industry

  

Recent performance  

The SHIP business unit’s mandate is primarily focused on the development of cross-sectoral projects. The SHIP SBU is able to cover the full investment value chain in partnership with other IDC SBUs. In addition it is also responsible for industrial infrastructure and extension of lines of credit to other African DFIs for end-user finance opportunities. During the year, the role of infrastructure development as a driver of economic growth was manifested through the activities of the Presidential Infrastructure Coordinating Commission (PICC). Apart from assisting with coordination of two of the Strategic Integrated Projects (SIPs), namely SIP 5 (Saldanha-Northern Cape Corridor) and SIP 8 (Green Energy), the IDC has also been tasked with the coordination of localisation opportunities emerging from all SIPs.

The IDC presented its business plan for SIP 5 to the PICC and it was accepted in September 2012. The IDC SIP office will continue its engagement with, and feedback to, all SIP 5 stakeholders.

In addition, IDC was appointed the localisation coordinator for the 18 SIPs within the PICC. The Localisation Project office was established within the SHIP SBU in December 2012. The office has the role of identifying, advising and reporting on localisation opportunities within the various SIPs which would include cooperation with Transnet and Eskom to develop these opportunities.

Project development over the past year included the establishment and implementation of a local assembly facility for minibus taxis in partnership with China’s BAW. This achieved establishment of new capacity, localisation and international co-operation within the BRICS. An end-user finance package has also been established.

Co-operation with international companies for value adding to local resources and localisation within the energy storage and battery segments proved to be more complex and economics more challenging.

The development of a local bamboo industry in partnership with industry players and other DFIs to assist with rural development and poverty alleviation is gaining momentum, and opportunities to achieve and deliver on these objectives are being pursued.

Demand for credit from other DFIs in the rest of the continent has increased and the IDC considers this development as an opportunity to promote use of goods and services from South Africa in the respective African markets benefiting from these facilities. Furthermore, end-user finance options that could see the IDC partner with the local banking sectors to the benefit of local manufacturers are being pursued.

Challenges  

The major challenge externally is the ability to fast- track and implement major infrastructure and logistics projects. Internally, the SHIP SBU will engage the other SBUs in the various cross-sectoral projects to lead a joint investment focus so as to ensure that the complete value chain is supported.

Long development times for major cross-sectoral, infrastructure and logistics projects remain a major challenge. In the case of cross-sectoral projects, coordination across several industries in a value chain added to the challenge. The challenges mainly relate to the initial identification and securing of appropriate sponsors, technical and operating partners, project structuring to ensure synergy and satisfaction of all participants, as well as the associated high upfront project development costs.

The time lag in RFP announcements by Government for major infrastructure related projects such as base load coal/gas energy caused delays in SHIP's pipeline developments.

Political hurdles in some African countries where potential projects have been identified caused an inability to fast- track those projects to implementation.

Strategy and prospects  

Our primary focus is the development and implementation of strategic high impact cross-sectoral projects that will facilitate job creation and have major development impacts.

Apart from these high-profile projects, we will continue to support industrial infrastructure and logistics developments and arrange finance and credit lines. The IDC’s participation in PICC initiatives will also provide a source of industrialisation and localisation projects.

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.


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