Investing in the economy

Summary of operational performance

Textiles and Clothing SBU
Performance   2010   2011   2012   2013  
Total value of financing approved (Rm)  292   539   501   426  
Total number of jobs expected to be created or saved   2 187   10 158   2 420   4 020  
Impairments as a % of outstanding book (at cost excluding undrawn commitments)  45%   41%   51%   60%  
Focus areas  
Building a conducive environment for development industry  
Building competitive local and regional value chains  
Stabilise major IDC investments in the industry  
 


Highlights  

2009   2010   2011   2012   2013  
  • IDC Clothing, Textiles, Footwear and Leather Competitiveness Scheme approved
  • Sector prioritised in IPAP
  • the dti launched the Clothing and Textiles Competitiveness Programme, which is administered by IDC
  • the dti/IDC Production Incentive was launched.
  • Spike in cotton price impacts on entire value chain
  • Sector designated for local procurement by government
  • Annual rate of job losses in the sector falls to 3 100, compared with an average of 10 200 over the previous three years
  • Strong take-up of Production Incentive
  • New entry-level wage dispensation agreed
  • Weaker rand assists companies to compete with imports
  • Retail sector explores opportunities for collaboration with local manufacturers to increase procurement of textiles, clothing and footwear
  • Project Re A Lokisa initiated to re-assess IDC’s subsidiary investments in the textiles sector

  
Recent performance  

The government’s designation of the textiles and clothing sector for local procurement has led to increased local sourcing. The retail industry’s improved response to fashion developments is also boosting demand for locally-produced products, both of which led to an increase in demand for funding into the clothing sub-sectors signalling stability and growth prospects for this labour-intensive sub-sector. Consumers' response to the adverse economic climate is to put downward pressure on prices, however, they remain fashion-conscious.

Despite a decline in the value of funding approvals, the awareness of the IDC’s role in the sector is growing and this is evidenced by the increased number of applications being considered. Of significance is the number of applications from local designers and design houses. An exciting investment was made in a new cut, make and trim factory in Isithebe, KwaZulu-Natal, which will create over 2 000 jobs in an area that was once a textile hub, but currently suffers from high unemployment, especially amongst women.

Challenges  

Despite interventions and the positive results these have had, conditions in the sector remain challenging, particularly in the textiles sub-sector. This is largely the result of competition from imports as well as currency volatility. Businesses that are growing are experiencing a lack of skills, mainly at supervisory and management level.

As a result of these challenges in the sector, the IDC’s textiles and clothing portfolio has a high level of impairments. To address this, the IDC has stepped up its involvement to help turn around ailing companies in which it has an interest. Project Re A Lokisa specifically looks at restructuring IDC textile investments and, where feasible, developing support projects that address value chain challenges. Other interests are closely monitored and interventions recommended such as distressed funding, turnaround interventions, or collaboration within respective value chains.

Strategy and prospects  

The industry is showing signs of recovery, particularly in the clothing and footwear sub-sectors. The IDC’s strategy is to maintain and increase employment by recapturing domestic market share, which it does by analysing value chains, identifying areas where we can compete effectively as a country, and finding opportunities, especially to increase productivity. In an effort to identify and develop niche sectors of the industry, the Textiles SBU is increasingly involved in developing local fashion designers, both fast fashion and high-end. A number of wool and mohair beneficiation projects are being evaluated.

The IDC’s close cooperation with government is particularly helpful in this sector. The recently improved outlook can, to some extent, be ascribed to the dti’s Clothing and Textiles Competitiveness Programme, which was developed in conjunction with the IDC and for which the IDC is the main implementing agency. Other important elements of our strategy are the ongoing review of existing investments and management of turnaround initiatives.

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
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