Media Room

News Articles

Financing African development

IDC-CEO-Geoffrey-Qhena-lrgGeoffrey Qhena, CEO of the Industrial Development Corporation

by Geoffrey Qhena, CEO of the Industrial Development Corporation

Africa's investment and trading patterns are changing visibly. The continent's vast natural resources provide for myriad of opportunities. Investors are also attracted to this continent by a fast growing, relatively young market of almost a billion people.

Amidst all this potential, economic development has been painfully lacking. The challenge lies not only in accessing the resources, but financing their development, enhancing productivity and improving the socio-economic conditions of the people of the region.

The opportunity of fast tracking social and economic development and access to the market lies in regional integration, the development of infrastructure and value-adding industrial development.

It is critical that value be added to extracted minerals prior to exportation, that primary agricultural production is complemented by food and beverages processing, and globally competitive industrial bases be developed and diversified. Such initiatives will help reduce poverty, create sustainable and skilled employment, and provide for efficient services support for the primary and secondary segments of Africa's economies. Furthermore, such objectives should be pursued in a socially- and environmentally responsible manner.

The traditional sources of funding intended for Africa experienced challenges in the recent global economic crisis. During this period Development Finance Institutions (DFIs) played a countercyclical role by increasing investment when other financiers were reducing their exposures.

DFIs also provide opportunity for innovative financing, early project development, and de-risking projects by offering very long term finance that traditional funders cannot tolerate. This long term view supplements conventional project requirements for funding, and includes generic mezzanine finance, a variety of debt instruments, early stage venture capital.

A number of private equity funds have earmarked funding for large infrastructure and industrial projects in Africa and the DFI's role is to crowd in the private sector by ensuring the viability of these projects.

Recently, African DFIs have re-evaluated their positioning and role, taking steps to improve their governance systems, aligning their strategies to the objectives of their regions. The intention is to offer investors strategic partnership in the development of projects in their countries and regions.

The DFI's perceptions of risk often differ from those of traditional investors, as do their recognition of conceivable returns and approach to investment. DFIs balance the financial returns with the requisite responsibility of socio-economic returns of the investments.

A partnership with local and regional DFIs adds a valuable dimension to projects, as they typically would understand the socio-economic dynamics of their countries, the nuances of the politics of the regions.

The development of these opportunities is also dependent on other important stakeholder partnerships. The achievement of the socio-economic objectives requires strong commitment and resolve from the respective governments to ensure that the vast opportunities and projects are identified, funded and implemented.

African governments need to harmonise strategies for national and regional integration. Sound Policy and Regulatory frameworks are important to enhance and attract local participation and foreign investment.

The challenge lies in fast-tracking the process, especially since the potential for 'leap-frogging' is being made increasingly possible by unprecedented technological change and innovation. Advancements are being made in telecommunications, information technology, transportation, energy generation, agriculture, and the list goes on.

Clearly all it will require for Africa to partake in such progress is a common purpose, accompanied by the appropriate level of collaborative effort and dedication.

Our sectors

Our strategic business units work in three distinct areas: the services sector; within the mining and manufacturing sector; and in the agro-processing and new industries environment. MORE >

Our regional support

We make an impact across the country, helping develop new business, growing existing companies, boosting local economies and providing expertise wherever needed. MORE >

Annual report

Advancing Industrial Development covers our financial and non-financial strategy and performance aspects for 2015. MORE >

Our products

We offer a wide range of products from debt equity to providing working capital and equipment finance. MORE >

Our research

Stay informed and read our award-winning research reports, as our team keep tabs on the economic trends globally, regionally and locally. MORE >

Corporate responsibility

We are playing our part in improving the quality of life of all our communities, especially in rural and underdeveloped areas. MORE >

Doing business with us

This is your one-stop-shop where you can engage with us directly via our e-services. MORE >

Domestic Medium Term Note Programme

The Industrial Development Corporation of South Africa Ltd has established a ZAR15,000,000,000 Domestic Medium Term Note Programme (as amended and updated on 17 July 2012). You can read the memorandum here. MORE >

Report Fraud     Email idc@tip-offs.com     Call 0800 30 33 36     SMS 39640

PAIA Manual | Terms and Conditions | Employee Webmail | Contact us | Sitemap
© The IDC 2016, ALL RIGHTS NOT EXPRESSLY ALLOWED ARE RESERVED. P.O. Box 784055, Sandton, 2146, South Africa