29 Aug IDC Invests R15.9 billion into the economy amid a challenging operating environment
“IDC’s performance in the year under review strategically positions the Corporation to support the country’s industrialisation, socioeconomic, and structural transformation objectives.”
Against the backdrop of several economic headwinds, the Industrial Development Corporation (IDC) disbursed R15.9 billion of its own on-balance sheet funds to businesses, facilitating the creation of 17 826 jobs in the financial year ending 31 March 2024. This amount was 11% down from the R17.8 billion recorded in the previous corresponding period.
While the development funder observed and experienced weak performance across broad sectors of the economy, the Corporation, riding on the strength of strategies pursued over the past few years, registered some notable successes. Of significance, the IDC’s disbursements facilitated a further R51.7 billion worth of investments for the South African economy during the reporting period, representing 2% of South Africa’s gross fixed capital formation.
“Growth in the local economy has been tepid over the past decade, most recently attributable to factors such as loadshedding, lower commodity prices, and weakening demand in both the global and domestic markets. The weak economic performance has had a knock-on effect on business confidence. This largely influenced investment decisions and capital outlays by some of our existing and potential clients,” said IDC interim Chief Executive Officer David Jarvis.
Jarvis further disclosed that industrial projects funded by the Corporation in the reporting period, valued at R3.7 billion (R2 billion in 2022/23), graduated from development stage to bankability – demonstrating success against the Corporation’s commitment to return to its value chain development roots.
Despite the drop in disbursement value, funding for women entrepreneurs increased , from R1.1 billion to R11.4 billion. Other notable highlights saw the Corporation increase its quantum in funding facilitated and committed to its transformation and economic inclusion mandate twofold to R22.3 billion in 2023/24 (R11.4 billion in the prior year).
Funds committed for Black Industrialists totalled R10 billion, while those for black-owned businesses rose by R5.3 billion to R13 billion. Funding for youth entrepreneurs dropped to R456 million from R501 million recorded in the previous financial year.
Jobs created or sustained in the reporting period fell nearly 50% from 34 035 recorded in the prior year to 17 826 in the year under review. However, Jarvis contextualised the drop in jobs created, explaining that many jobs that were saved in the prior year was attributable to funding for floods and social unrest recovery efforts.
“There will therefore be a focus on labour-absorbing agro-processing and agriculture, automotive, downstream chemicals, machinery and equipment and tradeable services in the coming period to address this national imperative.” said Jarvis.
Despite tough operating environment, he remained upbeat about prospects for the country and by extension the IDC in the year ahead, saying several government initiatives aimed at kickstarting stalling growth were already yielding positive results. Notable among these achievements is the stabilisation of energy supply.
“Due to interventions initiated by government, we are already seeing progress towards addressing bottlenecks which have overwhelmed the country’s rail transport network and port infrastructure. These challenges have largely impacted export-oriented businesses, particularly those in mining and manufacturing. For us at the IDC, addressing these challenges will create opportunities to provide funding to companies that rely on rail and port infrastructure,” he added.
Despite challenges in the operating environment, Chief Financial Officer Isaac Malevu said the IDC’s performance in the year under review strategically positions the Corporation to support the country’s industrialisation, socioeconomic, and structural transformation objectives.
He emphasised that the Corporation’s financial position remains strong, with a gearing ratio at 46% (2022/23: 45%). The IDC group reported healthy revenues of R24.3 billion in the reporting period, while net profit came in at R7.8 billion. The impairment ratio improved to 36.4%, and the non-performing loans ratio improved by 2 percentage points to 26.3% in 2023/24. Despite registering a marginal improvement, non-performing loans (NPLs) and impairment ratios were a concern.
“These results are encouraging and reflect a resilient and sustainable balance sheet that will help us to ramp up our funding activities in the year ahead. We need higher levels of sustainable GDP growth to effectively deal with the challenges of poverty, inequality, and unemployment, especially among our youth,” said Malevu.
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Issued by
Tshepo Ramodibe
Head of Corporate Affairs
Tel: 011 269 3000
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Chimwemwe Mwanza
Media Relations
Email: Chimwemwem@idc.co.za
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