Infrastructure

HOWWE FUND BUSINESSES IN THE
INFRASTRUCTURE SECTOR

“You and I come by road or rail, but economists and economies travel on infrastructure.”

 

Reliable infrastructure, directly and indirectly, fuels economic growth by reducing production costs and facilitating market access and enabling productive activities (Value chains). The infrastructure SBU has the mandate to unlock infrastructure development opportunities and investments in line with government objectives and stimulate SA’s economic growth and regional integration. Our investments in infrastructure aim to support value chains such as Mining, Agro-processing, Chemicals, and other industries that contribute to the South African economy’s industrial development.

 

The IDC Infrastructure Strategic Business Unit (SBU) enables infrastructure enterprises to pursue growth opportunities in water ande sanitation, telecommunications, logistics, and transport. The unit offers funding instruments that include debt, equity, and guarantees tailored to clients’ businesses and project-specific needs. The structuring thereof and the funding terms are dependent on the business plans.

 

Objectives of the Infrastructure SBU include:

  • Unlock (industrial) development by providing enabling infrastructure.
  • Support the Value chain strategies and industry development goals.
  • Eliminate infrastructure barriers to promote intra-Africa trade/regional integration.

WHAT WE FUND

 

The SBU provides funding in the following sub-sectors of the value chain.

Water and Sanitation

 

Supporting sustainable investments in the water sector to ensure the security of water supply, effective water management and conservation initiatives. For example.

 

  • Storage: reservoirs, dams.
  • Transportation: pipelines.
  • Bulk Services: Irrigation systems, pump stations.

 

Supporting projects that increase and extend broadband coverage to lower the cost of business and boost trade and business. This includes investments in fibre, wireless, transmission equipment, open access/shared infrastructure.

 

Logistics & Transport

 

Supporting transport networks such as road, rail, and ports. To ensure a good logistics network that will allow local industries to be competitive and access new markets/suppliers in the rest of Africa. For example.

 

  • Land: road, rail, ropeways, shared storage (e.g., cold storage, silos), terminals, industrial hubs.
  • Marine: ports/terminals, shipping/cargo, waterways, offshore facilities, port facilities, marine storage.
  • Air: ports/terminals, cargo (freight).
  • Logistics and transport networks for oil and gas fall within the Chemicals SBU mandate.

WHO SHOULD APPLY FOR FUNDING?

  • New or existing companies with projects in our focus areas > R15 million.
  • Projects between R1-15million are funded by the Smalls Business Finance Unit
  • New projects, expansions and rehabilitations (fixed assets and working capital)
  • Acquisitions are funded on a case-by-case basis, however, they must demonstrate an expansionary element with at least 50% being used for expansionary purposes; and
  • Projects that exhibit sustainable economic merit and meet IDC funding parameters.

FUNDING CRITERIA

A written request for funding and a comprehensive business plan is required as part of your application. Business plans need to be of quality and substance for us to contribute to infrastructure development positively. The business plan must include the following:

 

  • Detailed group and shareholding structure (to individual beneficiary level);
  • Clear description and explanation of the business model and business strategy;
  • Demonstration of management capability/track-record to deliver and implement infrastructure project;
  • Detailed market assessment as to the market opportunity and support for revenue assumptions;
  • Funding and capital structure that demonstrates adequate risk sharing between all parties
    • Adequate owner’s contribution
    • Crowding in other funders
  • A financial model that speaks to the business plan, demonstrates profitability and required returns to the IDC over the funding tenor.
  • Demonstrate significant developmental impact. We consider the factors below (not exhaustive):
    • Job Creation Potential
      The number of jobs created and total capital costs per job;
    • Local Content in Capital Expenditure
      Where goods can be sourced locally, this is highly encouraged. Local content must be to IDC satisfaction.
    • Regional Development
      Priority provinces, including the Northern Cape, Eastern Cape, Limpopo, and Free State as well as spatial development initiatives and special economic zones;
    • Community development and upliftment
    • Broad-based Black Economic Empowerment
      Direct BBBEE shareholding, broad-based shareholding (including local communities, skills development for workers, women), BBBEE operational involvement in terms of management and control, BBBEE procurement;
    • Black Industrialists
      Priority will be given to projects promoting black industrialists in control and operational involvement.

 

See the business plan guidelines for a comprehensive list of requirements

INVESTMENTS IN THE REST OF AFRICA

The project must be of direct benefit to South Africa in any of the following ways:

 

  • Must promote regional economic development with linkage to SA
  • Upstream / Downstream businesses within IDC value chains
  • Must develop and integrate regional value chains in line with IDC priority sectors
  • Must support the implementation efforts of the AFCFTA in order to entrench the development of regional VCs and a move away from a reliance on offshore supply chains
  • The minimum size of the total project funding requirement must be:
    • R5-million SACU-based investments
    • USD 3 million for SADC-based investments
    • USD10-million for investments in countries outside SADC
    • Rand, US Dollar and Euro-based funding are available.

HOW TO

APPLY FOR FUNDING

Application for funding should be in writing and should include an executive summary and a business plan.

STEP 1

BUSINESS PLAN

Draw up a well-researched business plan, stating a compelling case for funding

STEP 2

REGISTER ONLINE

*Applications can also be submitted at the IDC office

STEP 3

UPLOAD APPLICATION

Upload your application with the relevant documents, certificates and business plan

STEP 4

PROCESS APPLICATION

IDC will confirm that it has received your application. While processing we may ask you to supply extra information or documentation

STEP 5

APPROVAL STATUS

IDC will give you feedback on the outcome of your application, in writing. If your application is successful, due diligence will be conducted on your business.

STEP 6

LOAN CONTRACT

Once the IDC has satisfied itself of your bona fides, you will be asked to sign a loan contract

OTHER INDUSTRY SECTORS

WE FUND