The Industrial Development Corporation (IDC) disbursed R15.9 billion into the economy in the year to March 31, 11% below last year, but a “result we are proud of” considering the tough economic environment and that last year’s result was a record year, interim CEO David Jarvis said yesterday.
He said in an online presentation the institution had maintained its liquidity and balance sheet strength through the year despite headwinds such as loadshedding, logistics issues in the country, a low commodity price and investment environment, and high interest rates. The 2023 result was boosted to record levels by pent-up investment demand following the pandemic.
However, they were seeing “green shoots” in the fixed investment space. He said during 2024 the institution had remained true to its mandate to drive and support sustainable industrial development and transformation.
Notably, he said the IDC nearly doubled the funding it committed to its transformation and economic inclusion mandate, to black industrialists, black owned companies and black-owned SME’s and startups, to R22.3bn from R11.4bn in the prior year.
The funding for women entrepreneurs also increased markedly to R11.4bn from R1.1bn.
The amount disbursed in total had facilitated the creation of 17 826 jobs through the year, which was 48% lower than last year, and which was a focus in the new financial year.
He said many of the jobs that were saved in the prior year were attributable to funding for floods and social unrest recovery efforts, events that did not recur.
Nevertheless, “there will 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,” he said.
He said the funding disbursed was to support the development of new strategic projects, to support priority industrial projects with strategic partners and to support companies and industries affected by the energy and other challenges.
One such company, for example, was Tongaat Hulett, which received finance from the IDC support it through its business rescue process.
Jarvis said that of the industrial projects funded by the IDC in the period, funding valued at R3.7bn (R2bn in 2022/23) were for those that graduated from development stage to bankability – demonstrating success against a commitment to return to its value chain development roots.
Funds committed for black industrialists amounted to R10bn, while those for black- owned businesses rose by R5.3bn to R13bn. Funding for youth entrepreneurs dropped to R456m from R501m, but this figure was expected to improve in the new financial year, said Jarvis.
He was 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. “Green shoots” were appearing, he said.
Notable among these was the stabilisation of energy supply. There had also been progress on dealing with bottlenecks on the rail transport network and port infrastructure.
“For us at the IDC, addressing these challenges will create opportunities to provide funding to companies that rely on rail and port infrastructure,” he said.
The IDC group reported healthy revenues of R24.3bn, while net profit came in at R7.8bn, down from R10.7bn the previous year. Notable for its lower income contribution had been the sharp decline from Sasol. The impairment ratio improved to 36.4%, and the non-performing loans ratio improved by 2 percentage points to 26.3%.
During the year fixed investment in South Africa expanded, but at a more moderated 2% against 5.2% in 2023., the third consecutive year of higher capital spending.
The implementation of the poultry and sugar industry masterplans was supported by the IDC during the year but limited headway was made in expanding agriculture, as the operating environment for the sector was particularly challenging, with weather variability affecting the 2023 planting season.
“We are looking to support climate-resilience initiatives, such as financing the production and/or supply of drought-tolerant crop varieties, adoption of efficient irrigation systems, and production and acquisition of technologies related to ‘precision’ and ‘smart’ agriculture techniques.”
There was also progress in the IDC collaboration with Transnet to upgrade the Transnet railway infrastructure connecting Tshwane to the port of Port Elizabeth. The IDC also approved funding for the feasibility study to develop a sustainable end-to-end rail logistics solution for the automotive sector, to divert vehicle transportation from road to rail.
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