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Possibilities in Eastern and Southern Africa ABC Meeting (Woodmead), 9 March 2011 Thokoane Tsolo Head: Africa Unit.

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Presentation on theme: "Possibilities in Eastern and Southern Africa ABC Meeting (Woodmead), 9 March 2011 Thokoane Tsolo Head: Africa Unit."— Presentation transcript:

1 Possibilities in Eastern and Southern Africa ABC Meeting (Woodmead), 9 March 2011 Thokoane Tsolo Head: Africa Unit

2 Introducing the IDC  Established in 1940, the IDC is a self -financing, State-owned development finance institution  The vision of the IDC is to be the primary driving force of commercially sustainable industrial development and innovation to the benefit of South Africa and the rest of the continent  Provides financing to entrepreneurs engaged in competitive industries and enterprises based on sound business principles  Desired outcomes: – Sustainable employment – Regional equity (incl. development of the rest of Africa) – Growing SME sector – Broad-based black economic empowerment – Environmentally sustainable growth – New entrepreneurs entering the economy – Increased localisation Credit strengths of IDC: Sound financials Fast-growing assets provide sizeable capital cushion Credit rating is A3 (on par with sovereign)

3 Introducing the IDC (cont.) Non-commercial focus Fiscal transfers and grants Development objectives (social) Government / NGOs High commercial focus Private sector capital Financial objectives Known risks Commercial Financiers Commercial and development focus Sharing risk Internally generated funds, government funds, loans DFIs Greater importance on financial objectives Greater importance on social and developmental objectives Industrial Development Corporation (IDC) Development Bank of Southern Africa (DBSA) African Development Bank etc. ABSA/Barclays Standard Bank etc. IDC does not directly compete with any of these institutions, but encourages cooperation with them in order to achieve its own mandate and goals

4 IDC’s strategic intent wrt regional development Pursue a more pro-active approach encompassing:  Dynamic involvement in large project-based investments with a long-term strategic potential;  Catalytic leveraging of private sector investment, both locally/ regionally and beyond Africa, so as to:  expand and diversify regional productive capacity;  improve the competitiveness and innovativeness of industrial, mining, agricultural and other productive activities;  integrate value chains on a regional basis;  unlock latent potential through spatial initiatives;  enhance global participation by growing and diversifying trade capabilities;  Co-financing infrastructure development, rehabilitation and logistic improvements, so as to:  lower production costs and barriers to trade (incl. transportation, energy and telecommunication costs) and improve returns;  improve access to abundant natural resources and unleash the potential of hinterland communities ;  permit cost-effective access to intra- and extra-regional markets;  encourage resource-seeking, market-seeking and efficiency-seeking investment;  deepen integration through the sharing of production, management and operations of infrastructure facilities, hubs and SDIs;  enable the development of competitive, globally integrated regional value chains ;

5 Eastern & Southern Africa (excl RSA) … Countries25 Surface area16 million sq km Population535 million GDP (2010)USD 654 billion Exports (2010)USD 174 billion Imports (2010)USD 177 billion Sources: Economist Intelligence Unit; Quantec Indicative statistics: Market perspective:  COMESA (Common market for Eastern and Southern Africa)  ECA (East African Community)  IOC (Indian Ocean Commission)  SADC (Southern African Development Community)  SACU (Southern African Customs Union)

6 Mineral extraction Mineral beneficiation (e.g. –Diamond cutting & polishing –Jewellery design –Jewellery manufacture Mineral extraction Mineral beneficiation (e.g. –Diamond cutting & polishing –Jewellery design –Jewellery manufacture Textiles Cotton farming Spinning Manufacturing Design Textiles Cotton farming Spinning Manufacturing Design Tourism Hotels Food and Bev Catering Laundry Curios Tourism Hotels Food and Bev Catering Laundry Curios Petrochemicals Oil Paints Plastics Industrial textiles Chemicals Petrochemicals Oil Paints Plastics Industrial textiles Chemicals SADC development – the integrated value chain approach Food (all countries) Agricultural inputs Farmers/Producers Processing Distribution Wholesalers Retailers Consumers Food (all countries) Agricultural inputs Farmers/Producers Processing Distribution Wholesalers Retailers Consumers

7 Example: SADC integrated petrochemicals value chain potential Cracking/naphtha RAW MATERIALS Petroleum Gas Refining PRIMARY PRODUCTS 1 LPG, petrol, diesel, lubricants, tars, waxes CONVERSION Plastics: bags, pipes Rubber: tyres, hoses Textiles: industrial clothing BULK FORMUALTION Fertilizers Explosives Paints etc. Primary chemical processing Secondary chemical processing Tertiary chemical processing PRIMARY PRODUCTS 2 (FEEDSTOCKS) Ethylene, Propylene cellulose, fats, oils, rubber, ammonia, sulphuric acid etc. SECONDARY PRODUCTS Polythene, PVC, Nylon, Polyesters, Rayon etc. FINE FORMULATION Adhesives, Cosmetics, Mining & Agro-chemicals, pharmaceuticals Oil and gas - Angola - Mozambique - Namibia - DRC Refineries - South Africa - Angola - Namibia - Mozambique Chemicals processing -South Africa -Namibia -Mozambique -Zimbabwe SADC development – the integrated value chain approach (cont.)

8 SADC development – the spatial development initiative approach Source: Department of Transport

9 Current and potential IDC involvement … MOZAMBIQUE Mining Hotels Manufacturing (Textiles) Agro-processing Wood processing Energy Transport infra. Storage/ warehousing Rail LESOTHO Telecoms Mining Clothing NAMIBIA Agric. / agro-processing Mining Gas development BOTSWANA Mining Hotels & Accommodation Restaurant Mineral beneficiation MALAWI Food and Agriculture Retail infrastructure Rice SUDAN Infrastructure (Water) Building S. Sudan KENYA Sugar Wind energy Housing construction Port Tanzania-Kenya- Sudan Corridor Road Commuter rail UGANDA Hotels & accommodation Mining TANZANIA Sugar Rice Mining Port Tanzania-Kenya-Sudan Corridor Road Dar es Salaam-Isaka- Kigali-Bujumbura rail SEYCHELLES Hotels & Accommodation MAURITIUS Air transport ZAMBIA Storage and warehousing SWAZILAND Basic chemicals Mining Power generation D.R. CONGO Energy Mining ICT Infrastructure Hotel/ accommodation EGYPT Agriculture/ Bio-fuels Comoros Air Transport Eritrea Mining Zambia Storage/ warehousing, Mining, Healthcare Zimbabwe Mining Agro-industries Hotels Infrastructure (power and transport) Ethiopia Agro-processing Power generation Cement Leather processing

10 The Industrial Development Corporation 19 Fredman Drive, Sandown PO Box , Sandton, 2146 South Africa Telephone (011) Facsimile (011) Thank you


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