1. Industrial Development Corporation
Corporate Plan 2013/14 to 2017/18
13 August 2013

2. Structure of Presentation
Background
Revisions to IDC’s Strategy
Leading Industrial Development by Driving Implementing the NGP and IPAP
Balancing increased impact with sustainability of investments
Targets
IDC portfolio

3. Overview

4. Overview Activities Customers Business lifecycle Sectoral involvement
Funding products
Regional involvement
Provision of development finance
Project development
Research and policy inputs
Fund management
Non-financial forms of business support
Capacity building
Business
Government
Other DFIs
Conceptual
Pre-feasibility
Feasibility
Product commerciali-sation
Establishment
Expansion
Mature
Manufacturing
Agricultural value-add
Mining and mineral beneficiation
Green industries
Industrial infrastructure
Tourism, cultural industries and other productive services
General debt
Quasi-equity
Equity
Export/import finance
Short-term trade finance
Bridging finance
Guarantees
Venture capital
Wholesale funding through intermediaries
South Africa
Rest of Africa
Global imports of South African capital equipment

5. Revisions to IDC’s Strategy

6. Changes to objective and outcomes to reflect changing priorities and expectations
To be “the primary driving force of commercially sustainable industrial development and innovation to the benefit of South Africa and the rest of the African continent”
Vision
The IDC is self-financing national development finance institution whose primary objectives are to contribute to the generation of balanced, sustainable economic growth in Africa and to the economic empowerment of the South African population, thereby promoting the economic prosperity of all citizens. The IDC achieves this by promoting entrepreneurship through the building of competitive industries and enterprises based on sound business principles.
Mission
Objective
Support industrial capacity development
Lead industrial capacity development
Primary: Facilitate sustainable direct and indirect employment
Secondary:
Improving regional equity, including the development of South African rural areas, poorer provinces and industrialisation in the rest of Africa;
Growing the entrepreneurial and SME sectors
Expansionary and/or broad-based black economic empowerment
Environmentally sustainable growth
Growing sectoral diversity and increased localisation of production
Primary: Facilitate sustainable direct and indirect employment
Secondary:
Improving regional equity, including the development of South African rural areas, poorer provinces and industrialisation in the rest of Africa;
Growing the entrepreneurial and SME sectors
Transformational impact on communities and growing black industrialists
Environmentally sustainable growth
Growing sectoral diversity and increased localisation of production
Outcomes
Values
Passion
Professionalism
Partnership

7. Leadership in Industrial Development – 2013/14 onwards
Increasing Industrial Development Impact
Ensuring Long-Term Sustainability
Financial Capital
Human, Social, Natural and Manufactured Capital
Strengthen sector development objectives and strategies
Align IDC with the sector objectives of NGP and IPAP
Increased project development and implementation
Provide industrial finance to further achievement of sector development objectives
Increase regional industrial integration through the development of value chains
Ensure effective and efficiently operating sefa
Plan investment return and risk profile to ensure sufficient growth to replace existing cash generators
Ensure that appropriate pricing and fee structures are in place
Manage risk through appropriate investments, pricing and management of the portfolio
Human resources
Ensure appropriately skilled and capacitated human resources
Stakeholders
Improve customer service
Build partnerships with other financiers to leverage off different strengths and mandates
Increase engagement with sector players to identify opportunities
Strengthen IDC expertise to shape and influence policy
Build strong communities around projects that IDC fund
Natural environment
Reduce IDC’s negative environmental impact
Reduce industry’s negative environmental impact
Utilisation of resources
Improve efficiencies through improved systems and processes
Priorities have been revised and the strategy has been repackaged to emphasise the balance between increasing IDC’s impact and ensuring sustainability

8. Leading Industrial Development by Driving Implementing the NGP and IPAP

9. Context of IDC’s strategy
IDC is one of the main drivers of the implementation of the New Growth Path (NGP) and Industrial Policy Action Plan (IPAP);
Over the past two years, it has been aligning its operations to support the priority sectors identified by these policies.
Logistics, infrastructure and cross-sector projects
The green economy
Logistics
Industrial infrastructure
Green and energy saving industries
Bio fuels
Tourism, creative industries and high-level services
Craft and film
Business process services
Biotechnology
Agricultural value chain
Tourism
Agro-processing
Forestry, paper & pulp, furniture
Mining related technologies
Healthcare
ICT
Manufacturing activities
Automotives, components, medium and heavy commercial vehicles
Metals fabrication, capital and transport equipment
The mining value chain
Mining
Downstream mineral beneficiation
Advanced manufacturing
Plastics and chemicals
Clothing, textiles, footwear, leather
Pharmaceuti-cals
Oil and gas

10. Sectoral focus areas –Resources
Mining and Minerals Beneficiation
Steel and steel related inputs
Early stage project development of mining linked to beneficiation
Rest of Africa
‘New age’ minerals
Agro-Industries
Localisation
Land utilisation
Innovation
SHIP
Industrial infrastructure
High impact logistics
New sector development
Lines of credit and end-user finance
Green-Industries
Energy efficiency
Renewable energy
Fuel based green power
Emissions & pollution mitigation
Bio-fuels

11. Sectoral focus areas –Manufacturing
Textiles
Conducive environment
Competitive local / regional value chain
Stabilise major IDC investments
Forestry and Wood Products
Forestry
Sawmilling
Pulp and paper
Value added products
Chemicals
Mineral Beneficiation
Agricultural inputs
Infrastructure Inputs
Oil and gas
Develop plastics value chain
Metals
SOE Capex program
Tooling, die and mould industry
Foundries
Automotive components
Medium and heavy commercial vehicles,

12. Sectoral focus areas – Services
Tourism
Underdeveloped tourism nodes suitable and affordable to the domestic market
Rest of Africa
ICT
Broadband
ICT Green
Electronic sector
Healthcare
Pharmaceuticals
Medical Devices
Hospital PPPs
Media
Film production
Production infrastructure development
Audience development
Animation Hub
Pan African Television Broadcasters

13. Sectoral allocation Capital Allocation – 2013/14 to 2017/18
By IDC Business Unit
By NGP Jobs Driver
In line with its focus on industrial development, the manufacturing industry, driven mainly by the metals and chemicals industries will receive the largest share of IDC’s allocation;
The mining value chain, green industries and agricultural value chain are also expected to contribute significantly to funding over the next five years.

14. Leading Industrial Capacity Development
To truly lead industrial capacity development, IDC needs to continue:
Being proactive;
Developing deliberate strategies with clear objectives for different industries;
Collaborating and cooperating with different role-players in the private sector, government and financial sector to implement these strategies.
The impact of IDC playing a leading role is illustrated in the following slides

15. Case Study: Localising manufacturing of components for the renewable energy build programme
DCD Wind Tower Factory
After feasibility studies proved the viability, IDC is co-investing with DCD, a local company to set up a facility to build towers for wind turbines in the Coega IDZ.
This investment was made possible by the Renewable Energy Procurement Programme which allocated 1 850MW to onshore wind projects. The Eastern Cape is a well suited location for the project given that the bulk of the wind power generation projects that has preferred bidder status is located in this province.
The project will create 203 permanent jobs and increase localisation of components for renewable energy generation projects.
Localising production 
Poorer province
New industry

16. Case Study: Localising manufacturing of automotive components
MSSL Global RSA Module Engineering Limited
The company manufactures plastic moulded components for local motor vehicle assemblers such as Toyota, Nissan and Ford. Given the drive to increase local production of motor vehicle components, the Indian based company will be setting up a factory in Durban to manufacture
Interior and exterior plastic components.
The products that will be produced used to be imported previously additional people will be employed by the company as part of the expansion and the project will add to the downstream beneficiation of plastics.
Localising production 
Import replacement

17. Case Study: Ensuring competition in the supply of steel
Scaw Metals
Scaw, a company operating in the steel industry, employs about people in with four divisions manufacturing grinding media, wire rod products, cast products, and rolled products.
The grinding media division is the only large scale African manufacturer of grinding media used in mining industries, with the wire rod products division manufactures specialised rods and chains destined for the mining and construction sectors. The cast products division manufactures specialised products also targeting the mining, rail and power generation sectors and the products manufactured by the rolled products division are destined for the mining, infrastructure, construction and power generation sectors.
IDC acquired Scaw from Anglo-American PLC in 2012 in pursuit of its strategy to intervene in the South African steel industry to ensure competitively priced steel supplies to downstream industries and increase localisation.
Scaw is well positioned to capture growth in the mining, railway and power generation sectors. Scaw is the only producer of locomotive frames in Southern Africa and one of a few in the world.
Modernising industry 
Downstream development

18. Case Study: Establishment of new industries
Bioethanol
IDC is the sole shareholder in a R2 billion project to produce bioethanol in the Eastern Cape;
The project will construct a 100 million litres per annum bioethanol production plant utilising grain sorghum as feedstock;
This will be the first significant production facility for biofuels in the country and will create jobs for people during the construction and operational phases in a rural area in a poor province;
The project is at a phase where it will start to source equipment needed for construction.
Rural development 
Poorer province
New industry
Job creation

19. Case Study: Establishment of new industries
Conduct Telecoms
Conduct Telecommunications builds, owns, manages and leases last mile dark optic fibre using an open access model. The company previously approached the IDC to fund pilot sites for their network.
These sites have been completed and is participating in funding the roll-out of additional sites jobs will be created during the installation of the cables. The company is increasing broadband penetration.
Increasing competitiveness 
Job creation

20. Balancing increased impact with sustainability of investments

21. Sustainable development impact
Increasing industrial development impact
- Financial
- Communities
- Environment
- Jobs
Sustainability:
Impact
Sustainability

22. Balancing a greater impact with sustainability
Increasing its industrial development impact should be done responsibly and the corporation needs to consider the following:
Increasing leverage of funding from other sources including private sector financiers and other DFIs;
Ensuring that our projects and clients are sustainable:
Maximising the direct impact on communities;
Development of small business to further increase the impact;
Monitoring and managing investments to identify potential problems at client businesses and intervene timeously where required;
Identify opportunities for growth to increase clients’ development impact;
Minimising the negative impact that projects have on the environment;
By ensuring client sustainability, job creation is guaranteed and IDC’s financial sustainability is strengthened.

23. Sustainable communities and regional equity
IDC Offices
Several of the sectors that IDC support have a strong direct or indirect presence in rural areas.
These include agro-processing, tourism and mining among others.
IDC is strengthening its processes to ensure that projects deliver the maximum benefit to local communities.
Part of this includes the development of SMEs that take advantage of the benefits that the project brings to the area. In this regard, sefa will play an important role in the future.

24. Case Study: Rural development through agro-processing
Russellstone Soy Crushing Plant
The project comprises the development of a green-fields soya crushing facility in the Bronkhorstspruit Industrial Area. The plant will have a capacity of c.a tons per annum and will convert soya beans into high quality soya oil cake, soya hulls, and crude soya oil for distribution into the animal feed and industrial sectors. This will be the first dedicated oil cake focussed commercial-scale soya crushing facility in South Africa replacing c.a tons of imported soya cake per annum, creating 48 permanent job opportunities, and having a direct and beneficial impact on the local cultivation of soya beans. The project will require the dry-land cultivation of ca ha soya, which would also promote disease management and improve soil nutrition if used as part of a rotational crop. The indirect employment impact in the agricultural sector is conservatively estimated at jobs.
Rural development 
Import replacement
Job creation

25. Case Study: Development of value chains benefiting rural areas
Coega Cheese
In 2011, IDC approved funding for the establishment of a dairy in the Coega IDZ. The project is operating and IDC was more recently approached to provide funding for the establishment of a cheese factory adjacent to the dairy.
The project is further beneficiating agricultural projects in addition to the value-add that the dairy already provided, with an additional 46 jobs being created.
Poorer province 
Downstream development

26. Case Study: Funding for renewable energy
IDC Participation in Rounds 1 and 2 of the Renewable Energy Procurement Programme
Technology
Number of projects
Value (R’m) MW
Solar Photo-Voltaic 7
1 048
138
Wind
2 011
452
Concentrated Solar 2
3 448
150
Hydro 1
188 10
Total 17
6 695
750
IDC is one of the largest funders for projects qualifying under the first two rounds of the REIPP programme.
It will continue to participate, ensuring that localisation and community development around projects receive the highest priority.
Rural development 
Poorer provinces
New industry

27. Environmental impact
DFIs across the world are playing a leading role to transform economies to be less energy intensive.
South Africa has one of the least energy efficient economies in the world.
Recent and expected future electricity price increases are impacting the competitiveness of local industry negatively.
In addition to energy and the resulting carbon emissions, several other natural systems, including water is also being put under pressure. This is specifically important for a water-scarce country such as South Africa.
Given IDC’s close association with industry and the fact that this is a fairly new market, it is in a prime position to assist in providing funding to businesses seeking to realise the benefits of improving processes and equipment to lessen their impact on the environment.
To achieve this, the organisation has already launched the Green Energy Efficiency Scheme, but plans to further improve processes to entrench an approach that considers environmental impacts in all its approval and monitoring processes.

28. Rural development through agro-processing
SA Calcium Carbide
SA Calcium Carbide, located in Newcastle, is the only producer of calcium carbide in Africa. IDC previously provided funding for the company to assist with the installation of a co-generation facility, utilising furnace off- gas currently being flared, to reduce the company’s reliance on the national grid for electricity.
The project has been successfully commissioned and the company more recently approached IDC to provide funding for an additional initiative aimed at removing and destroying cyanide from waste water.
Environmental protection 

29. Increasing capacity in the recycling industry
Bon Accord Recycling Facility
One of the country’s largest waste management services companies approached IDC to set up a semi-automated material recycling facility at a landfill site in Pretoria.
The transaction will create 33 jobs with the potential for 30 more if an additional shift is introduced. The company will be able to process tons of waste per month and recover paper, plastics and glass in the process.
Reducing negative environmental impact 

30. Partnerships and collaboration
In order for IDC to achieve its goal, it needs to work with other organisations. To this end, the corporation has been partnering with various role-players to fulfill its mandate and increase its impact.
dti - Industrial development impact through the management of special schemes such as the Clothing and Textiles Competitiveness Programme (CTCP) and Manufacturing Competitiveness Enhancement Programme (MCEP);
Whole school programme – IDC targeting 20 schools across the country in support of the Basic Education Accord. Depending on the individual needs of each school, the IDC’s intervention could include leadership training; building of science laboratories; teacher development in technology and extra lessons for maths and science;
Various Provincial Governments – Increasing rural development by working with provincial govenments to roll-out the Nguni Cattle project;
Association of African Development Finance Institutions (AADFI), SADC-Development Finance Resource Centre (SADC-DFRC); individual DFIs on the rest of the continent – Assisting with capacity building and providing lines of credit to assist DFIs in the rest of the continent to fund development;
Business Community – Recently concluded the IDC BMF sefa Business Plan Competition in conjunction with the Soweto Branch of the Black Management Forum – competition to be rolled-out to the rest of the country;
Land Bank – Working closely with Land Bank, including utilising them as an intermediary for IDC funding, to better reach rural areas and assist with the development of primary agriculture.
The Nguni Cattle Project
The primary focus of the project was to empower previously disadvantaged emerging commercial farmers
establish a viable supply of organic beef for the growing local and international market
The project engages traditional farmers in the breeding and conservation of indigenous livestock
Each community receives pregnant Nguni heifers and Nguni bulls
All members of the communities are involved in the concept of “passing on the gift” where communities are required to return 10 heifers and 2 bulls from the offspring within 5 years.

31. Financial sustainability
By managing its clients better, IDC can improve their performance resulting in a more successful client base.
This will result in more sustainable clients and a more sustainable development impact. If risks in businesses are identified early enough, interventions can be made earlier and turnarounds implemented in time to save the business.
IDC currently subsidises certain debt funding costs with equity returns. As IDC plans to dispose of equity investments to commit capital to new ventures there is a need to find ways to replace existing mature investments with new investments that deliver suitable returns.
To reduce the potential impact on IDC’s loan prices, IDC will increase its sourcing of lower-cost funding.
IDC’s Funding Model
IDC relies on borrowings, internal profitability, capital growth and exits from mature investments to maintain and expand its funding ability

32. Targets

33. IDC Targets for 2013/14 Perspective Indicator Measurement 2013/14
Baseline
Targeted
Industrial capacity development 
Implementing projects
% of pre-identified projects implemented
70% of projects
100% of projects
Contribution to investment in the economy
Value of funding approvals with agreements signed
R14bn
R21bn
Sub-minimum: disbursements
R8bn
Progress towards achieving priority industry development goals
Achievement of industry development milestones
80% achieved
90% achieved
Development impact
Jobs expected to be created/saved in South Africa
Number of jobs expected to be created or saved, counted at the time of agreements being signed
32 000
50 000
Sub-minimum: jobs in rural areas
7 000
Actual jobs created
Actual number of jobs created/saved in South Africa
20 000
25 000
Financial sustainability and efficiency
Ratio of administration costs to interest and fee income
Administration cost, including grants and donations, excluding impairments as a % of net interest and fee income and dividends (excl. mature legacy investments)
Budget
Budget - 10%
Growth in reserves
5-year average growth in reserves (excl. mature legacy investments)
CPI+2%
CPI+4%
Growth in value of new equity investments
IRR for investments where IDC first took equity in the underlying business since 1 April 2010
1.7%
4.%
Level of impairments
Impairments as a % of the portfolio (at cost)
18%
16%

34. IDC Targets for 2013/14 (continued)
Perspective
Indicator
Measurement
2013/14
Baseline
Targeted
Human capital
Staff turnover
Staff turnover for high performance individuals and successors on M level and above 7% 5%
Stakeholder relations/ Customer satisfaction
Turnaround time on transactions
Turnaround time on non-complex transactions: (from date of start of due diligence to date of agreement being sent to client)
17 working days
15 working days
Customer satisfaction index
TR*M index value as determined through survey 85 95
IDC reputation
Reptrak Pulse index value (measured every two years)
Not measured
sefa
Implementation of sefa
sefa achievement of balanced scorecard
sefa’s performance against targets for 2013/14

35. IDC’s portfolio

36. IDC’s Portfolio as at 28 February 2013
By Region
By Industry
IDC’s participation in the renewable energy procurement programme has made a large impact on its portfolio in especially the Northern Cape and Eastern Cape;
Mining continues to play a major part in IDC’s development activities given the importance of the sector both locally as well as in the rest of the continent.
100%
16% 8%
11%
12% 4% 7%
26% 1% 5% 7% 8% 9% 5% 1% 3%
11% 2% 4%
24% 6%
Agriculture, forestry & fishing
Eastern Cape
Free State
Gauteng
KwaZulu Natal
Limpopo
Mpumalanga
North West
Northern Cape
Western Cape
Outside SA
90%
Mining
80%
Food and beverages
70%
Clothing, textiles, leather and footwear
60%
Wood, paper, printing and publishing
Petroleum, chemicals, rubber plastics and non-metallic minerals
50%
Basic metals
40%
Fabricated metals, machinery and equipment
Motor vehicles and transport equipment
30%
Other manufacturing
Electricity and water supply
20%
Construction, transport, catering and accommodation
Communication and business services
10%
Medical and community services 0%

37. Thank you Industrial Development Corporation 19 Fredman Drive, Sandown
PO Box , Sandton, 2146
South Africa
Telephone
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