1 IDC Annual Report - 2006/07 Accelerating Sustainable Economic Development Geoffrey Qhena CEO10 October 2007
2 Mission and Vision“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”Contribute to the generation of balanced, sustainable economic growth in South Africa and AfricaEconomically empower the South African populationPromote entrepreneurship through the building of competitive industries and enterprises based on sound business principles
3 IDC’s RoleTo support sustainable development, IDC invests in businesses showing economic merit;Some businesses are not often funded because of perceived high risks;IDC views this as a market failure;IDC does more detailed assessments and funds investments which would not otherwise happen;IDC plays a critical role in assisting industries to develop, in ways which meet South Africa’s needs:Supporting industrial policy development;ASGISA;Investments in targeted sectors;Cooperate with national and provincial government, DFIs, and other COTII institutions.
4 IDC’s Objectives Sustainable job creation; Regional development BBBEE; Rural areasProvincial spreadTownshipsIDZs;BBBEE;SMEs;Entrepreneurs;Enhance balance of payments position by encouraging exports;Support industrial development in the rest of Africa;Achieve these goals while remaining financially sustainable.
5 2006/07 Annual HighlightsFacilitated the creation of a record of more than direct jobs in South Africa with a further in the rest of Africa as a result of funding activities;R5.9 billion in funding approvals for 241 enterprises;About 24% of the jobs to be created and 20% of approvals to three provinces with highest unemployment rates;69% of the number of approvals relate to SMEs;162 transactions totalling R3.4 billion to black empowered companies;More than 680 SMEs received training and business support;Earmarked R250 million in venture capital for the next five years;Facilitated six workers’ trusts and 15 community foundations in our investments;The IDC won Businessmap Foundation/Business Report award for Top Development Financier for Black Economic Empowerment for the fourth consecutive year, with one of our clients winning the Top Black Business award and another two clients reaching finals in this category.Job CreationApproval Value33117 jobs in South Africa is the highest achieved in the last 13 years3816 jobs were saved (2006:991) contributing to 12% of the total number of jobs. 50% of jobs saved were in the clothing and textiles industries5.63 jobs were created for each R1m of IDC investmentMore than jobs created will be in black empowered companies24% of jobs created in South Africa will be created in three provinces with the highest unemployment rates (Eastern Cape, Limpopo, North West)5099 new jobs expected to be created in townships with 1448 jobs saved.168 of the number of approvals went to SMEs,R597 million were approved for 32 businesses operating in or near townships (Inanda, Hammanskraal, Shoshunguve, Phoenix, Alexander, Dobsonville, Mdhatha, Mamelodi, Jabulani, Thembisa)R1 360 million were approved for 41 businesses operating in the South African rural areas*9-month period
6 Some Development Agency Projects Regional DevelopmentSome Development Agency ProjectsR597 million approved for developments in townships, expecting to create new jobs and save existing ones;Over jobs will be created in rural districts of South Africa;“Development agencies” enable IDC to participate more intensively in rural development and unlock economic potential of various provinces;The agency concept starting to bear fruit, with various projects identified and being implemented.AgencyInceptionProject InformationNkonkobe2003Instrumental in reviving Kat River citrus developmentBlue Crane2004Boschberg Mountain Development (with Tourism) estimated R800 m projectFlower project 8 women own projectVegetable seed project with 28 beneficiariesAirport project accessed R5m grant and employs 53 temporary workersFruit project 4 permanent and 32 temporary workersPomegranates project (4000 tree pilot)HibiscusBeachfront plan approved – project team in place, funding received from National TreasuryMandela BayGovan Mbeki Avenue upgrade (R 12m)Donkin Reserve (R 9m)UDZ tax incentive facilitationCleaning and security (300 jobs)IllembeAmatikula Fisheries (R36 m) KZN Growth Fund3 Gijima funded projects, 5 under review. The Agency Development Support Department (ADS) has been charged with the primary responsibility of providing a dedicated programme of financial and technical assistance to municipalities seeking to establish such local development agencies. The primary objectives of these agencies are:To promote and develop economic potential on a local and/or regional basis by building on opportunities and unique competitive strengths of the region’s economy;To leverage public and private resources for development around opportunities which offer investment, employment, economic and development potential/opportunities;To foster/develop the innovation and entrepreneurial potential and activity which supports and drives economic growth;To manage the spatial organization of the area , in a socially efficient manner, particularly through the use of public land and targeted private projects;To strengthen the respective areas and perceived environment so that it can compete for capital investment necessary to develop its full economic potential.Six (6) projects from agencies have enjoyed investigation and are under consideration by relevant SBU’s , namely :Boschberg Tourism Development Node (Blue Crane)Clackson/BCDA Hydro ProjectAlbesera Aircraft manufacturingWits Ultra-light Aircraft Project/Somerset East Aviation ProjectEast London Harbour UpgradingDesert Raisin Expansion
7 Value of Empowerment Approvals Number of Empowerment Approvals BEE162 transactions totaling R3.4 billion to black empowered companies;BEE accounted for 68% of the total number of approvals and 58% of the total value of financing approved;Specific targeting of expansions and new BEE companies, and reduced focus on BEE acquisitions financed;32% of funding approved was for expansions and start-ups by black business;R1 026 million approved for acquisitions;Extension of the competitive financing scheme.Value of Empowerment ApprovalsNumber of Empowerment ApprovalsBethlehem farmers trustKWV foundationGolden Frontiers Citrus foundationDMC diamondsLiving GoldArisa foundationBroodkraal foundationKenaf FoundationEC Biomass foundationGlobal forestsCoast skills community foundationElgin homes*9-month period
8 Examples of Business Support provided SME SupportFinancing provided to 167 SMEs;70% of the number and 18% (R985m) of the value of IDC’s approvals are to SMEs;To provide finance to a wider range of SMEs (especially new entrepreneurs), some gaps need to be addressed:Lack of skills;Lack of necessary support systems;Lack of access to financial institutions;Entrepreneurial development initiatives introduced to promote entrepreneurship and enhance sustainability of IDC funded businessesIDC business support to clients;More than 680 delegates attended entrepreneurship courses sponsored by IDC in Gauteng, Northern Cape, Eastern Cape, Limpopo, and Free State.Examples of Business Support providedClientSupport ProvidedHlumisa - Eastern CapeAssistance in selecting and setting up financial management systems, design and documentation of costing system, design of leads management system (new clients) and developing marketing strategyITT - East RandAssisted in implementing QA system, capacity managementVAC Cleaning -Cape TownAssisted through development of financial management system, and in strategic decision-making while mentoring owners over long period
9 Competitive Financing for Development R1 billion fund providing financing for 5 schemes expired December 2006:Pro SME Jobs Scheme;Pro BEE Expansionary acquisitions scheme;Pro Franchise Scheme;Pro Forestry Scheme;Pro Orchards Scheme;Loans priced at up to prime less 5%;Assisting 115 SMEs to create 7450 direct job opportunities;Extension of Pro Orchards, Pro Forestry, Pro BEE Expansionary Acquisitions Schemes.
10 Some High Impact Projects IDC identified the berry industry as a industry with potential:High value agricultural cropHigh international demand – healthy food consumption trendsLabour intensiveExport cropProjectLocationImpactBlue Mountain BerriesGeorge, Western CapeBlueberries, 70ha, 450 jobsAmathole BerriesStutterheim, Eastern CapeBlueberries, 330ha, 2,300 jobsEcho BerriesBrits, North WestStrawberriesAmajuba BerriesCharlestown, KwaZulu-NatalRaspberries, 100ha, 795 jobs
11 Some High Impact Projects The fish processing industryIDC’s current exposure (including commitments) to this industry = R60mExportsThe budgeted export volumes will contribute at least R6.7m in export earnings per annum.Sub-sectors supported:Abalone;Fish Packing & canning; andIce production for the fish industry.Regional: exposure in Western, Eastern & Northern Cape;BEE exposure includes:Bluefin;Mosselbay Fish ProcessorsIndustry development needsShortage of processing capacity (hake and lobster) in Hout Bay;Lack of HACCP compliant facilities;Lack and availability of ice.
12 Some High Impact Projects Eastern Cape BiomassBlack empowered company situated in Coega Industrial Development zone;Manufacture of fuel pellets;tons per month for European markets;Biomass is an environmentally friendly alternative source of energy;In line with IDC strategy to invest in clean fuels;370 full time jobs created;Ownership shared with workers and community;IDC investment R59m
13 Some Other Investment Approvals Marine fabrication and construction yard catering for the West African offshore oil and gas industry – Saldanha, Western Cape – 700 permanent jobs – 5% community participationMining services for the diamond mining industry – Barkley West, Northern Cape – 212 permanent jobs – 10% workers participationCement blending supplying the cement brick and construction industry – Mabopane, North West – 50 permanent jobs – 100% black owned and managedTourist lodges catering for the local and foreign 3-star market – Nkambeni, Mpumulanga – 250 permanent jobsExpansion of dried fruit plant catering for the export market – Marulaneng, Limpopo – 80 permanent jobs250 bed private hospital – eThekwini, KwaZulu-Natal – 570 permanent jobsCall centre services – Randburg, Gauteng – 540 permanent jobsProduction of fertilizers, further beneficiating the upstream chemicals industry’s products – Sasolburg, Free State – 58 permanent jobs – 44% black ownershipStainless steel strip cold rolling mill – Coega, Eastern Cape – 105 permanent jobs
14 Beyond Investment Herdmans – Atlantis, Western Cape Herdmans is a producer of linen yarn, located in Atlantis in the Western Cape.IDC became involved with the company in 2001, when it provided funding to help fund a portion of Herdmans Ireland’s operations to relocate to South Africa.By 2005, all the Irish operations except a dye house and the marketing operations had been relocated to the premises in Atlantis.At the start of 2005, quotas on Chinese exports in the textiles sector were lifted worldwide, and the company soon started facing difficult market conditions.By 2006, the company’s Irish bankers and shareholders withdrew support for the company and Herdmans ceased manufacturing.In an attempt to save some of the jobs at the company, IDC took ownership of the company and started a process of restructuring.With the help from the landlord, Khula, and major creditors such as the City of Cape Town, 95 jobs were saved in the company.Herdmans is still facing significant challenges, but the IDC is positive about the company’s future.IDC’s development focus extends beyond the investment decision, and plays an integral part of the investment monitoring process
15 Touching Lives Knysna Elephant Park STANFORD MOTAU, Head Trainer – Leads the handlers and their partner elephants in rigorous daily training sessions.SHEILA MSOPI, Ticket Office and Education Centre – ‘My job is very interesting, I’m learning a lot.’NOLA NDEBENDWANA, Statistics and Bookings – Studying towards a Diploma in Public Finance and Accounting.MOSEKETSI MPETA, Senior Account Manager, Tourism SBU – ‘As a development finance institution, we seek to fund those projects which commercial banks consider to be high risk. For a very long time the IDC was the only institution funding tourism. And when we decide to fund a project, we conduct a very detailed due diligence, so we know exactly the risks that are involved.’NIEK WOLMARANS, Senior Account Manager, Tourism SBU – ‘A normal commercial bank would probably not have funded a project like this. But now, in an area on the border of the Eastern Cape, which is very poor, they are employing about 60 people, and they are probably supporting quite a few people themselves.’STANFORD MOTAU - ‘The park’s ‘visitor friendly’ elephants are trained by STANFORD MOTAU, head trainer. He leads the handlers and their partner elephants in rigorous daily training sessions starting at 6.30 each morning. Stanford lives on the property, with his wife, Florence, who also works on the farm. The newly built staff residences feature a common room equipped with entertainment facilities.SHEILA MSOPI - The park’s facilities include an interactive elephant education centre for visitors. SHEILA MSOPI grew up near Queenstown in the Eastern Cape and had to cut short her tourism studies at a college in Cape Town for financial reasons. But she has grown since she recently started working in the ticket office at the elephant park and she introduces visitors to the education centre. ‘My job is very interesting,’ she beams. ‘I’m learning a lot.’ In addition to its conservation impact, the park has been a good source of new jobs in the area. About nine people are now employed per elephant (five directly, four indirectly).NOLA NDEBENDWANA - NOLA NDEBENDWANA handles the statistics and major bookings for the Knysna Elephant Park that now receives over visitors per year. In her free time, Nola is studying towards a Diploma in Public Finance and Accounting. Her goal is to ensure that visitors get the best out of the variety of experiences on offer at the park.
16 Touching Lives Bethlehem Farmers’ Trust JOSEPH TSHABALALA, Field Manager – Unemployed for eight years before being selected as one of the 94 farmers who would be trained in managing and maintaining apple orchards.PIETER FOURIE, Project Manager – ‘If this project were to fail in the future once ownership has been transferred into the hands of the farmers, I would not have done my job properly’MASONTAHA TITEBE, Farmer and Project Secretary – ‘I don’t want to focus only on apple farming. In coming years I want to see myself farming cattle too.’RIAN COETZEE, SBU Head: Food, Beverage & Agro Industries – ‘We often review projects with community involvement. Quite often the individuals in the community trust get lost because it’s a trust with thousands of beneficiaries. At Bethlehem Farmers’ Trust there’s real ownership – clearly identified beneficiaries who have taken up ownership of the project.’KALVENIE RAJA, Senior Account Manager, Risk Capital Facility SBU – ‘What I like very much about this project is its focus on training and skills development. Empowerment is not just about ownership. Through training, the farmers’ operational involvement has made the project more meaningful to them, boosting its sustainability and removing dependency on others to do for them what they now can do for themselves.’JOSEPH TSHABALALA - Formed in 1998, with assistance from the IDC, the Development Bank of South Africa and the departments of agriculture and land affairs, 106 hectares of apple orchards are being developed, while training and empowering unemployed people from historically disadvantaged communities, to establish them as farmers. Field manager JOSEPH TSHABALALA was unemployed for eight years before being selected as one of the 94 farmers who would be trained in managing and maintaining apple orchards.PIETER FOURIE - Project manager PIETER FOURIE is a born and bred farmer passionately committed to seeing the project prosper. ‘If this project were to fail in the future once ownership has been transferred into the hands of the farmers, I would not have done my job properly,’ he boldly declares.MASONTAHA TITEBE - ‘We are not women and men here. We are farmers,’ says Agri mentor Hendrik Pheko. ‘We don’t treat women differently or men differently. In line with the IDC’s commitment to gender empowerment, 30 percent of the BFT farmers are women. MASONTAHA TITEBE joined the project a year after matriculating. Her salary enables her to rent her own place and, as a single parent, to pay both her children’s school fees. ‘The project has impacted on my life in a big way,’ she says. As well as being a fully trained farmer, she works in the BFT offices as the project’s secretary. ‘I don’t want to focus only on apple farming,’ she says. ‘In coming years I want to see myself farming cattle too.’We often review projects with community involvement. Quite often the individuals in the community trust get lost because it’s a trust with thousands of beneficiaries. At Bethlehem Farmers’ Trust there’s real ownership – clearly identified beneficiaries who have taken up ownership of the project.’ - RIAN COETZEE, SBU Head: Food, Beverage & Agro Industries‘What I like very much about this project is its focus on training and skills development. Empowerment is not just about ownership. Through training, the farmers’ operational involvement has made the project more meaningful to them, boosting its sustainability and removing dependency on others to do for them what they now can do for themselves.’ - KALVENIE RAJA, Senior Account Manager, Risk Capital Facility SBU
17 Touching Lives Amka Products ISMAIL KALLA, Amka CEO – ‘It’s always been a win-win relationship. They’ve been more than a bank to us, offering us technical as well as financial support. They forced us to budget forward and think in terms of good results, getting us focused in the right direction.’RONALD MAKOLA, Black Like Me Marketing Manager – ‘Although we treat the SADC region as our local market, we are busy establishing ourselves in the Democratic Republic of Congo, Mozambique, Angola, Kenya and Nigeria.’MARY KWINDA, Lecturer Amka Academy – ‘I was very curious about this thing of hair. With no formal education, I saw that it was a skill that could help me to advance myself. Students from Zimbabwe, Togo, Nambia – they all know me’MOHAMED SHAIK-AMOD, Senior Account Manager, Chemicals, Textiles and Allied Industries SBU – ‘Amka is one of IDC’s success stories. We’ve been with them for many, many years, so there’s a long history to the association. We’ve taken them from a small SMME to a very large corporate, which is now a multi-billion rand turnover company, if you factor in all the companies within the group.’WILLIE FOURIE, Head: Chemicals, Textiles and Allied Industries SBU – ‘One of our clients started out supplying solely to Amka and their business has grown hugely. Having developed a niche of its own they no longer supply Amka, so the Kallas have gone on to develop another company which manufactures jars for their products. Amka favours developing new entrepreneurs, so the pool gets bigger and bigger around them, while they increase their own footprint.’Established as a humble trading store on Boom Street, Marabastad, in the late Fifties, today Amka Products is one of the largest family-owned health and beauty companies on the continent, with 20 leading brands selling in more than 35 African countries. ‘We’ve been blessed with a winning team,’ says CEO ISMAIL KALLA‘The kinds of products we sell make it possible for me to manage my hair properly,’ says Black Like Me CEO CONNIE MASHABA. Connie has been in the business of hair care for 22 years. In 1985, her husband, Herman, started a small business in Hammanskraal, called Black Like Me. Soon the factory in Garankuwa was too small… In 1993, following a fire that burned their factory to the ground, they opened a new plant in Midrand and were there until 2005, when they joined the Kalla brothers at Amka.Black Like Me (BLM) marketing manager RONALD MAKOLA became part of the Amka team when the two companies merged in He joined the legendary Afrocentric cosmetics house during the landmark year of 1994, having graduated as an analytical chemist at what is now the Tshwane University of Technology. After working on the production side for several years, he was appointed marketing manager in 2001, and quickly started developing stand-alone brands.‘Amka is one of IDC’s success stories. We’ve been with them for many, many years, so there’s a long history to the association. We’ve taken them from a small SMME to a very large corporate, which is now a multi-billion rand turnover company, if you factor in all the companies within the group.’ - MOHAMED SHAIK-AMOD, Senior Account Manager, Chemicals, Textiles and Allied Industries SBU‘One of our clients started out supplying solely to Amka and their business has grown hugely. Having developed a niche of its own they no longer supply Amka, so the Kallas have gone on to develop another company which manufactures jars for their products. Amka favours developing new entrepreneurs, so the pool gets bigger and bigger around them, while they increase their own footprint.’ - WILLIE FOURIE, Head: Chemicals, Textiles and Allied Industries SBU
18 Touching Lives Ntuso Forestry THAMI ZIMU, Owner – ‘I couldn’t forget the way I grew up. It was an important foundation for me. If there is nobody in your area to look up to, it is very difficult to pick yourself up.’BHEKI MHLUNGU , Farm Manager – ‘I’m managing to support my family and send my three kids to school.’ As one of the permanent employees, he will soon be a beneficiary of the workers trust.RENTIA VAN TONDER, Head: Wood & Paper SBU – ‘Given the situation in the country with limited resources in timber, we decided that, as the IDC, we would like to make a difference. But initially we found that it was impossible given our general guidelines and norms. We needed long-term finance and special funding structures, and had to think out of the box to achieve true empowerment in this sector. We structured the transaction in such a way that Thami and her family trust would acquire 70 percent of the company and the workers’ trust would acquire 30 percent, which supports our objective to facilitate broad-based structures. That’s really close to my heart, as it’s in a rural area with high poverty where the people that will benefit had very little.’THAMI ZIMU - Ever since she was a girl growing up in rural Ndonyane on KwaZulu-Natal’s South Coast, THAMI ZIMU has had her eye on the prize. Born into a hardworking family, she started out helping her parents, who were subsistence farmers. In 1977, she began her career as a nurse and was soon leading the Edendale Hospital Sociology Department while lecturing at the University of KZN. Then she changed direction and joined Sanlam as a financial advisor, quickly earning herself a Sanlam Top Achiever award. She also bought and successfully operated a ‘very busy’ Kentucky Fried Chicken franchise at the Durban station. But, after losing her husband, Thami decided to return to her roots, and bought a timber and sugar cane farm in the Umzinto District. ‘I couldn’t forget the way I grew up,’ she says. ‘It was an important foundation for me.’ Sappi began mentoring her soon after she joined the timber farming fraternity, so when the pulp and paper manufacturer acquired the hectare Pierremont Farm near Bulwer with the idea of establishing a BEE enterprise on it, she was the obvious choice. With IDC financing, Thami was able to buy Pierremont and now heads up a 1046-hectare forestry operation. Talking on her cellphone in her sunglasses as she stomps through the fields in gumboots, she is the epitome of the modern farmer.BHEKI MHLUNGU - As Ntuso Forestry’s farm manager, BHEKI MHLUNGU, lives in the bottom farmhouse near the Pholela river and visits his family at home in Bulwer about three times a week. Highly skilled in forestry, he started out as a labourer back in 1988, but went on to take several courses, including a foreman’s course, at Sappi’s training centre in Richmond. When the job with Thami came up, he leapt at it as he had been retrenched by Sappi and was ‘sitting at home’. ‘Now I’m managing to support my family and send my three kids to school,’ he states proudly. As a local guy who has pushed himself to attain his current leadership position, Bheki is a role model for others in the community. And as one of Thami’s permanent employees, he will soon be a beneficiary of the workers trust, established to ensure that Ntuso’s labour force participates in the wealth created by the project. When the transaction is completed next year, the 31 workers will jointly own 30 percent of the business, benefiting both them and their families. The Ntuso worker’s trust is a shining light for the farming sector, in which working conditions for labourers and contractors are generally poor.
20 Abridged Group Income Statement for the Year Ended 31 March 2007 R’ million %Analysis of Net Profit/LossRevenueCost of SalesFinancing Expenses (8)GROSS PROFITExxaroNet Capital GainsOther IncomeOperating Expenses (10)OPERATING INCOMEShare of Equity-Accounted InvestmentsPROFIT BEFORE TAXTaxation (27)PROFIT FOR THE YEAR*9-month period
21 Abridged Group Balance Sheet as at 31 March 2007 R’ millionStrengthened Financial BaseAssetsLoans, Advances and InvestmentsCash and Cash EquivalentsProperty, Plant & Equipment & InventoriesOther Assets*9-month period-102030405060000102030405*0607Financial yearCapital and Reserves - R billion0%5%10%15%20%25%30%35%40%Debt/Equity Ratio - %Fair value revaluationExcl. fair value revaluationDebt/Equity ratioEquity and LiabilitiesCapital and ReservesLong-term LoansDeferred TaxationOther LiabilitiesDebt/Equity Ratio 11% 14%
23 2006/07 SummaryLeadership in Development entrenched in the organisation;Record levels of job creation;Improvement in development impact largely the result of increased activity;Financial performance exceeded budgets;Undertook a review of all processes in the IDC to determine fit with strategy and efficiency;Rebranding process to reflect IDC development role;Businessmap/Business Report BEE award 3rd consecutive year2nd year of improving customer satisfaction;IDC on track to exceed its 5yr job creation target.
24 IDC’s Role in Implementing the National Industrial Policy IDC’s role in supporting the policy is on two levels:Directly through the provision of finance and other services;Indirectly through the support and finance that it provides to specific businesses.The three domains of South Africa’s industrial policy and illustrative interventionsCurrency/interest ratesTransport/LogisticsUtility regulationLabour cost/productivityCost of capital: Selected sectors/activitiesCompetition policySelected import tariffsMarket accessCost based interventionsSupport for labour intensive sectors/activitiesSmall BusinessCo-op supportBBBEESpatial interventionsInclusion based interventionsSector / activity specific financingManufacturing excellence supportIndustry-specific technical infrastructureSkills developmentInnovation and technology supportLeveraging public expenditureStandard, quality and accreditation supportIndustrial upgrading interventionsDirect support through the IDC’s services and activitiesIndirect support through the businesses that IDC financeLegend
25 Sector Specific Actions Supporting the Industrial Policy Action Plan (IPAP) The following initiatives related to the four lead sectors are already in place:Capital/Transport equipment and Metal FabricationSOE Public Sector Capex ProgrammeNational Tooling InitiativeProject HoefysterInitiatives are also underway to improve competition in the upstream metals sectorAutomotives and ComponentsSupply development programme to improve component manufacturing capacity & expertise and increase of local contentChemicals, Plastic Fabrication and PharmaceuticalsDirect involvement in the Fluoro-chemicals expansion initiativePromoting the local production pharmaceuticalsForestry, Pulp and Paper, and FurnitureForestryPulp and PaperFurnitureCapital/Transport equipment and Metal FabricationSOE Public Sector Capex ProgrammePart of the forum between the dti, DoPE, DST, SOEs, including Transnet, Eskom and PBMR to discuss the implications of the competitive supplier development programme, review of supplier development programmes of each SOE.Discussions held with Transnet and Eskom on the roll-out plans of their capex programmes.Plans and discussions for the IDC to help Transnet in managing an Enterprise Development Fund is at a very advanced stage.National Tooling InitiativeWorking closely with the Institute for Advanced Tooling, Tshwane University of Technology and Tshumisano on all initiatives to rehabilitate the tooling, foundries and forging sector.The investment wing enterprise, namely Rapid Design Technology (RDT), an existing interest of the IDC is in discussions with a German technology company in order to train, upskill and manufacture using their latest technology with RDT.Meetings held with the Gauteng Tooling Initiative to discuss the initiative and recapitalization challenges; Capex programme of the SOEs and quick-win projects; and research and knowledge sharing including sector developments and support initiatives.Project HoefysterSupporting SMEs supplying Denel to ensure local production of specific products destined for the defence industryAutomotives and ComponentsSupply development programme to improve component manufacturing capacity & expertise and increase of local contentDiscussions with NAACAM on needs-analysis exercise so that funding products are structured taking into account the constraints of their members (SMEs). Discussions around the Automotive Empowerment plan were also held.Discussions with several OEMs, including VW SA, Ford Motor Company, Toyota on their programmes to localise manufacturing of components for future models.Chemicals, Plastic Fabrication and PharmaceuticalsDirect involvement in the Fluoro-chemicals expansion initiativeParticipation in the Hydro-fluoric acid project (currently in pre-feasibility)Engaging with DST, DTI and other players, like NECSA and NCP (Chlor-Alkali Holdings) on potential further downstream and supplementary projects.Promoting the local production pharmaceuticalsTwofold initiative to develop the local manufacturing of antiretrovirals (ARVs): to facilitate the establishment of businesses which can manufacture the raw materials; and to facilitate an expansion of existing drug manufacturing capacity in the country.Development of capacity for vaccine production in South Africa.Exploring opportunities to develop fluorine compounds which are used as active ingredients in many pharmaceutical products.Forestry, Pulp and Paper, and FurnitureForestry:The IDC’s is focussing on two initiatives in this sector namely afforestation and forestry services.Specific programmes have already been implemented to improve the access to finance for companies participating in afforestation projects. This includes facilities with longer repayment terms, taking into account the long lead time to harvesting trees.The forestry services initiatives focus on the development of emerging contractors providing siviculture, harvesting, and other services.Pulp and PaperInitiative being investigated on the best way for IDC to support the paper recycling industryFurnitureExploring opportunities of an integrated value chain, including furniture manufacturing in the Kokstad region in conjunction with Hans Merensky, the dti and DWAFAll Business Units’ Sector Development Strategies are being reviewed to ensure maximum alignment and impact in these sectors
26 Sector Specific Actions Supporting the Industrial Policy Action Plan (IPAP) (continued) Initiatives related to other sector actions:ASGI-SABusiness Process Outsourcing & OffshoringBiofuelsTourismOther substantive sector projectsDiamond beneficiation and jewelleryIDC’s structure, industry knowledge and networks makes it one of the premier organisations for the implementation of the industrial policy
27 ProspectsBe leaders in the implementation of the national industrial policy;Enhancing regional presence:Roll-out of regional managersDevelop regional development strategies for IDCCloser to clientsImproved customer serviceApprove first investments under the internally managed venture capital fund;Enhance product development in line with client needs and economic development focus areas;Double impact on job creation in 5 years;Investigate feasibility of key projects to improve South Africa’s competitiveness.