1. Taking Leadership in Development - 2006/07 Mr. Geoffrey Qhena Chief Executive Officer The Industrial Development Corporation of South Africa 10 March 2005

2. IDC’s Role To support sustainable development, IDC invests in businesses showing economic merit; Some businesses which may be viable are often not funded by commercial banks 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: –ASGISA; –Supporting industrial policy development; –Sectoral strategy development and implementation –Downstream beneficiation Cooperates with national and provincial government, DFIs, and other COTII institutions;

3. IDC’s Objectives IDC addresses South Africa’s social and economical development needs: –Regional –BEE –Exports –Etc. Overarching objective of job creation; Provide a path for people to move from the 2 nd to the 1 st economy; Support industrial development in the rest of Africa.

4. 2005/06 Review Re-emphasised its overarching objective as job creation –In line with government and ASGISA’s goals of halving unemployment by 2014; Indications are that approvals have the ability to create the 19 000 targeted direct jobs in SA –Target was significantly higher than that achieved in previous years; –Renewed focus on job creating investments; –Development of entrepreneurs; Achieving these goals while remaining financially sustainable

5. 2005/06 Review (continued) Shift of emphasis from acquisitions to assisting BEE entrepreneurs to expand or start new businesses; Ongoing involvement in PBMR and Coega anchor project; Increasing attention on downstream beneficiation; Continuing involvement in the film industry – resulting in critical acclaim for “Tsotsi”

6. 2005/06 Review (continued) 9 Months up to December 2005 (Gross values) –More than 140 approvals (R2.8 billion of IDC finance); –More than R13 billion total investment facilitated (total value of projects); –19 000 jobs expected to be created through the approvals (70 000 including indirect jobs*); –75% of number of approvals for SMEs; –66% of the number and 46% of the value of approvals for companies with more than 25% HDP shareholding; –56% of approvals have more than 50% HDP participation at senior management level. * Estimate based on economic multipliers

7. 2005/06 Review (continued) South African Job Creation by Province Some examples of businesses supported: –Stainless steel precision strip mill in the Eastern Cape; –Pharmaceutical manufacturing in the Free State; –Alliance with commercial bank to enable HDP contractors entry into goods transport sector; –Tourism and forestry related businesses in Limpopo; –Platinum and coal mining in Mpumalanga; –Chrome mining and non-metallic mineral products in North West; –Tourism and fruit production in the Western Cape; –Wholesale finance to financial institutions in Kenya and ECOWAS for on-lending to smaller companies.

8. Competitive Financing for Development Launched R 1 billion fund providing financing for 5 schemes: – 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%; More than 60 applications received under the schemes; R100 million approved, to create more than 2 600 direct jobs; Fund expires December 2006.

9. THE NGUNI CATTLE PROJECT Aims – To assist in transforming traditional community farmers into recognizable breeders of Nguni cattle – To assist in transforming communities into sustainable commercial farming units – To assist communal farmers to enter global market – To improve household income in communities Status – Initiated in the Eastern Cape with University of Fort Hare – Launched in North West and Limpopo Provinces – Launching in Free State and Northern Cape Provinces – Discussions in KwaZulu Natal Province

10. Local Development Agencies Aims: –Accelerate and equitably distribute economic development –Assist local and regional economies to achieve their full potential –Locally driven entities that identify and harness resources and opportunities –Focus on poor, rural communities or areas with high developmental opportunities and under-utilised assets Programme includes : – Grant funding to municipalities under managed conditions – Capacity building and training for agencies and staff – Monitoring and evaluation – Research and best practice – Aftercare Status: –19 agencies financed; R25 million dispersed –Agencies distributed throughout country (7 in Eastern Cape, 1 Northern Cape, 1 Gauteng, 3 in KwaZulu-Natal, 2 in Western Cape, 1 in Free State, 1 in Mpumalanga, 2 in Limpopo, 1 in North West)

11. Inputs to Government Initiatives ASGISA – inputs into: –List of special provincial infrastructure projects (Deputy Presidency) –Impact of public sector CAPEX programme (DPE) –Downstream beneficiation strategy (DTI) Compiling database of capital projects (DTI, DPE, National Treasury, Mintek) Inputs into industrial policy development & sectoral strategies (DTI) Assisting Market Access Unit of DTI Steel supply chain evaluation (DPE) Sectoral prospects publication (DTI, TIPS) Administration of SPII, FRIDGE

12. Cooperation With Other Entities Other DFIs and COTII institutions Lesotho National Development Corporation Tshumisano Technology Support Programme Ithala MEGA Free State Provincial Government Mpumalanga Provincial Government North West Government

13. Plans for 2006/07 Increase targeted direct job creation in South Africa from 19 000 to more than 21 000 Allocated more than R6.2 billion for investment next year (IDC generated funds) SHIP –Strategic High Impact Projects Roadshows to be held this year: –Northern Cape Provincial Government –Eastern Cape Provincial Government –KwaZulu Natal Provincial Government

14. SME Support Between 65% and 80% of the number 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 IDC plans to address these issues through a range of initiatives: –Training for clients –Business support programmes –Expanding IDC’s reach through chambers of commerce, NGOs, etc. –To be achieved through partnerships

15. Some Large Projects Under Development Project name Project description Provincial Location SectorTotal investment amount of project Various Bio- fuel Projects To produce 1 billion litres of fuel grade ethanol from multiple feedstock KZN (first project), Free State, Northern Cape, Eastern Cape, Mpumalanga (SA) FuelUS$200 million (for first project) Cassava Starch Project To produce industrial starch from cassava root KZN (SA)StarchR500 million Makhatini Sugar and Power Project To produce mill white sugar from cane as well as power co-generation KZN (SA)Sugar and power co- generation US$140 million Water Project Rural Water reticulation infrastructure Limpopo (SA)WaterTo be determined Umzimvubu Catchment Develop- ment Project Full development of the catchment’s area including construction of a dam, power and water, reticulation, forestry and agriculture Eastern Cape (SA)Infrastruc- ture R28 billion (estimate) Accelon. com Satellite Internet connectivity in West Africa Lagos (Nigeria) Telecommu -nications US$30 million

16. Thank you