PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS (NATIONAL COUNCIL OF PROVINCES)

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PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC
AND FOREIGN AFFAIRS (NATIONAL COUNCIL OF
PROVINCES)

• Lumkile Mondi
• Chief Economist and Head of Research and
  Information
• Industrial Development Corporation of South
  Africa

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Corporate profile

• Self-financing state-owned development finance
  institution (Act No 22 of 1940)
• Provides financing to entrepreneurs engaged in
  competitive industries
• Follows normal company policy and procedures in
  its operations
• Pays income tax at corporate rates and dividends
  to its shareholder
• Independent Board of Directors
• Reports on a fully consolidated basis, with its
  Annual Report freely available to the public

IDCs head office in Sandton, South Africa
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Vision and mission
To be the primary driving force of commercially
sustainable industrial development and innovation
to the benefit of South and southern Africa

• Contribute to the generation of balanced,
  sustainable economic growth in South Africa and
  Africa
• Economically empower the South African and
  African population
• Promote entrepreneurship through the building of
  competitive industries and enterprises based on
  sound business principles

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Operational structure
CEO/President Khaya Ngqula
Manager in the Office of the CEO Mnathi Mcambi
COO Kutoane Kutoane
Corporate Secretariat Nomini Rapoo
14 strategic business units (SBUs), focussed on
specific economic sectors
Projects Jaco Kriek
Industrial Sectors Raisibe Morathi
Services Sectors Gerrit van Wyk
Internal Audit Eva Sam
HR and Support Services Lesé Matlhape
Professional Services Geoffrey Qhena
Finance and Funding Gert Gouws
Legal Services General Counsel Tony Tshivhase
Marketing Corporate Affairs Neo Sowazi
Business Planning and Strategy Riaan Joubert
Information Technology Joel Mpshe
Project and Structured Finance Stephan Vermaak
Corporate Finance Joanne Coetzee
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Total Staff Complement
As at 31 May 2003 470
President/CEO EVPs/COO/CFO SBU/Dept
Heads SAM/SPM/Specialists Professional Administrat
ive Support
1 9 31 93 186 150
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Staff Composition Male
May 2002 (Total Male 240)
May 2003 (Total Male 258)
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Staff Composition Female
May 2002 (Total Female 194)
May 2003 (Total Female 212)
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Employee Age Profile
(48)
(25)
Number of staff
(18)
(8)
(1)
Age
Average age 38
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Core strategies
Provide risk capital to a wide range of
industrial projects
Identify and support opportunities not
addressed by market
Maintain financial independence
Establish local and global partnerships in
projects benefiting SA or Africa
Build on and invest in human capital
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Financial instruments

• Equity
• Quasi-equity
• Commercial debt
• Wholesale bridging finance
• Share warehousing
• Guarantees
• Export/import finance
• Short-term trade finance
• Wholesale venture capital

Flexible Deal Structuring
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The financing process
Initial Screening
Basic Assessment
Term Sheet
Due-diligence
Decision-making
Legal Agreements
Disbursements
Post investment management
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The investment cycle
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Sectoral focus
Projects Division
Oil, Gas Related Products
Oil, gas and upstream chemicals
Food, Beverages and Agro-industries
Agriculture, food, beverage and marine sectors
Resources and Beneficiation
Mining, minerals and metals
Private and Public Partnerships
Private sector participants in e-government,
energy, privatisation initiatives, transportation
and IT and telecommunications
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Sectoral focus (continued)
Industrial Services Division
Chemicals and Allied Industries
Chemicals, rubber and plastics, non-metallic
mineral products, textiles, clothing, leather,
footwear
Basic iron and steel, casting/foundries,
structural and other fabricated metals,
machinery, motor vehicles, parts and accessories,
and other transport equipment
Metal Based Products
Wood, Paper Other
Forestry, logging, sawmilling and articles of
wood, furniture, pulp and paper, articles of
paper or paperboard and other manufacturing
Entrepreneurial Mining and Jewellery
Junior mining, mining related activities,
acquistions of mining assets by HDPs and jewellery
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Sectoral focus (continued)
Services Sectors Division
Hotels, guest houses and lodges, cultural
villages, conference and convention centres
leisure and entertainment facilities and other
unique tourism projects.
Tourism
Publishing of books, brochures, newspapers,
journals, recorded printing of published
materials, reproduction of printed materials and
recorded media, films and video recordings,
feature films, documentaries and television series
Media Motion Pictures
Techno Industries
Information technology, telecommunications,
electronics and electrical industries
Wholesale Bridging Finance
Wholesale funding to intermediaries, who manage
and administer finance on behalf of the IDC,
on-lending to individual entrepreneurs
Various venture capital funds focussed on
technology, biotechnology, mining and empowerment
Wholesale Venture Capital
Facilitation and funding of health, education and
empowerment
Health and Education
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Empowerment strategy
IDC (BEE) process of support through

• The continuation, implementation and procurement
  of
• outsourcing policies and programs that
  encourage
• the economic empowerment of the historically
• disadvantaged people (HDP), emerging businesses
  
• and entrepreneurs and
• Encouraging the entry of black empowerment
• entrepreneurs into the new sectors of the
  economy
• as well as the traditional industries and
  sectors
• where entry barriers are noticeably high.

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Procurement from HDPs
2002/03 Target Procure at least 55 of goods and
services from companies with HDP ownership of
more than 25
2002/03 Achievement Procured R58.3 million (58)
from empowerment companies
2003/04 Target Procure at least 55 of goods and
services from companies with HDP ownership of
more than 25 and 30 from companies with HDP
ownership of more than 50
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Empowerment strategy
BEE funding is guided by the following
imperatives

• Creation of ownership of businesses for HDPs

• Management capacity and entrepreneurship through
  transfer of skills

• Advancement of HDP employees through share and/or
  profit participation and

• Adherence to the national BEE agenda affirmative
  action and procurement policies

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Empowerment strategy

• Financed 625 (cumulative) black entrepreneurs
• Approved R 5.6 bn (cumulative) to BEE
• Increased BEE approvals from 3 entrepreneurs to
  191 p.a
• Increased value of approvals from R 61 000

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Financial track record

• 2001/2002 produced a record net attributable
  income of R 1.8 billion

• Balance sheet remains strong. Capital and
  reserves grew at an average rate of 18 per annum
  over the past five years to reach R 26.4 billion
  at the end of the 2001/2002 financial year.

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Developmental track record

• In 2001/2002
• the IDC approved finance to the value of R 4.9
  billion, representing 6.9 of private sector
  fixed investment in South Africa
• Assisted more than 500 entrepreneurs
• Finance to empowerment firms represented 37 of
  the number and 42 of the value of approvals
• IDCs finance will create more than 23 000 new
  job opportunities.

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NEPAD
A catalyst partner for investments in
productive capacity throughout Africa
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NEPAD

• Sugar

• Mining

• Mining
• Fishing

• Energy

• Pharmaceuticals
• Mining

• IT

• Mining
• Tourism
• Pharmaceuticals

• Energy

• Mining

• Telecoms
• Petroleum
• Tourism

• Tourism

• Tea
• Coal
• Tourism

• Mining
• Energy

• Aluminium
• Titanium
• Cotton
• Sugar
• Aquaculture

• Hotel

• Mining
• Horticulture
• Tourism
• IT

• Table grapes
• Mining
• Food processing

• Energy
• Tourism

• Aquaculture

• Telecommunications

• Wattle
• Distillery
• Frozen foods

• Mining

Includes projects implemented, under
implementations and under consideration
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Prospects for the future

• Greater involvement in social services sectors
  such as healthcare and education
• Targeting poor provinces
• Play a leading role in facilitating broad based
  empowerment
• Entrench IDCs financial sustainability through
  improved internal systems
• Improved outward communication regarding IDCs
  developmental role and
• Increased human resource development within the
  IDC to ensure continuation of the high levels of
  professionalism within the corporation.

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Thank You!