IDC Africa Strategy Africa Business Frum JSE Sandtn 3rd May 2018 Presentatin by : Lizeka Matshekga Divisinal Executive : Agr, Infrastructure & New Industries
Overview f IDC Established: 1940 Type f rganisatin: Develpment Finance Institutin (DFI) Ownership: State wned cmpany, 100% wned by the SA gvernment Ttal assets: R129.8 billin (31 March 2017 - grup) Ttal liabilities: R41.5 billin (31 March 2017 - grup) Funding status: Fund peratins and grwth frm investments, pay dividends and incme tax Credit rating: Baa2 (Mdy s) Main business area: Prviding funding fr entrepreneurs and prjects cntributing t industrialisatin Gegraphic activities: Suth Africa and the rest f Africa Prducts: Custm financial prducts abve R1m t suit prject s needs including debt, equity, guarantees r a cmbinatin Small and Micr enterprise cverage: sefa (fully wned subsidiary) Stage f investment: Prject identificatin and develpment, feasibility, cmmercialisatin, expansin, mdernisatin Number f emplyees: 849 (March 2018) Operatinal Ftprint: Head Office - Jhannesburg 20 Reginal and Satellite ffices 2
The Rle f DFIs DFIs Psitining within the Suth African Financial Landscape Greater imprtance n scial and develpmental bjectives Greater imprtance n financial bjectives Gvernment / NGOs Nn-cmmercial fcus Fiscal transfers and grants Develpment bjectives (scial) DFIs Cmmercial and develpment fcus Sharing risk Internally generated funds, gvernment funds, lans Cmmercial Financiers High cmmercial fcus Private sectr capital Financial bjectives Knwn risks DFIs shuld nt cmpete with ther institutins, but shuld instead encurage cperatin t achieve their gals 3
Summary f IDC s Main Activities IDC s main activity is the prvisin f industrial finance t businesses thrughut the business lifecycle in varius sectrs aligned with industrial plicy pririties as well as develping prjects in these industries. In additin, it is invlved in ther activities such as research, plicy inputs and fund management fr gvernment departments; nn-financial supprt fr business; and capacity building fr ther DFIs. Activities Custmers Business lifecycle Sectral invlvement Funding prducts Reginal invlvement Prvisin f develpment finance Prject develpment Research and plicy inputs Fund management Nn-financial frms f business supprt Capacity building Business Gvernment Other DFIs Cnceptual Pre-feasibility Feasibility Prduct cmmercialisatin Establishment Expansin Mature Manufacturing Agricultural valueadd Mining and mineral beneficiatin Industrial infrastructure Turism, cultural industries and ther prductive services General debt Quasi-equity Equity Exprt/imprt finance Shrt-term trade finance Bridging finance Guarantees Whlesale funding thrugh intermediaries Suth Africa Rest f Africa Glbal imprts f Suth African capital equipment 4
Fr IDC t assume Leadership in Industrial Develpment, it must psitin itself mre centrally in identified sectrs. Reactive industry funder Respnd t activity Drive activity Practive industry develper Gvt. Other DFIs SOEs Gvt. Enabling activity Value Chains Prducers Prducers Industry partners RA Relevant industry bdy RA Relevant industry bdy Cmmercial banks and ther financial institutins Befre, we invested in industry players acrss the SA ecnmic landscape in a predminantly reactive way Nw, we want t take greater wnership and leadership fr develping the mst imprtant parts f the ecnmy t drive desired utcmes 5
IDC Sectrial Fcus Areas Metals Value Chain Chemicals Value Chain Agr Value Chain High Impact Sectrs Basic Metals and Mining Machinery and Equipment Autmtive and Transprt Equipment Basic and Specialty Chemicals Chemical Prducts and Pharmaceuticals Special High Impact Sectrs Clthing & Textiles Media & Mtin Pictures Agr-prcessing and Agriculture Enablers Industrial Infrastructure New Industries Heavy Manufacturing Light Manufacturing & Turism Value Chains are earmarked fr special attentin including practive prject develpment, whilst High Impact Sectrs are exclusively reactive 6
Develpmental Outcmes Sustainable Industrial Develpment Sustainable Lcalizatin and Industrializatin Sustainable Jb Creatin Supprting Targeted Grups (e.g. Black Industrialists, Yuth & Wmen) Supprting the develpment f Value-Chains and Reginal Value Chains Supprting Suth African cmpanies cnducting business in Rest f Africa and accessing new markets in the regin 7
R'm 2016/17 t 2020/21 Crprate Plan Funding Apprvals & Disbursements Capital Allcatin by SBU 2016/17 t 2020/21 Media and mtin pictures 2% Clthing and textiles 3% High impact industries 11% Metals and mining 32% 30 000 25 000 20 000 Histrical Apprvals and Capital Allcated Apprvals: Actual Estimate Base Target Disbursements: Actual Estimate Base Target Industrial infrastructure 23% 15 000 10 000 New industries 2% Agr-prcessing and agriculture 8% Chemicals and pharmaceuticals 19% 5 000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Targeting t grw funding t R100 billin ver the next five years subject t imprving ecnmic cnditins; 12% f ttal allcatin twards investments utside f SA, in the cntinent; Highest prtin f capital allcated t pririty value chains i.e. metals and mining, chemicals and pharmaceuticals, and agr-prcessing and agriculture;
IDC Africa Strategy Supprt industrial develpment in the Rest f Africa thrugh funding prjects in line with IDC s cre value chain mandate Unlck reginal integratin pprtunities t increase intra-trade Fcus n reginal integratin value chain apprach vs Suth Africa Supprt Suth African cmpanies cnducting business in Rest f Africa Prmte lcal/indigenus participatin n prjects 9
IDC Africa Strategy (cntinued) Cllabratin with lcal/reginal DFIs Prvide funding t third party funds fcusing t Rest f Africa Prjects and transactins must demnstrate direct and indirect linkages and benefits t Suth Africa - Direct in a frm f gds and services - Indirect in a frm f security f supply 10
Summary f the Rest f Africa Scre-Card Prjects can be categrized as fllws : Industry Develpment Gals aligned prjects The extent f investment in supprt f sectr develpment gals is used t measure the develpment impact f a Rest f Africa transactin which is deemed t be fully aligned t an SBUs value chains strategy Nn-Industry Develpment Gals The develpment scre card belw will be used t assess the develpment impact. The final scre is measured ut f 5 (100% f the screcard weighting) with 2 as the hurdle scre. IDC's Rest f Africa Develpment Screcard Develpment scre calculatin Actuals Weight Scre Weighted Scre Jbs created fr Suth Africans 1 15% 1.00 0.15 Jbs created fr Hst Cuntry Natinals 3 15% 3.00 0.45 Pririty Cuntry Ghana 10% 1.00 0.10 SA Benefit USD 26.00 35% 2.00 0.70 African Ownership 49% 15% 0.00 0.00 Pllutin preventin 3 5% 3.00 0.15 Emissins & Energy Cnsumptin 3 5% 3.00 0.15 OVERALL SCORE: 100% 1.7
The IDC s rest f Africa prtfli as at 31 December 2017 IDC Activity in the Rest f Africa Expsure : ca R12.9 billin; in 42 prjects in 16 cuntries. 12
Rest f Africa Strategy: Linking the IDC t the RA Kenya 13% IDC RA Expsure (incl. Cmmitments) by cuntry as at 31 December 2017 Mzambique 21% Ivry Cast 1% Mali 1% Malawi 2% Ethipia 2% Sudan 3% DRC 3% Namibia 3% Tanzania 4% Zimbabwe 5% Senegal 5% Nigeria 7% Uganda 11% Zambia 8% Ghana 11%
Outcme f this partnership Cllabrate with JSE-listed cmpanies and SMEs cnducting business in RA IDC t prmte reginal value chains by funding prjects that surce inputs frm the RA r exprt prducts int the RA that fall within the IDC s pririty value chains namely Agr- Prcessing; Chemicals and Metals. Practical examples: Develpment f industrial parks fr businesses perating in Africa in supprt f a valuechain frm Suth Africa e.g. Supplier park fr mining suppliers in DRC and Zambia Funding Agr-prcessing where inputs cme frm Suth Africa (vice versa) r the endprduct is sld back t Suth Africa r value additin in Suth Africa Supprting mining develpments and industrialisatin in the ROA Prvide industrial infrastructure (telecms, energy, water & telecms) funding supprt t prjects in the Rest f Africa 14
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