Africa-Press – South-Africa. The Industrial Development Corporation (IDC) has announced that it disbursed R15.9 billion of its own on-balance sheet funds to South African businesses.
This was for businesses in the agriculture, automotive, downstream chemicals, machinery and equipment sectors, facilitating the creation of 17,826 jobs in the financial year ending March 2024.
“While the development funder observed and experienced weak performance across broad sectors of the economy, the Corporation, riding on the strength of strategies pursued over the past few years, registered some notable successes,” said the IDC.
Of significance, the IDC said that its disbursements facilitated a further R51.7 billion worth of investments for the South African economy during the reporting period, representing 2% of the country’s gross fixed capital formation.
The IDC is a self-financing national development finance institution focusing on financing and supporting industrial projects to drive economic growth, job creation, and industrialisation working closely with the Department of Trade, Industry and Competition.
“We support industrial capacity development proactively identifying and funding high-impact projects, creating viable new industries, and using diverse industry expertise to drive growth in priority sectors,” said the IDC.
It offers loans, equity investments, and guarantees to businesses across various sectors, aiming to stimulate investment, foster innovation, and address financial and operational challenges.
Over the financial year, funds committed for black Industrialists totaled R10 billion, while those for black-owned businesses rose by R5.3 billion to R13 billion.
Funding for youth entrepreneurs dropped to R456 million from R501 million recorded in the previous financial year.
Jobs created or sustained in the reporting period fell nearly 50% from 34,035 recorded in the prior year to 17,826 in the year under review.
However, IDC interim Chief Executive Officer David Jarvis said the drop in jobs created was attributable to funding for floods and social unrest recovery efforts.
“There will therefore be a focus on labour-absorbing agro-processing and agriculture, automotive, downstream chemicals, machinery and equipment and tradeable services in the coming period to address this national imperative,” of increasing these figures, said the interim CEO.
Jarvis conceded that the country’s economic conditions have meant that much of its goals have been an uphill battle, seen in its own funding to businesses dropping 11% year-on-year.
“Growth in the local economy has been tepid over the past decade, most recently attributable to factors such as loadshedding, lower commodity prices, and weakening demand in both the global and domestic markets.”
South Africa’s GDP only increased by a meagre 0.6% in 2023.
“The weak economic performance has had a knock-on effect on business confidence [which] largely influenced investment decisions and capital outlays by some of our existing and potential clients,” he added.
However, Jarvis said that improvements in Eskom’s performance and early positive signs at Transnet are expected to benefit the economy and attract foreign direct investment into South Africa.
“Due to interventions initiated by government, we are already seeing progress towards addressing bottlenecks which have overwhelmed the country’s rail transport network and port infrastructure [which] have largely impacted export-oriented businesses, particularly those in mining and manufacturing,” said Jarvis.
According to the latest Bank of America Fund Manager Survey, managers see reform in rails and ports, electricity transmission, and skills as key to boosting South Africa’s GDP by 2.0% to 2.5% in the next three years.
Managers also have a positive outlook on domestic equities, with a 17% total return expected over the next year.
“For us at the IDC, addressing these challenges will create opportunities to provide funding to companies that rely on rail and port infrastructure,” added Jarvis.
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