The Industrial Development Corporation of South Africa (IDC) provided funding of R20.7 billion to key sectors in the year to March 31, a figure 29% higher than in 2022, with most of it going towards industrial expansions.
The Development Finance Institution achieved strong results for the year despite a weak economy, load shedding, geopolitical tensions and slower international growth, its annual results showed yesterday.
The funding was the highest nominal amount ever approved by it, said CEO TP Nchocho.
Disbursements for the year surged 147% to R17.8bn, with the bulk directed towards capacity expansions, projects and start-ups, in line with a mandate to sustain industrial capacity development and fund economic transformation objectives.
“The increase in approvals and disbursements is a reflection of a funding cycle which among other factors, has been able to mitigate challenges confronting both the global and local economies. We have had to respond to these while maintaining our objectives to deliver on our mandate to transform and grow our economy,” Nchocho said in a statement.
He said in an online presentation that the IDC created or saved 34 035 jobs compared to 27 130 for the previous reporting period.
Of these, about 8 500 jobs - mainly in KwaZulu-Natal - were saved by the IDC’s R1.25bn in support of Flood Relief Fund interventions - created to support businesses affected by last year’s flood in parts of KwaZulu-Natal, Eastern Cape, Northwest, Northern Cape Mpumalanga and Gauteng.
The transformation investment facilitated during the year came to R11.4bn, R7.6bn of which went to black industrialists.
Approvals for women-empowered companies were R1.1bn, while those for youth-owned businesses were R501 million. “This is an area where IDC has committed itself to improvement in the year ahead,” Nchocho said.
Impairment ratios remained elevated above the IDC’s prudential upper limit, due largely to certain sizeable investee defaults, and the challenging operating environment.
However, targeted interventions in the previous financial years helped to contain non-performing loan ratios (NPLs), which were now trending down.
Notwithstanding this, “most of our investees have performed well under the circumstances,” said Nchocho.
Foskor turned around to deliver a net profit of over R2.7bn. Grinding Media generated R226m net profit.
The IDC facilitated almost R9.6bn towards localisation and beneficiation activities across sectors such as steel, pharmaceuticals, automotive and food products.
Looking ahead, Nchocho said the IDC had earmarked more than R7bn for energy projects in 2023/24.
He said partnerships would remain a thread in their approach. The IDC would work closely with Transnet and private sector players to address obstacles to transport and logistics networks.
He said their agricultural footprint would also be expanded as areas were identified in which it could develop downstream industries that added value to primary agricultural produce.
The IDC would also seek to leverage opportunities presented by the African Continental Free Trade Area.
Minister of Trade, Industry and Competition, Ebrahim Patel said the record investments would “catalyse and sustain the recovery of productive sectors further underscoring the significance of the IDC’s countercyclical role in stimulating our economy, as well as agility to respond timeously to pressing challenges facing the country.”
IDC chief financial officer Isaac Malevu said group profit rose significantly by 70% to R10.7bn in the past year. The asset base fell 5% to R161bn from R171bn, largely a result of shifts in listed share prices.
“For us, the strengthening of the balance sheet is indicative of the organisation’s financial health as shown by a 13.3% growth in total assets post 2021 and a strong capital structure with debt: equity at 29.8% - well below the prudential policy upper limit of 60,” said Malevu.