Thoughts on the Latest IDC Initiatives 

THE state-owned Industrial Development Corporation (IDC) is actively seeking out entities that could be funded, instead of waiting for cash-hungry businesses to knock on its doors.

The proactive investment stance comes after Economic Development Minister Ebrahim Patel set a stretch target this year for the financier to invest R100bn over the next five years.

This means the IDC will need to push itself to reach a theoretical R20bn-a-year investment goal.

It invested almost R13bn last year, while in the preceding five years it averaged annual loan advances of about R6.5bn.

The IDC was now being proactive to help local entrepreneurs become competitive and increase production, CE Geoffrey Qhena said on Friday.

Decreasing imports while directing more exports into the rest of Africa are the plan’s core tenets.

The expectation was this would result in a reduction in unemployment and deepen the levels of transformation in business ownership, he said.

Agroprocessing, renewable energy, manufacturing, industrial infrastructure and mining, and manufacturing are the sectors in which the IDC is looking to scale up and help start businesses.

“We need to be proactive. That means we need to engage more with existing and aspiring entrepreneurs,” Mr Qhena told Business Day on Friday.

The IDC is talking to multinational companies about sourcing more of their goods locally.

“Our guys are talking to the OEMs (original equipment manufacturers) in the automotive sector to see what parts can be produced locally. There are also talks with retailers to see what can be procured by them locally.”

The IDC has taken a step back to review investments it has made in renewable energy, because the level of “localisation” is not where it should be.

SA’s overall trade deficit widened by R40.2bn to R223.4bn last year because of deficits in the balance of trade with Asia, the Middle East and European Union, IDC research showed.

The export sector’s inability to exploit a weaker currency because of “supply-side constraints” was cited as a contributing factor.

Subdued demand in key export markets also had an effect. But Africa was ripe for the picking because of the continent’s aggressive infrastructure drive.

The continent was also replete with opportunities, which SA companies could use to increase trade, Mr Qhena said.

Asked what the IDC had done to drive localisation, Mr Qhena said it had funded a Coega-based company that produces towers for wind energy generation.

The IDC was also working on funding two projects manufacturing thin-film solar panels as well as financing a black-owned noodle manufacturer that supplied a global retail chain, he said.

The IDC had recently established a division called “new industries” to fund businesses with disruptive technologies. It is deepening ties with universities and institutions including the Council for Scientific and Industrial Research as well as the Technology Innovation Agency to gauge the commercial viability of projects.