industrial development corporation idc strategy 2012/13 to 2016/17 shakeel meer divisional...

Industrial Development Corporation

IDC Strategy2012/13 to 2016/17

Shakeel MeerDivisional Executive: Corporate Strategy

29 May 2012

2

Introducing IDCVision, mission, objective and values

Valu

esVi

sion To be “the primary driving force of commercially sustainable industrial development and innovation

to the benefit of South Africa and the rest of the African continent”

Mis

sion

The IDC is self-financing national development finance institution whose primary objectives are to contribute to the generation of balanced, sustainable economic growth in Africa and to the economic empowerment of the South African population, thereby promoting the economic

prosperity of all citizens. The IDC achieves this by promoting entrepreneurship through the building of competitive industries and enterprises based on sound business principles.

Obj

ectiv

e

Support industrial capacity development

Passion Professionalism Partnership

• Facilitate sustainable direct and indirect employment• Regional equity (including development of the rest of Africa)• Growing the entrepreneur and SME sector• Expansionary and/or broad-based black economic empowerment• Environmentally sustainable growth• Grow sectoral diversity and increase localisation

Out

com

es

3

Strategy: Leadership in Industrial DevelopmentPillars of IDC’s strategy

Industrial DevelopmentContributing to an

Enabling EnvironmentLeveraging IDC’s Portfolio

for Maximum ImpactCustomer Service and Environmental Impact

• Sector focus in line with NGP and IPAP2• Project development• Industrial finance• Sector development

strategies•Regional industrial

integration

• Proactive role in shaping and influencing policy• Factors impeding industry

development•Role clarification,

partnership with and support for other DFIs

• Segmenting IDC’s portfolio and designing customised funding schemes as an enabler for development• IDC’s funding model

• Improved customer service• Improved efficiencies•Reducing IDC’s impact on

the environment•Reducing industries/IDC

client impact on environment

The primary driving force of commercially sustainable industrial development and innovation to the benefit of South Africa and the rest

of the African continent

4

Considerations for IDC

•Strategy focussed on implementation of industry related issues of the New Growth Path and Industrial Policy Action Plan;•IDC’s sectoral involvement aligned with these policies;•Playing a bigger role in proactively developing these key sectors through project development.

5

Historical Funding Activities

Limpopo

2002 to 2012

Value (R'm) 5 295Jobs 18 601

2012Value (R'm) 919Jobs 2 582

Examples:-Chemicals-Agro-processing

KwaZulu-Natal

2002 to 2012

Value (R'm) 6 542Jobs 31 714

2012Value (R'm) 85Jobs 3 897

Examples:-Fabricated metals and capital equipment-Clothing and textiles-Green industries-Agro-processing

North-West

2002 to 2012

Value (R'm) 7 930Jobs 37 160

2012Value (R'm) 3 573Jobs 11 471

Examples:-Automotive components-Fabricated metals-Agro-processing-Mining

Western Cape

2002 to 2012

Value (R'm) 6 330Jobs 30 632

2012Value (R'm) 1 359Jobs 3 437

Examples:-Fabricated metals-Green industries-Agro-processing-Pharmaceuticals-Clothing and textiles

Gauteng

2002 to 2012

Value (R'm) 21 663Jobs 85 062

2012Value (R'm) 3 811Jobs 16 804

Examples:-Automotive components-Fabricated metals-Plastics, pharmaceuticals, and chemicals

6

Historical Funding Activities (continued)

Mpumalanga

2002 to 2012

Value (R'm) 3 924Jobs 21 642

2012Value (R'm) 404Jobs 2 161

Examples:-Fabricated metals-Forestry and wood processing

Free State

2002 to 2012

Value (R'm) 847Jobs 5 778

2012Value (R'm) 67Jobs 106

Examples:-Agro- processing-Clothing and textiles

Northern Cape

2002 to 2012

Value (R'm) 8 001Jobs 19 047

2012Value (R'm) 3 553Jobs 3 787

Examples:-Green-industries-Agro-processing-Mining

Eastern Cape

2002 to 2012

Value (R'm) 7 778Jobs 27 332

2012Value (R'm) 189Jobs 1 739

Examples:-Green industries-Advanced manufacturing – electronics-Automotive components-Fabricated metals

7

Historical Funding Activities

- 1.0 2.0 3.0 4.0 5.0 6.0

Eastern Cape

Free State

Gauteng

KwaZulu Natal

Limpopo

Mpumalanga

North West

Northern…

Western Cape

Index: IDC funding relative to provincial GDP

IDC Funding Approvals Relative to Provincial GDP (2002 to 2012)

8

Jobs Expected to Created/Saved

-

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

50 000

2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12

Full-

time

equi

vale

nt jo

bs

Direct impact on 2nd economy jobsSavedExpected to be created

IDC Impact on Jobs

9

Focus Areas for 2012/13

ICT (4%)Healthcare (3%)

Tourism (3%)

Media & Motion Pictures (3%)

Mining and Minerals Beneficiation (17%)

Forestry and Wood Products (9%)

Metals and Machinery (8%)

Textiles (3%)

Chemical & Allied Industries (7%)

Venture Capital (<1%)

Green Industries (21%)

Strategic High Impact Projects (17%)

Agro Industries (7%)

Budgeted Investment Values – 2012/13

• Rural-poor linkages• Import replacement

• Industrial infrastructure• Localisation of bus, truck and

taxi manufacturing

• Non fossil fuel based renewable energy• Energy efficiency• Emission and pollution mitigation

• Basic chemicals• Glass and ceramics• Cement, concrete and building materials• Plastic and rubber products and import

replacement

• Commercialisation of South African intellectual property

• Competitive local / regional value chain • Fabricated metal, capital and transport equipment • Automotive and MHCV • Components for green industries Budgeting to approve R15bn in 2012/13.

10

Focus Areas for 2012/13

ICT (4%)Healthcare (3%)

Tourism (3%)

Media & Motion Pictures (3%)

Mining and Minerals Beneficiation (17%)

Forestry and Wood Products (9%)

Metals and Machinery (8%)

Textiles (3%)

Chemical & Allied Industries (7%)

Venture Capital (<1%)

Green Industries (21%)

Strategic High Impact Projects (17%)

Agro Industries (7%)

Budgeted Investment Values – 2012/13• Pulp and paper• Community forestry• Furniture

• Junior mining sector• Competitive steel pricing

• Pharmaceutical manufacturing• Medical devices• Hospital PPPs

• Film production• Audience development• Production facilities• Broadcasting

• Underdeveloped nodes in SA

• Telecommunication• Shared services• Set-top boxes

11

Green-Industries Focus Areas

Energy efficiencyEnergy efficiency

Heat, Electricity & building efficiency

Heat, Electricity & building efficiency

Cleaner production / Industrial Efficiency

Cleaner production / Industrial Efficiency

Transport EfficiencyTransport Efficiency

Waste to Energy Waste to Energy

Fuel Based EnergyFuel Based Energy

Co-generationCo-generation

Emission and pollution mitigationEmission and pollution mitigation

Air pollution controlAir pollution control

Water & soil treatmentWater & soil treatment

Waste Management/ Recycling

Waste Management/ Recycling

Clean stovesClean stoves

Bio FuelsBio Fuels

Bio EthanolBio Ethanol Bio DieselBio Diesel

Renewable Energy: Non-Fuel Power Renewable Energy: Non-Fuel Power

Wind Power GenerationWind Power Generation

Concentrated Solar PowerConcentrated Solar Power

Solar Photo Voltaic PowerSolar Photo Voltaic Power

Services related

to renewable

energy & energy

efficiency

Services related

to renewable

energy & energy

efficiency

Local

manufacturing

related to

renewable

energy & energy

efficiency

Local

manufacturing

related to

renewable

energy & energy

efficiency

12

IDC Participation in Renewable Energy Projects

MoltenoWind: 100MW

Full Time Equiv. Jobs: 147

RustenburgSolar PV: 7MW


MalmesburySolar PV: 6MW


CookhouseWind: 140MW


Oyster BayWind: 80MW


UpingtonConcentrated Solar : 50MWFull Time Equiv. Jobs: 727

PofadderConcentrated Solar : 100MWFull Time Equiv. Jobs: 660

CaledonWind: 28MW


PofadderSolar PV: 10MW


De AarSolar PV: 10MW


PrieskaSolar PV: 20MW


KenhardtSolar PV: 10MW


GoudaWind: 138MW


KomgaWind: 140MW


Grass RidgeWind: 60MW


GrahamstownWind: 24MW


KakamasHydro


UpingtonConcentrated Solar : 50MWFull Time Equiv. Jobs: 427

• IDC is participating in 18 of the 47 renewable energy projects that received preferred bidder status in rounds 1 and 2;•Also funding projects for components for wind and solar.

13

IDC’s Funding Model

Equity funding

Loan funding

Capital growth

Interest repayments

IDC relies on borrowings, internal profitability, capital growth and exits from mature investments to maintain and expand its funding ability

Capital repayments

Dividend paymentsExits of mature

investments

IDC Funds•Borrowings•Balance sheet•Mature investments•Retained earnings

The balance between the corporation’s developmental role and financial performance is maintained by relying on proceeds from mature equity investments (both dividends and capital growth) to cross-subsidise

higher risk activities and the loan portfolio.

Subsidy

14

Examples of Sector StrategiesAgro-Industries

Rural/poor linkage initiative•Objective – Increase rural development and poverty alleviation in rural areas;

•Description – Utilise investment in the agro-processing sector to create demand for primary agricultural products;

– Incentivise agro-processors to source raw materials from emerging farmers and provide the necessary non-financial support;

– Establish agri-business support organisations to provide technical assistance and other services to emerging farmers;

– E.g. funding for a dairy enabling increased potential for livestock farming.

•Impact – Job creation in rural areas and agriculture based communities across South Africa;

– Expansionary and broad-based black economic empowerment.

Impact

Import replacement•Objective – Establish agro-processing activities that will replace imported products

and create demand for SA based agriculture;

•Description – Development of the malt and edible oils industries through support for

project development in these areas;– E.g. production of malt, soya processing;

•Impact – Job creation in several rural areas, but particularly in the Northern Cape, Gauteng, Free State and Mpumalanga;

– Improvement in SA’s balance of payments.

Impact

15

Examples of Sector StrategiesStrategic High Impact Projects

Industrial Infrastructure•Objective – Industrial projects in underdeveloped regions;

•Description – Work closely with government to identify and develop opportunities;

– Supporting the Presidential Infrastructure Co-ordinating Commission (PICC) with developing roll out plans;

– Engaging with Eskom and Transnet on localisation of production of inputs to capex/infrastructure programmes;

– E.g. Supporting local production and refurbishment of rolling stock and developing industrial opportunities in EC and Limpopo through

cooperation with Transnet and private companies on provision of railway capacity;

•Impact – Job creation and industrialisation in areas relying on a mostly agrarianeconomy.

Impact

Localisation of Bus, Truck and Taxi Manufacturing•Objective – Greater localisation of government procurement and increased

industrialisation;

•Description – Develop projects and attract foreign investors to increase local production of transport equipment;

– First round of will focus on increasing local assembly capacity, with the potentialfor increased manufacturing of components being

investigated;

•Impact – Job creation and industrialisation;–Enabler for local procurement for busses as per the regulations of the Preferential Procurement Policy Framework Act.

Impact

16

Examples of Sector StrategiesGreen Industries

Renewable Energy• Objective – Establish a new industry in SA;

– Assist with making SA’s economy less carbon intensive;

•Description – Participate in developing and funding projects bidding for the Renewable Energy IPP (REIPP) programme;

– E.g. during the 1st round bidding process, IDC funded projects in the wind and solar generation industry to be located in the Northern Cape, Western Cape, Eastern Cape and North West;

•Impact – Community participation and upliftment;– Potential for the development of the component industry.

Impact

Energy Efficiency• Objective – Assist companies to use electricity efficiently;

– Alleviate pressure on the electricity system;

•Description – Provide support to companies to identify and implement energy saving measures;

– Funding of further solar water heater roll-out initiatives.

•Impact – Job creation through the service industry;– More sustainable and competitive industries.

Impact

17

Examples of Sector StrategiesForestry and Wood Products

Community Based Forestry Projects• Objective – Rural development;

– Ensuring sufficient forest resources;

•Description – Assisting rural communities to develop sustainable forestry projectsand provide funding for these projects;

•Impact – Sustainable development of restituted land in the Eastern Cape and KwaZulu-Natal;

– Increased timber supply.

Impact

Competitive Local/Regional Value Chain• Objective – Stabilise the local textiles and clothing industry to stem further job

losses and build a basis for potential future growth;•Description – Develop and implement projects in the region (outside SA) that will

enable SA companies to source inputs more competitively;

– Continued implementation of the CTCIP;

– Encouraging the local clothing, textiles and footwear industries to invest in improving their competitiveness

– E.g. cotton production in Zimbabwe;•Impact – Retention and creation of jobs, particularly in KwaZulu-Natal and the

Western Cape;– Regional value chain integration.

Impact

Clothing and Textiles

18

Examples of Sector StrategiesHealthcare

Local Pharmaceutical Production• Objective – Ensure security of supply for local pharmaceutical ingredients and medical

devices;

•Description – Develop and implement projects that supply SA’s pharmaceutical needs;

– E.g. vaccine production in the Western Cape (being implemented), ARV active ingredients in North West;

•Impact – Positive impact on balance of payments;– Job creation.

Impact

Impact

Mining and Minerals Beneficiation Competitive Steel Prices for Downstream Producers• Objective – Reduce input prices for the downstream metals industry;

•Description – Develop and implement projects that will enable more competition in

the steel industry;

– E.g. steel mill in Limpopo, mini-mills in Gauteng and Eastern Cape (EC being implemented), scrap substitute in Mpumalanga;

•Impact – Reduced prices for downstream metal producers throughout the country;– Increased job creation in upstream as well as downstream industries.

19

Port Elizabeth

IDC Regional Presence

Sandton

Cape Town

Bloemfontein

Polokwane

Rustenburg

Kimberley

Durban

East London

Mbombela

Klerksdorp

Mafikeng

Vryburg

Emalahleni

Secunda

TzaneenHead Office/Regional Office

Satellite Office

Legend• Regional offices are fully fledged

operational offices that form part of IDC’s deal assessment process;

• In addition to regional offices, branch offices have been established in certain areas – these are permanently staffed;

• Satellite offices are also being rolled out and co-locates with the new small business finance entity;

• Roll-out of future offices will be coordinated with the new small business finance entity to control costs.

Pietermaritzburg

Brits

Upington (launching in May)

George

GroblersdalBranch Office

Thohoyandou

20

Prospects

Thank you

Industrial Development CorporationIndustrial Development Corporation19 Fredman Drive, Sandown19 Fredman Drive, SandownPO Box 784055, Sandton, 2146PO Box 784055, Sandton, 2146South AfricaSouth AfricaTelephone 011 269 3000Telephone 011 269 3000Facsimile 011 269 2116Facsimile 011 269 2116E-mail [email protected] [email protected]

industrial development corporation idc strategy 2012/13 to 2016/17 shakeel meer divisional...

Documents

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value rm85jobs3

value rm3 811jobs16

value rm3 573jobs11

value rm6 330jobs30

value rm6 542jobs31

value rm1 359jobs3

value rm5 295jobs18