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LIMPOPO DEPARTMENT OF ECONOMIC DEVELOPMENT, ENVIRONMENT AND TOURISMThe heartland of southern Africa – development is about people!
2015
ICT YOUTH CONFERENCE
MALOSE MAKGETA- SENIOR REGIONAL OFFICERPolokwane - Limpopo ProvinceLimpopo ICT Youth Conference
25 March 2015Funding of sustainable ICT projects
Industrial Development Corporation of SA
MALOSE MAKGETA- SENIOR REGIONAL OFFICER
Polokwane - Limpopo Province
Limpopo ICT Youth Conference
26 March 2015
Funding of sustainable ICT projects
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PURPOSE OF PRESENTATION
Provide background on IDC corporate profile & mandate
Elaborate on IDC financing Criteria
Give an overview of the IDC Business Application process
Put more emphasis on IDC Groe Youth fund
Overview of IDC ICT Business Unit
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BACKGROUNDo Established: 1940
o Type of organisation: Development Finance Institution (DFI)
o Ownership: State owned company, 100% owned by the SA government
o Funding status: Self financing, pays dividends and income tax
o Main business area: Providing funding for entrepreneurs and projects that are contributing to industrialisation and job creation
o Geographic activities: South Africa and the rest of Africa
o Products: Custom financial products to suit a project’s needs including debt, equity, guarantees or a combination of these
o Stage of investment: Project identification and development, feasibility, commercialisation, expansion, modernisation
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Vision, mission, objective and valuesVa
lues
Visi
on 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
Lead industrial capacity development
Passion Professionalism Partnership
Primary: Facilitate sustainable direct and indirect employmentSecondary:• Improving regional equity, including the development of South African rural areas, poorer provinces and industrialisation in the
rest of Africa;• Growing the entrepreneurial and SME sectors• Transformational impact on communities and growing black industrialists• Environmentally sustainable growth• Growing sectoral diversity and increased localisation of production
Out
com
es
8
• Funding can be structured utilising a wide array of instruments including:• Debt;• Equity;• Quasi-equity;• Guarantees;• Trade finance;• Bridging finance;• Venture capital.
• The funding will be structured in a way that will suit the business’ needs most appropriately. Structuring options include:
• Term of the funding: Short, medium and long-term loans are available;• Grace periods for repayment : Repayments can be structured to suit cashflows and allow for periods
where no payments need to be made on either capital or interest;• Flexible security requirements: In most instances, very little security is required for small business
applications• Special funding schemes are available that offer more attractive terms and targets cross sectoral issues
such as job creation or development of specific sectors. Also include funds managed on behalf of other organisations, largely the dti;
• IDC’s business support programme addresses non-financial support to entrepreneurs.
IDC’s funding products
Funding of R1 million and more
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Financing Criteria BEE acquisitions of existing business must be
expansionary buy-in, not pure sale of shares, or control acquired by HDPs. HDPs must be involved in management
Projects in with the following sectors or with the following characteristics are NOTconsidered:
– Pure retail (including Franchising)
– Property development (esp. Residential)
– Primary agriculture (Only Long Term Crop)
– Liquor, Tobacco, Gaming, Gambling and related
– Environmentally non-compliant
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Managing IDC: Deal origination, assessment and post-investment: Funding process
Applications from existing/
prospective businesses
Proactive identification and development of
projects
Pipeline Assessment and decision
Detailed due-diligence/feasibility study assessing development impact and sustainability of
opportunities:• Development outcomes• Market for products/services• Technical viability and
competitiveness• Financial viability• Management• Legal• Environmental impact• Etc.
Implementation and monitoring
Structuring of funding depending on client’s needs
Approval of viable transactions at appropriate committee
Ongoing monitoring of client performance after funding is
disbursed
Interventions in businesses experiencing difficulties
• Business support• Restructuring of facilities• Etc.
More emphasis being placed on early stage
involvement and development of
projects
Legal agreements
Meeting conditions
Disbursement
Screening
Basic assessment
Pre-feasibility
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Basic Assessment
Due Diligence Feasibility Study
Decision-making (Investment Committee)
Legal Agreements
Disbursement
Post-investment Management
Initial Screening
Engagement letter MOU/Co-operation Agreement
Business Application Process
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Special Funding Schemes
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Development Funds Department
Transformation and E
ntrepreneurial Schem
e (TES
)
Annual Allocation €47m
HIGH DEVELOPMENT RING FENCED FUNDS
Support P
rogram for Industrial Innovation (S
PII)
Risk C
apital Facility (RC
F)
AnnualAllocation
Clothing &
Textiles Com
petitive Program
me (C
TCP
)
GR
EE
N E
NE
RG
Y E
FFICIE
NC
Y FU
ND
R 500 m
UN
EM
PLO
YM
EN
T INS
UR
AN
CE
FUN
D (U
IF)
R 2 b
IDC Business Support Unit
R 1 b
GR
O –
E-S
CH
EM
E
R 10 b
GR
OW
E Y
OU
TH S
CH
EM
E
AG
RO
PR
OC
ES
SIN
G LIN
KA
GE
S S
CH
EM
E (A
PLS
)R 100 m R 10 b
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TES Structure
WomenEntrepreneurial
FundR 400 m
40%
Investment: R360mBus. Support: R40m
DevelopmentFund
R 250 m25%
Investment: R242,5Bus. Support: R7,5m
CommunityFund
R 150 m15%
Investment: R145mBus. Support: R5m
EquityContribution
FundR 150 m
15%
Investment: R135mBus. Support: R15m
People withDisabilities
FundR 50 m
5%
Investment: R45mBus. Support R5m
TRANSFORMATION AND ENTREPRENEURIALSCHEME
R 1 Billion
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Background
Background
• On 18 April 2013 IDC signed the Youth EmploymentAccord in Soweto and pledged R1billion towards youthenterprise funding
• On 29 July 2013 a Memorandum of understanding(MOU)was signed between the IDC,NYDA and sefa
• The MOU outlines the establishment of a three-waypartnership to provide development funding for youth-owned businesses
• Through this collaboration, youth owned businesseswill be able to access IDC and sefa loans allocated foryouth as well as NYDA grants
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Regional Development
Who qualifies:
• Start-up businesses, including funding for buildings, machinery and
working capital;
• Existing businesses for expansionary purposes;
• Over 50% ownership by persons under 35 years of age;
• Businesses that demonstrate economic merit and have prospects of
acceptable profitability to be able to service their obligation;
• For the duration of the funding period, businesses whose maximum cost
per job does not exceed R500 000 relative to the total funding required;
• Broad-Based Black Economic Empowerment certification from an
accredited verification agency, where applicable;
• Businesses operating or expanding in South Africa;
Gro-E youth Scheme
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Regional Development
How the scheme works:
• Funding will be made available at prime less 3% to businesses that will
create jobs.
• A minimum of R1-million with a maximum of R50-million per project will be
allowed.
• The funding is available over five years or until the scheme is exhausted,
whichever occurs first.
• The first draw must be within one year from approval of funding. If not,
pricing reverts to normal IDC pricing.
• Reduced loan pricing will be available for five years, after which normal
IDC pricing will apply.
• Finance required in excess of the scheme’s limit can be accessed through
normal IDC funding.
• Pre- and post-investment support and mentorship will be provided where
needed.
Gro-E Youth Scheme
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ICT SBU
The ICT SBU’s vision is to be the financials partners od choice:
• Telecommunications;
• Information Technology;
• Shared Service (Business Process Outsourcing);
• Green Initiatives (E-waste and demand-side management);
• Electronics; and
• Contract-based electrical.
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Prospects
QUESTIONS AND COMMENTSI Thank you
Industrial Development CorporationSuite 18, Biccard Park Office Park43 Biccard Street , PolokwaneTel : 015 299 4080E-mail - [email protected]