Pretoria: Development finance institutions like the Industrial Development Corporation (IDC) play a central role to the economy, Economic Development Minister Ebrahim Patel said on Monday.
“Given that growth prospects in Europe remain fragile and the possible impact this could have on our domestic economy, it remains critical to ensure that development finance institutions (DFI’s) continue to play a counter-cyclical role in the economy,” said the minister at the release of the IDC’s annual financial statements.
Last year, Patel announced that the IDC would make available R102 billion over the next five years to drive investment in the economic priorities identified in the New Growth Path.The IDC has achieved an unprecedented level of approvals during the past year. In releasing its annual results, the IDC said the value of funding approved increased to R13.5 billion from R8.7 billion. There were 293 funding approvals in 2012 compared to 221 in the previous year. The IDC was set up to promote economic growth and industrial development.
“We expect the IDC to continue ramping up its performance. As part of the contribution of the IDC to industrial development, we have begun to measure the speed with which it considers and decides on applications. It is making steady progress to improve turnaround times.
“I have asked the IDC to consider the cost of its facilities to ensure that it is affordable and provides real support to manufacturers,” explained the minister. A significant part of the IDC’s approvals over the past year have been in the green and renewable energy sector.
The IDC participated in funding for 12 of the projects that received preferred bidder status during the first round of the Renewable Energy Procurement Program (REPP). It also launched the Green Jobs report, as well as the Green Energy Efficiency Fund (GEEF) to provide-low cost funding to businesses to implement energy-saving technologies. It has launched a Green Bond to raise finance for renewable sector investments.
The IDC said the minister has now been given the responsibility for improved small business finance through the Small Enterprise Finance Agency (Sefa).
“From the beginning of the current financial year Sefa is a subsidiary of the IDC. The benefits of this association will contribute to the creation of linkages between large and small firms, which will benefit from being part of supply chains.”
In April, Patel unveiled Sefa saying that the new entity – a result of a merger between Khula, the SA Micro Finance Apex Fund (Samaf) and the IDC’s small business lending portfolio – would be a wholly-owned agency of the Industrial Development Corporation (IDC).
The agency will focus on lending loans of up to R3 million to small businesses.