MEA­SUR­ING THE IDC’S SUC­CESS

CityPress - - Business -

South Africa has ex­pe­ri­enced low eco­nomic growth rates in the past five years as a re­sult of nu­mer­ous fac­tors: from sup­ply-side con­straints such as ris­ing costs, through to de­mand-side chal­lenges such as high house­hold in­debt­ed­ness. In these un­cer­tain times, how then should we be mea­sur­ing the suc­cess of the In­dus­trial Devel­op­ment Cor­po­ra­tion (IDC)? Re­port­ing our re­sults for the 2015 fi­nan­cial year, our 75th year in ex­is­tence, you could look at the IDC’s bot­tom line and say, yes, we have been suc­cess­ful, hav­ing re­ported R11.5 bil­lion in ap­provals.

But is this the most im­por­tant mea­sure of suc­cess for us at the IDC?

Not really. I’m not say­ing prof­itabil­ity isn’t an im­por­tant met­ric for the IDC. It is crit­i­cal that we make a re­turn on our in­vest­ments to en­sure our long-term self­sus­tain­abil­ity.

As a devel­op­ment fi­nance in­sti­tu­tion, our man­date is broader than just en­sur­ing the prof­itabil­ity of the busi­ness.

It is about mak­ing sure we con­trib­ute to the long-term suc­cess of the South African econ­omy by pro­vid­ing fi­nance to those busi­nesses that are un­able to se­cure cap­i­tal from com­mer­cial en­ti­ties such as banks.

In so do­ing, the IDC con­trib­utes to the cre­ation of bal­anced, sus­tain­able eco­nomic growth in South Africa and on the rest of the con­ti­nent. We want to pro­mote en­trepreneur­ship through the build­ing of com­pet­i­tive in­dus­tries and en­ter­prises based on sound busi­ness prin­ci­ples. By de­vel­op­ing in­dus­trial ca­pac­ity, the IDC achieves spe­cific out­comes. The most im­por­tant of these is to en­able job cre­ation through the com­pa­nies we fund.

Fo­cus­ing though on try­ing to find short-term mea­sure­ment met­rics to mea­sure whether we have been suc­cess­ful in any given year misses the point of what the IDC aims to achieve. We look to make long-term in­vest­ments in busi­nesses that the pri­vate sec­tor finds too risky.

We are also very mind­ful that we don’t, as an in­sti­tu­tion, crowd out pri­vate sec­tor in­vestors. Rather, we want to cre­ate a mar­ket in which the pri­vate sec­tor can play a role at a later stage.

I am con­fi­dent that within our port­fo­lio there is at least one busi­ness that is the next South African in­dus­trial cham­pion that has its roots with the IDC. And that will be the mea­sure of our suc­cess.

Qhena is the CEO of the IDC

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