Funding SA’s entrepreneurs through today’s tough cycles
The Industrial Development Corporation (IDC) offers funding with the primary aim of creating direct and indirect jobs in the South African economy, and to help drive industrial development across urban and rural areas as well as the rest of the continent.
The development financier has a strong balance sheet that has enabled it not only to meet its funding obligations to entrepreneurs, but also to pay both tax and dividends to its sole shareholder, the government, throughout the depressed economic environment.
Funding is offered in the form of debt, equity or quasi equity, guarantees, trade and bridging finance, as well as venture capital. Funding is structured according to business needs, with loans ranging from short to long term and, where required, payment holidays on interest or capital are negotiated.
There are specific funding schemes available for businesses with high job creation potential, black-, women- and youthowned businesses, distressed businesses that are funded to save jobs as well as sector specific funds for forestry, clothing and textiles, among others.
Security and owner contributions are required depending on circumstances. These can be lowered in the case of historically disadvantaged investors. Projects must demonstrate viability and the IDC does not refinance fixed assets, as this contradicts its mandate to grow the industrial base.
Funding is offered across 13 Strategic Business Units (SBUs): these include the agro-processing and agriculture unit, which focuses on livestock and some field crops processing, horticulture and aquaculture, among other areas.
The automotive and transportation equipment SBU focuses on growing South Africa’s participation in the global automotive and original equipment manufacturing value chain. The basic metals and mining SBU focuses on the beneficiation of metals, a long-term strategic focus area for South Africa
The basic and speciality chemicals unit supports the chemicals value chain as does the chemical products and pharmaceuticals unit.
THE APPLICATION REQUIRES DETAILED INFORMATION ABOUT THE SHAREHOLDERS
Other units are clothing and textiles; heavy manufacturing, industrial infrastructure; light manufacturing and tourism; machinery and capital equipment; media and motion pictures, which funds digital cinemas in townships; and animation and new industries, which helps build new technologies and industries that can drive industrialisation that would be job intensive.
The rest of Africa SBU is dedicated to scouring the African continent searching for opportunities in agriculture, manufacturing, tourism, minerals and mining, petroleum and energy as well as transport and other related infrastructure.
The application requires detailed information about the shareholders and management of the company (see box). For an acquisition, the IDC requires a majority black-owned purchaser and more than half of the funding having to go towards expansion.