IDC focuses on supporting wind energy and solar power for South Africa

The Industrial Development Corporation (IDC) approved R9.4 billion in funding last year – the second highest level in the development fund’s history.

The IDC helped to save or create 19 300 jobs, as the country recovered from its first recession in 17 years.

Briefing the National Assembly’s Economic Development Portfolio Committee on Wednesday, Shakeel Meer, the IDC’s divisional executive of industrial sectors said while R4.8 billion was disbursed last year, approvals fell just short of the record R10.8 billion in the 2008/09 financial year.

However, the 19 300 jobs created was below the IDC’s target of 37 745 jobs, despite 9 651 of these jobs being created in rural areas – above the target of 8 554 jobs targeted for rural areas.

Meer attributed the low jobs figures to some clients having cancelled their applications for finance with the onset of the recession and to lower than expected uptake in distressed funding – with only R1.4 billion of the R6.1 billion allocated for distressed firms being taken up.

The IDC, however, was running several promotional workshops and activities to boost the awareness of this funding.

Meer said the IDC last year approved R376 million to vehicle component and transport equipment manufacturers, which is expected to save 1 500 jobs.

A further R292 million in funding was approved to companies in the clothing sector to improve their competitiveness, which is expected to save and create 2 100 jobs.

The IDC was also increasing its focus on green investments, targeting projects in wind power and solar power, energy management and recycling.

Among these include 11 wind farm projects which are in the pipeline, three concentrating solar power and four solar photovoltaic projects which have been approved.

However, Meer said setting up wind farms created very little jobs, so it was important that South Africa begin manufacturing technologies for renewable energy, rather than importing these.

Among its other funding commitments, the IDC was focusing on financing suppliers of rail equipment for the Passenger Rail Agency (Prasa) and Transnet, as well as suppliers to Eskom’s build programmes.

These included R45 million to woman-owned business in upgrading commuter rail coaches and R30 million to a company manufacturing ducting for the Medupi power station.

The IDC also approved R34 million to help abalone farms in the Western Cape to expand and allow black entrepreneurs to acquire a stake in the business.

Over a third of IDC’s total investments went into the capital intensive mining sector, with the highest number of loans going to the agro-processing sector and to businesses in the trade, catering and accommodation sector.

About two thirds of loans went to Gauteng, with about five percent of loans to the rest of Africa. The Free State benefited from the least number of loans.

The IDC continues to hold significant shareholding in various companies, including fertliser company Foskor, where it holds a 59 percent stake, Hulett Aluminium (30 percent) and Mozambican smelter, Mozal (24 percent).

Among its other results, the IDC funded 124 small and medium-sized businesses and approved R1.8 billion to fund businesses in other African countries.

However impairments increased from 10.2 percent in the 2006 financial year to 16.3 percent in the last financial year, in line with the IDC’s move towards making riskier investments.

Meer said the organisation has been looking at new funding sources, such as tapping into the Unemployment Insurance Fund – targeted at companies that particularly create or save jobs.