industrial development corporation idc strategy 2012/13 to 2016/17 shakeel meer divisional...
TRANSCRIPT
Industrial Development Corporation
IDC Strategy2012/13 to 2016/17
Shakeel MeerDivisional Executive: Corporate Strategy
29 May 2012
2
Introducing IDCVision, mission, objective and values
Valu
esVi
sion 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
Support industrial capacity development
Passion Professionalism Partnership
• Facilitate sustainable direct and indirect employment• Regional equity (including development of the rest of Africa)• Growing the entrepreneur and SME sector• Expansionary and/or broad-based black economic empowerment• Environmentally sustainable growth• Grow sectoral diversity and increase localisation
Out
com
es
3
Strategy: Leadership in Industrial DevelopmentPillars of IDC’s strategy
Industrial DevelopmentContributing to an
Enabling EnvironmentLeveraging IDC’s Portfolio
for Maximum ImpactCustomer Service and Environmental Impact
• Sector focus in line with NGP and IPAP2• Project development• Industrial finance• Sector development
strategies•Regional industrial
integration
• Proactive role in shaping and influencing policy• Factors impeding industry
development•Role clarification,
partnership with and support for other DFIs
• Segmenting IDC’s portfolio and designing customised funding schemes as an enabler for development• IDC’s funding model
• Improved customer service• Improved efficiencies•Reducing IDC’s impact on
the environment•Reducing industries/IDC
client impact on environment
The primary driving force of commercially sustainable industrial development and innovation to the benefit of South Africa and the rest
of the African continent
4
Considerations for IDC
•Strategy focussed on implementation of industry related issues of the New Growth Path and Industrial Policy Action Plan;•IDC’s sectoral involvement aligned with these policies;•Playing a bigger role in proactively developing these key sectors through project development.
5
Historical Funding Activities
Limpopo
2002 to 2012
Value (R'm) 5 295Jobs 18 601
2012Value (R'm) 919Jobs 2 582
Examples:-Chemicals-Agro-processing
KwaZulu-Natal
2002 to 2012
Value (R'm) 6 542Jobs 31 714
2012Value (R'm) 85Jobs 3 897
Examples:-Fabricated metals and capital equipment-Clothing and textiles-Green industries-Agro-processing
North-West
2002 to 2012
Value (R'm) 7 930Jobs 37 160
2012Value (R'm) 3 573Jobs 11 471
Examples:-Automotive components-Fabricated metals-Agro-processing-Mining
Western Cape
2002 to 2012
Value (R'm) 6 330Jobs 30 632
2012Value (R'm) 1 359Jobs 3 437
Examples:-Fabricated metals-Green industries-Agro-processing-Pharmaceuticals-Clothing and textiles
Gauteng
2002 to 2012
Value (R'm) 21 663Jobs 85 062
2012Value (R'm) 3 811Jobs 16 804
Examples:-Automotive components-Fabricated metals-Plastics, pharmaceuticals, and chemicals
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Historical Funding Activities (continued)
Mpumalanga
2002 to 2012
Value (R'm) 3 924Jobs 21 642
2012Value (R'm) 404Jobs 2 161
Examples:-Fabricated metals-Forestry and wood processing
Free State
2002 to 2012
Value (R'm) 847Jobs 5 778
2012Value (R'm) 67Jobs 106
Examples:-Agro- processing-Clothing and textiles
Northern Cape
2002 to 2012
Value (R'm) 8 001Jobs 19 047
2012Value (R'm) 3 553Jobs 3 787
Examples:-Green-industries-Agro-processing-Mining
Eastern Cape
2002 to 2012
Value (R'm) 7 778Jobs 27 332
2012Value (R'm) 189Jobs 1 739
Examples:-Green industries-Advanced manufacturing – electronics-Automotive components-Fabricated metals
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Historical Funding Activities
- 1.0 2.0 3.0 4.0 5.0 6.0
Eastern Cape
Free State
Gauteng
KwaZulu Natal
Limpopo
Mpumalanga
North West
Northern…
Western Cape
Index: IDC funding relative to provincial GDP
IDC Funding Approvals Relative to Provincial GDP (2002 to 2012)
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Jobs Expected to Created/Saved
-
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12
Full-
time
equi
vale
nt jo
bs
Direct impact on 2nd economy jobsSavedExpected to be created
IDC Impact on Jobs
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Focus Areas for 2012/13
ICT (4%)Healthcare (3%)
Tourism (3%)
Media & Motion Pictures (3%)
Mining and Minerals Beneficiation (17%)
Forestry and Wood Products (9%)
Metals and Machinery (8%)
Textiles (3%)
Chemical & Allied Industries (7%)
Venture Capital (<1%)
Green Industries (21%)
Strategic High Impact Projects (17%)
Agro Industries (7%)
Budgeted Investment Values – 2012/13
• Rural-poor linkages• Import replacement
• Industrial infrastructure• Localisation of bus, truck and
taxi manufacturing
• Non fossil fuel based renewable energy• Energy efficiency• Emission and pollution mitigation
• Basic chemicals• Glass and ceramics• Cement, concrete and building materials• Plastic and rubber products and import
replacement
• Commercialisation of South African intellectual property
• Competitive local / regional value chain • Fabricated metal, capital and transport equipment • Automotive and MHCV • Components for green industries Budgeting to approve R15bn in 2012/13.
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Focus Areas for 2012/13
ICT (4%)Healthcare (3%)
Tourism (3%)
Media & Motion Pictures (3%)
Mining and Minerals Beneficiation (17%)
Forestry and Wood Products (9%)
Metals and Machinery (8%)
Textiles (3%)
Chemical & Allied Industries (7%)
Venture Capital (<1%)
Green Industries (21%)
Strategic High Impact Projects (17%)
Agro Industries (7%)
Budgeted Investment Values – 2012/13• Pulp and paper• Community forestry• Furniture
• Junior mining sector• Competitive steel pricing
• Pharmaceutical manufacturing• Medical devices• Hospital PPPs
• Film production• Audience development• Production facilities• Broadcasting
• Underdeveloped nodes in SA
• Telecommunication• Shared services• Set-top boxes
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Green-Industries Focus Areas
Energy efficiencyEnergy efficiency
Heat, Electricity & building efficiency
Heat, Electricity & building efficiency
Cleaner production / Industrial Efficiency
Cleaner production / Industrial Efficiency
Transport EfficiencyTransport Efficiency
Waste to Energy Waste to Energy
Fuel Based EnergyFuel Based Energy
Co-generationCo-generation
Emission and pollution mitigationEmission and pollution mitigation
Air pollution controlAir pollution control
Water & soil treatmentWater & soil treatment
Waste Management/ Recycling
Waste Management/ Recycling
Clean stovesClean stoves
Bio FuelsBio Fuels
Bio EthanolBio Ethanol Bio DieselBio Diesel
Renewable Energy: Non-Fuel Power Renewable Energy: Non-Fuel Power
Wind Power GenerationWind Power Generation
Concentrated Solar PowerConcentrated Solar Power
Solar Photo Voltaic PowerSolar Photo Voltaic Power
Services related
to renewable
energy & energy
efficiency
Services related
to renewable
energy & energy
efficiency
Local
manufacturing
related to
renewable
energy & energy
efficiency
Local
manufacturing
related to
renewable
energy & energy
efficiency
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IDC Participation in Renewable Energy Projects
MoltenoWind: 100MW
Full Time Equiv. Jobs: 147
RustenburgSolar PV: 7MW
Full Time Equiv. Jobs: 48
MalmesburySolar PV: 6MW
Full Time Equiv. Jobs: 26
CookhouseWind: 140MW
Full Time Equiv. Jobs: 220
Oyster BayWind: 80MW
Full Time Equiv. Jobs: 275
UpingtonConcentrated Solar : 50MWFull Time Equiv. Jobs: 727
PofadderConcentrated Solar : 100MWFull Time Equiv. Jobs: 660
CaledonWind: 28MW
Full Time Equiv. Jobs: 47
PofadderSolar PV: 10MW
Full Time Equiv. Jobs: 85
De AarSolar PV: 10MW
Full Time Equiv. Jobs: 35
PrieskaSolar PV: 20MW
Full Time Equiv. Jobs: 71
KenhardtSolar PV: 10MW
Full Time Equiv. Jobs: 60
GoudaWind: 138MW
Full Time Equiv. Jobs: 124
KomgaWind: 140MW
Full Time Equiv. Jobs: 220
Grass RidgeWind: 60MW
Full Time Equiv. Jobs: 230
GrahamstownWind: 24MW
Full Time Equiv. Jobs: 107
KakamasHydro
Full Time Equiv. Jobs: 139
UpingtonConcentrated Solar : 50MWFull Time Equiv. Jobs: 427
• IDC is participating in 18 of the 47 renewable energy projects that received preferred bidder status in rounds 1 and 2;•Also funding projects for components for wind and solar.
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IDC’s Funding Model
Equity funding
Loan funding
Capital growth
Interest repayments
IDC relies on borrowings, internal profitability, capital growth and exits from mature investments to maintain and expand its funding ability
Capital repayments
Dividend paymentsExits of mature
investments
IDC Funds•Borrowings•Balance sheet•Mature investments•Retained earnings
The balance between the corporation’s developmental role and financial performance is maintained by relying on proceeds from mature equity investments (both dividends and capital growth) to cross-subsidise
higher risk activities and the loan portfolio.
Subsidy
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Examples of Sector StrategiesAgro-Industries
Rural/poor linkage initiative•Objective – Increase rural development and poverty alleviation in rural areas;
•Description – Utilise investment in the agro-processing sector to create demand for primary agricultural products;
– Incentivise agro-processors to source raw materials from emerging farmers and provide the necessary non-financial support;
– Establish agri-business support organisations to provide technical assistance and other services to emerging farmers;
– E.g. funding for a dairy enabling increased potential for livestock farming.
•Impact – Job creation in rural areas and agriculture based communities across South Africa;
– Expansionary and broad-based black economic empowerment.
Impact
Import replacement•Objective – Establish agro-processing activities that will replace imported products
and create demand for SA based agriculture;
•Description – Development of the malt and edible oils industries through support for
project development in these areas;– E.g. production of malt, soya processing;
•Impact – Job creation in several rural areas, but particularly in the Northern Cape, Gauteng, Free State and Mpumalanga;
– Improvement in SA’s balance of payments.
Impact
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Examples of Sector StrategiesStrategic High Impact Projects
Industrial Infrastructure•Objective – Industrial projects in underdeveloped regions;
•Description – Work closely with government to identify and develop opportunities;
– Supporting the Presidential Infrastructure Co-ordinating Commission (PICC) with developing roll out plans;
– Engaging with Eskom and Transnet on localisation of production of inputs to capex/infrastructure programmes;
– E.g. Supporting local production and refurbishment of rolling stock and developing industrial opportunities in EC and Limpopo through
cooperation with Transnet and private companies on provision of railway capacity;
•Impact – Job creation and industrialisation in areas relying on a mostly agrarianeconomy.
Impact
Localisation of Bus, Truck and Taxi Manufacturing•Objective – Greater localisation of government procurement and increased
industrialisation;
•Description – Develop projects and attract foreign investors to increase local production of transport equipment;
– First round of will focus on increasing local assembly capacity, with the potentialfor increased manufacturing of components being
investigated;
•Impact – Job creation and industrialisation;–Enabler for local procurement for busses as per the regulations of the Preferential Procurement Policy Framework Act.
Impact
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Examples of Sector StrategiesGreen Industries
Renewable Energy• Objective – Establish a new industry in SA;
– Assist with making SA’s economy less carbon intensive;
•Description – Participate in developing and funding projects bidding for the Renewable Energy IPP (REIPP) programme;
– E.g. during the 1st round bidding process, IDC funded projects in the wind and solar generation industry to be located in the Northern Cape, Western Cape, Eastern Cape and North West;
•Impact – Community participation and upliftment;– Potential for the development of the component industry.
Impact
Energy Efficiency• Objective – Assist companies to use electricity efficiently;
– Alleviate pressure on the electricity system;
•Description – Provide support to companies to identify and implement energy saving measures;
– Funding of further solar water heater roll-out initiatives.
•Impact – Job creation through the service industry;– More sustainable and competitive industries.
Impact
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Examples of Sector StrategiesForestry and Wood Products
Community Based Forestry Projects• Objective – Rural development;
– Ensuring sufficient forest resources;
•Description – Assisting rural communities to develop sustainable forestry projectsand provide funding for these projects;
•Impact – Sustainable development of restituted land in the Eastern Cape and KwaZulu-Natal;
– Increased timber supply.
Impact
Competitive Local/Regional Value Chain• Objective – Stabilise the local textiles and clothing industry to stem further job
losses and build a basis for potential future growth;•Description – Develop and implement projects in the region (outside SA) that will
enable SA companies to source inputs more competitively;
– Continued implementation of the CTCIP;
– Encouraging the local clothing, textiles and footwear industries to invest in improving their competitiveness
– E.g. cotton production in Zimbabwe;•Impact – Retention and creation of jobs, particularly in KwaZulu-Natal and the
Western Cape;– Regional value chain integration.
Impact
Clothing and Textiles
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Examples of Sector StrategiesHealthcare
Local Pharmaceutical Production• Objective – Ensure security of supply for local pharmaceutical ingredients and medical
devices;
•Description – Develop and implement projects that supply SA’s pharmaceutical needs;
– E.g. vaccine production in the Western Cape (being implemented), ARV active ingredients in North West;
•Impact – Positive impact on balance of payments;– Job creation.
Impact
Impact
Mining and Minerals Beneficiation Competitive Steel Prices for Downstream Producers• Objective – Reduce input prices for the downstream metals industry;
•Description – Develop and implement projects that will enable more competition in
the steel industry;
– E.g. steel mill in Limpopo, mini-mills in Gauteng and Eastern Cape (EC being implemented), scrap substitute in Mpumalanga;
•Impact – Reduced prices for downstream metal producers throughout the country;– Increased job creation in upstream as well as downstream industries.
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Port Elizabeth
IDC Regional Presence
Sandton
Cape Town
Bloemfontein
Polokwane
Rustenburg
Kimberley
Durban
East London
Mbombela
Klerksdorp
Mafikeng
Vryburg
Emalahleni
Secunda
TzaneenHead Office/Regional Office
Satellite Office
Legend• Regional offices are fully fledged
operational offices that form part of IDC’s deal assessment process;
• In addition to regional offices, branch offices have been established in certain areas – these are permanently staffed;
• Satellite offices are also being rolled out and co-locates with the new small business finance entity;
• Roll-out of future offices will be coordinated with the new small business finance entity to control costs.
Pietermaritzburg
Brits
Upington (launching in May)
George
GroblersdalBranch Office
Thohoyandou
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Prospects
Thank you
Industrial Development CorporationIndustrial Development Corporation19 Fredman Drive, Sandown19 Fredman Drive, SandownPO Box 784055, Sandton, 2146PO Box 784055, Sandton, 2146South AfricaSouth AfricaTelephone 011 269 3000Telephone 011 269 3000Facsimile 011 269 2116Facsimile 011 269 2116E-mail [email protected] [email protected]