Case
Teaching Notes
Supplementary Resources
Abstract
As Geoffrey Qhena, chief executive officer (CEO) of the Industrial Development Corporation (IDC), sat in his office at the organisation's headquarters in Johannesburg, reviewing details of the recently published annual report in preparation for a meeting with the board, he reflected on the state of the organisation he had led since 2005. Now it was October 2012 and, under his leadership, the performance of the organisation was generally lauded as impressive. Qhena wanted more, intending to grow the development impact of the IDC by increasing its minimum loans from R1 million to R5 million in 2013. He wondered how best to achieve this in the current environment of economic uncertainty.
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Resources
Exhibit 1. IDC's Funding Model
Source: Maia, J. 2012. ‘Fostering Industrial Development in South Africa’, available http://www.pegnet.ifw-kiel.de/activities/events/confdocs2012/presentations-and-posters/ (accessed 4 October 2012).
Exhibit 2. Footprint of IDC Investments across Africa
Source: Industrial Development Corporation, 2012. Integrated Annual Report 2012, available http://www.idc.co.za/IR2012/exposure-in-africa.php (accessed 20 October 2012).
Exhibit 3. IDC Internal Project Development Process
Source: Adapted from Qhena, G. 2010. ‘Implementing IPAP: IDC's Support for the Implementation of the Industrial Policy Action Plan’, Presentation to the Portfolio Committee on Trade and Industry, available http://www.thedti.gov.za/parliament/051210_engaging_idc_implementing_IPAP.pdf (accessed 4 October 2012).
Exhibit 4. History of Funding at IDC between 2002 and 2012
Source: Meer, S. 2012. ‘Driving Industrial Capacity in Development – IDC Strategy 2012/13 to 2016/17’, available http://www.pmg.org.za/report/20120529-industrial-development-corporation-its-strategic-plan-annual-operatio (accessed 4 October 2012).
Exhibit 5. Focus Areas for IDC Investment in the 2012/2013 Financial Year
Source: Meer, S. 2012. ‘Driving Industrial Capacity in Development – IDC Strategy 2012/13 to 2016/17’, available http://www.pmg.org.za/report/20120529-industrial-development-corporation-its-strategic-plan-annual-operatio (accessed 4 October 2012).
Exhibit 6. IDC Financing Process
Source: Adapted from Mondi, L. N.D. ‘Learning from a Successful DFI Model: The Case of IDC of South Africa’, Presentation, available www.adfi-ci.org/news/Presentation_by_Mr_Mondi_IDC_Part_2.pdf (accessed 3 October 2012).
Exhibit 7. Impact of IDC Funding on Job Creation from 2005 to 2012
Source: Meer, S. 2012. ‘Driving Industrial Capacity in Development – IDC Strategy 2012/13 to 2016/17’, available http://www.pmg.org.za/report/20120529-industrial-development-corporation-its-strategic-plan-annual-operatio (accessed 4 October 2012).
Exhibit 8. IDC Funds and Schemes (Special Purpose Finance) from 2007 to 2012
Scheme | Target Group/Sector | Amount |
Community Forest Grant | Agro-processing | R50 million |
Clothing and Textile Competitiveness Programme | Clothing, textiles, leather | R250 million |
Distressed Funding | All economic sectors | R6.1 billion |
Gro-E Scheme | All economic sectors | R10 billion |
Isivande Women's Fund | Female entrepreneurs | R50 million |
Natural Disaster Relief Initiative | Agricultural sector | R250 million |
Pro-Forestry Scheme | Wood processing | R100 million |
Pro-Orchards Scheme | Agro-processing | R200 million |
Risk Capital Facility Programme | Entrepreneurs and SMEs | R450 million |
Support Programme for Industrial Innovation | Innovation | R50 million |
Transformation and Entrepreneurship Scheme | Entrepreneurs and SMEs | R1 billion |
Source: Compiled from information on IDC's schemes, available http://www.idc.co.za/development-funds (accessed 4 October 2012).
Exhibit 9. IDC's Strategic Investments as at October 2012
Company Name | Industry | Location | Shareholding (%) |
AECI Bioproducts Limited http://www.mbendi.com/orgs/casn.htm | Explosives and chemicals | Johannesburg | 40.00 |
ArcelorMittal SA Ltd | Steel | Vanderbijlpark | 14.70 |
BHP Billiton SA Ltd | Mining | Johannesburg, | 3.96 |
Exxaro Resources Ltd | Mining | Pretoria | 14.00 |
Foskor Ltd | Phosphates and phosphoric acids | Phalaborwa | 59.00 |
Habesha Cement Share Company | Cement | Addis Ababa | 20.00 |
Harmony Gold Ltd | Mining | Randfontein | 7.43 |
Hernic Ferrochrome Ltd | Ferrochrome | Brits | 25.00 |
Kumba Iron Ore | Iron ore | Johannesburg | 12.90 |
Mozal SARL | Aluminium | Maputo | 25.00 |
Saldanha Steel (Pty) Ltd | Steel | Saldanha | 50.00 |
Sasol Fibres (Pty) Ltd | Fibre | Durban | 50.00 |
Scaw Metals Group | Steel | Johannesburg | 74.00 |
Source: Compiled from information on IDC's investment portfolio, available http://idc.mbendi.com/ (accessed 20 October 2012).
Exhibit 10. Highlights of IDC Financial Statements (Income Statements and Balance Sheets) from 2005 to 2012
Year | 2004/05 | 2005/06 | 2006/07 | 2007/08 | 2008/09 | 2009/10 | 2010/11 | 2011/12 |
Revenue | 2 806 | 4 524 | 5 169 | 7 299 | 14 958 | 7 785 | 8 965 | 10 985 |
Financing costs | 495 | 457 | 499 | 570 | 528 | 346 | 446 | |
Operating expenses | 2 119 | 1 914 | 2 674 | 4 067 | 3 416 | 3 057 | 6 730 | |
Net operating income | 1 287 | 37 | 378 | 2 155 | 5 314 | 2 008 | 2 285 | 3 412 |
Other income | 55 | 133 | 314 | - | 159 | 131 | 121 | |
Share of equity-accounted investments | 266 | 417 | 1 673 | 1 950 | 1 132 | 40 | 633 | 368 |
Net capital gains | 1 260 | 341 | 1 796 | 488 | 128 | 573 | 36 | 878 |
Profit | 1 172 | 753 | 4 345 | 3 951 | 5 621 | 2 229 | 2 712 | 3 303 |
Total assets | 36 950 | 48 155 | 63 615 | 90 433 | 73 377 | 88 631 | 106 806 | 112 230 |
Total equity | 30 091 | 38 984 | 52 574 | 75 848 | 65 045 | 79 555 | 93 068 | 91 862 |
Total liabilities | 6 859 | 9 171 | 11 041 | 14 585 | 8 332 | 9 076 | 13 738 | 20 037 |
Note: Values are in millions of rand
Source: Compiled using a selection of figures from IDC annual reports 2005 to 2012 available
IDC 2012, Annual Report 2012, available http://idc.co.za/IR2012/downloads/idc_integrated_ar2012.pdf
IDC 2012, Annual Report 2011, available http://www.idc.co.za/images/publications/4154%20IDC%20Ar%20complete_LR.pdf (accessed 30 November 2012).
IDC 2012, Annual Report 2010, available http://www.idc.co.za/images/publications/idc_annual_report_2010.pdf (accessed 30 November 2012).
PMG 2009, IDC Annual Report 2009, available http://www.pmg.org.za/report/20091014-industrial-development-corporation-idc-annual-report-20089 (accessed 30 November 2012).
Slideserve 2006, IDC Annual Report 2006, available http://www.slideserve.com/Thomas/idc-annual-report-2006 (accessed 30 November 2012).
PMG 2006, IDC Financial Statements 2006, available http://www.pmg.org.za/minutes/20061114-industrial-development-corporation-200506-annual-report-and-financial-statements-br (accessed 30 November 2012).
Docstoc 2005, IDC Results 2005, available http://www.docstoc.com/docs/125296627/IDC-Results-200405 (accessed 30 November 2012).
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2024 Sage Publications, Inc. All Rights Reserved