IDC: Prioritising Development Impact

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.

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

You are not authorized to view Teaching Notes. Please contact your librarian for instructor access or sign in to your existing instructor profile.

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).

Figure

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).

Figure

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).

Figure

Exhibit 4. History of Funding at IDC between 2002 and 2012

Figure

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).

Figure

Exhibit 5. Focus Areas for IDC Investment in the 2012/2013 Financial Year

Figure

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).

Figure

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).

Figure

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).

Figure

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

locked icon

Sign in to access this content

Get a 30 day FREE TRIAL

  • Watch videos from a variety of sources bringing classroom topics to life
  • Read modern, diverse business cases
  • Explore hundreds of books and reference titles