Development financier, the Eastern Cape Development Corporation (ECDC), says it disbursed a total of R92,3 million in loans to 260 Small Medium and Micro Enterprises (SMMEs) in the 2015/16 financial year.
Announcing the financier’s annual results in East London today, ECDC chief executive Ndzondelelo Dlulane says the results coupled with an unqualified audit opinion, are an indication of ECDCs positioning as a trusted custodian of public funds as well as a provider of high impact and empowering loan instruments to the SMME sector.
“The loan disbursements led to the facilitation of 1,875 jobs. A close look at these numbers shows that businesses involved in the construction sector received close to half of all loans. The sector is robust indicating increased government spending in the roll out of socio-economic infrastructure projects particularly in the former Transkei which has significant backlogs. Following close behind construction was the services sector.
“Almost R71 million or 77% went to SMMEs in Alfred Nzo, OR Tambo, Chris Hani and Joe Qqabi districts and the Buffalo City Metro. Another major milestone is the growth in financing of youth businesses. Funding to youth-owned businesses grew by 119% and to women-owned businesses by 59%,” Dlulane says.
For example, Fez Building Construction, a long-standing client of the corporation, built three schools, in Butterworth, Engcobo and Idutywa, as well as upgraded the Maluti College in the Matatiele municipal area. The value of projects totalled R83.8 million and ECDC approved loans worth R20,8 million for these projects. These projects created 141 jobs with the wage bill totalling R2,7 million.
Another ECDC client, MC Bavu JV TP Construction was involved in two notable projects – the Mthatha Maxwele Municipal clinic with adjoining staff accommodation, valued at R20,9 million)and the renovation of the magistrate’s office in KwaBhaca (Mount Frere). ECDC financing for the clinic project came to R3,1 million. Fifty jobs were created and R1,7 million in wages were paid.
In addition, Zingwazi Contractors built a R22,7 million multi-purpose community hall in Bizana, which created 21 jobs. ECDC financing for the project amounted to R4,9 million.
The Jobs Stimulus Fund and Imvaba Co-operatives Fund disbursed a total of R13 million, meaning 710 more people are employed. Collections on loans totalled R136.3 million, up by 5%.
Dlulane says an important area for ECDC is the wide-ranging business support it provides to the province’s SMME sector.
In 2015/16, 292 enterprises received non-financial support. This is largely due to ECDCs continued relationship with business chambers and other strategic partners as well as its continued support of the creative industries.
He says ECDC’s work through business incubation is given further impetus through SMMEs that are located at the Eastern Cape Information Technology Initiative and Buffalo City After Market Automotive Incubator which generated close to R12 million in revenue in 2015/16.
In the investment promotion sector, ECDC facilitated R2.26 billion of investment into the Province which created close to 1,000 jobs. This was due largely to three large wind farms built by a private investor. The 2015/16 financial year saw substantial investment by Innowind (Pty) Ltd in three large wind farms in the Eastern Cape. These farms are Chaba (near Komga), Waainek (near Grahamstown) and Grassridge (near Port Elizabeth).
ECDC has engaged with Innowind since 2008 and signed a memorandum of understanding in 2010. The renewable energy sector in the province is second in size to the Nothern Cape, which has outstanding sunshine throughout the year. However, the Eastern Cape is the clear leader in wind energy, having secured investment in 16 wind projects. The province also has investment in a solar renewable energy project.
The latest investments affirm the Eastern Cape’s attractiveness in the competitive wind sector. The province is acknowledged globally as having one of the best wind conditions in the world. New Zealand is our closest competitor. Within a short period, the province has created a multi-billion sector. Within three to five years, it will be able to generate an average of eight hours of electricity every 24 hours.
ECDCs market access function also provided integrated export support to 147 enterprises.
Through the innovation facility, ECDC spent R6 million scoping, developing and testing the ideas of projects in key growth sectors. The innovation facility leveraged an additional R19,8 million in third-party funding for these projects. For example, ECDC has helped Blue Crane Mining, establish and expand a 200 hectare quarry aggregate mine in Indwe outside Queenstown in the Eastern Cape with funding of R736 000.
The funds were used to develop a geo-tech survey and business plan and to prepare an additional 1,000 hectares for development and mining. In the past year, the company, Blue Crane Mining has secured a R30 million offtake agreement with a road construction company to build a new 14km road from Indwe to the Elitheni Coal Mine.
The mine supplies standard concrete stone products, crusher sand, specialised road stone and base course products and non-standard rock.
ECDC, in partnership with the Technology Innovation Agency, has also invested R11 million in 10 technology-companies.
Dlulane says the property function has undergone an exciting repositioning exercise. The sale of the residential property portfolio is well underway with sales expected to reach R8 million. Funds generated from the sale of these properties will be used to capitalise the core business. For example, exciting initiatives include a partnership with private developers on long-term lease agreements of vacant land in and around Mthatha.
Through its strategic projects unit, ECDC continued to assist government with social infrastructure implementation particularly in the areas of education, water and transport.
For example, ECDC has utilised some R195 million toward the construction and refurbishment of four dilapidated schools in the OR Tambo District Municipality in the former Transkei of the Eastern Cape. Construction has already begun in all three schools and we expect that the last school will be completed by April 2017. Phase 1 of the R98.2 million Makana water crisis intervention project has also been completed.
The upgrade of three Mayibuye Transport Corporation depots valued at R16 million has also begun.
“ECDC is also excited that it has secured a landmark agreement with the Department of Education to manage projects estimated at R4.6 billion over the next three years. This is a notable development which cements ECDC as a trusted service delivery arm of government in the implementation of socio-economic development initiatives.
“These achievements have been realised on the back of substantially improved corporate governance, a resilient and capacitated human resources with the requisite skills set, an energised and growing SMME sector and continued government and partner support,” explains Dlulane.
Alan Straton
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