IDC to Invest R102 billion in Industry

The Industrial Development Corporation is to invest R102 billion in the next five years to aid the development of industry, Economic Development Minister Ebrahim Patel said on Tuesday.

“The IDC will substantially increase the level of industrial funding and will make available R102 billion over the next five years for investment in New Growth Path priorities,” Patel said as he tabled the department’s Budget Vote.

The R102 billion has been revised upwards from the previously allocated R66 billion in its current five-year projections.

Over the next five years, green industries will be allocated R22.4 billion, while mining and beneficiation will be allocated R22.1 billion. Manufacturing will receive R20.8 billion while the agriculture value chain will receive R7.7 billion.

Tourism, creative industries and high level services will receive R14.8 billion with funding to distressed companies receiving R2.5 billion, followed by strategic high impact projects receiving R11.1 billion and venture capital receiving R500 million.

The allocations will be reviewed annually.

The department will focus on the green economy in the year ahead with the belief that 300 000 new jobs are possible in the green economy by 2020.

Patel has also asked the self-financing national development institution to consider a facility to address challenges companies face as a result of the strong rand, possibly through the Distressed Sector Fund. He expects a proposal from the IDC at the end of May.

On the cost of IDC lending, interest on new IDC loans will be up to 100 basis points lower for high development impact investments, which should reduce the average cost of borrowing by 50 points.

Based on existing loan profiles, this should save borrowers approximately R500 million over the next five years alone.

The New Growth Path sets a target of creating five million jobs in 10 years. According to the minister, development finance institutions have a central role to play in implementing the New Growth Path.

“They provide crucial mechanism for forging constructive and productive partnerships with stakeholders to develop our economy,” he explained.

The IDC, he said, must play a central role to encourage new economic activities, support new job creation and promote a greener economy.

Of the Economic Development Department’s R594 million allocated budget, R219 million will be transferred to small business development, while Khula and Samaf (government’s small business funding agencies) will deploy a further R381 million from their own resources.

The minister further added that the facilities offered by Khula will be supplemented by a new direct lending facility, Khula Direct, which has been allocated R55 million this year. – BuaNews