PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND

PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND

PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS (NATIONAL COUNCIL OF PROVINCES) Lumkile Mondi Chief Economist and Head of Research and Information Industrial Development Corporation of South Africa Corporate profile Self-financing state-owned development finance institution (Act No 22 of 1940) Provides financing to entrepreneurs engaged in competitive industries Follows normal company policy and procedures in its operations Pays income tax at corporate rates and dividends to its shareholder Independent Board of Directors Reports on a fully consolidated basis, with its Annual Report freely available to the public

IDCs head office in Sandton, South Africa Vision and mission To be the primary driving force of commercially sustainable industrial development and innovation to the benefit of South and southern Africa Contribute to the generation of balanced, sustainable economic growth in South Africa and Africa Economically empower the South African and African population Promote entrepreneurship through the building of Operational structure CEO/President Khaya Ngqula Manager in the Office of the CEO Mnathi Mcambi

COO Kutoane Kutoane Projects Jaco Kriek Professional Services Geoffrey Qhena Services Sectors Industrial Sectors Gerrit van Wyk Raisibe Morathi Legal Services & General Counsel Tony Tshivhase Business Planning and Strategy Riaan Joubert 14 strategic business units (SBUs), focussed on specific economic sectors

Finance and Funding Gert Gouws Information Technology Joel Mpshe HR and Support Services Les Matlhape Project and Structured Finance Stephan Vermaak Corporate Secretariat Nomini Rapoo Internal Audit Eva Sam Marketing & Corporate Affairs Neo Sowazi

Corporate Finance Joanne Coetzee Total Staff Complement As at 31 May 2003 President/CEO EVPs/COO/CFO SBU/Dept Heads SAM/SPM/Specialists Professional Administrative & Support 470 1 9 31 93 186 150 Staff Composition : Male May 2002 (Total Male 240) 3% 11% 46% 40% Black Male White Male

Coloured Male Asian Male May 2003 (Total Male 258) 4% 11% 47% 38% Black Male White Male Coloured Male Asian Male Staff Composition : Female Black Female Coloured Female White Female Asian Female May 2002 (Total Female 194) 12% 7% 38% 43% Black Female Coloured Female

White Female Asian Female May 2003 (Total Female 212) 7% 12% 44% 37% Employee Age Profile 250 (48%) 225 Number of staff 200 150 100 (25%) 119 (18%) 84 (8%)

50 0 38 (1%) 4 <=30 31 - 40 41 - 50 Age Average age : 38 51 - 60 60+ Core strategies Provide risk capital to a wide range of industrial projects Identify and support opportunities not addressed

by market Establish local and global partnerships in projects benefiting SA or Africa Maintain financial independence Build on and invest in human capital Financial instruments Equity Quasi-equity Commercial debt Wholesale & bridging finance Share warehousing Guarantees Export/import finance Short-term trade finance Wholesale venture capital Flexible Deal Structuring The financing process Initial Screening

Basic Assessment Term Sheet Due-diligence Decision-making Legal Agreements Disbursements Post investment management The investment cycle One Finance Entity Business unit investment After-care Divestment (Debt repayment/ exit) Funding IDC Interest / Dividends Balance sheet Borrowings

Mature investments Development funds Capital repayments (debt) Proceeds from exit (equity) Sectoral focus Projects Division Oil, Gas & Related Products Food, Beverages and Agro-industries Resources and Beneficiation Private and Public Partnerships Oil, gas and upstream chemicals Agriculture, food, beverage and marine sectors Mining, minerals and metals Private sector participants in e-government, energy, privatisation initiatives, transportation and IT and telecommunications Sectoral focus (continued)

Industrial Services Division Chemicals and Allied Industries Chemicals, rubber and plastics, non-metallic mineral products, textiles, clothing, leather, footwear Basic iron and steel, casting/foundries, structural and other Metal Based Products fabricated metals, machinery, motor vehicles, parts and accessories, and other transport equipment Wood, Paper & Other Forestry, logging, sawmilling and articles of wood, furniture, pulp and paper, articles of paper or paperboard and other manufacturing Entrepreneurial Mining Junior mining, mining related activities, acquistions of mining assets by HDPs and jewellery and Jewellery Sectoral focus (continued) Services Sectors Division Tourism Media & Motion Pictures Techno Industries

Hotels, guest houses and lodges, cultural villages, conference and convention centres; leisure and entertainment facilities and other unique tourism projects. Publishing of books, brochures, newspapers, journals, recorded printing of published materials, reproduction of printed materials and recorded media, films and video recordings, feature films, documentaries and television series Information technology, telecommunications, electronics and electrical industries Wholesale & Bridging Finance Wholesale funding to intermediaries, who manage and administer finance on behalf of the IDC, on-lending to individual entrepreneurs Wholesale Venture Capital Various venture capital funds focussed on technology, biotechnology, mining and empowerment Health and Education Facilitation and funding of health, education and empowerment Empowerment strategy

IDC (BEE) process of support through: The continuation, implementation and procurement of outsourcing policies and programs that encourage the economic empowerment of the historically disadvantaged people (HDP), emerging businesses and entrepreneurs; and Encouraging the entry of black empowerment entrepreneurs into the new sectors of the economy as well as the traditional industries and sectors where entry barriers are noticeably high. Procurement from HDPs 2002/03 Target: Procure at least 55% of goods and services from companies with HDP ownership of more than 25% 2002/03 Achievement: Procured R58.3 million (58%) from empowerment companies 2003/04 Target: Procure at least 55% of goods and services from companies with HDP ownership of more than 25% and 30% from

companies with HDP ownership of more than 50% Empowerment strategy BEE funding is guided by the following imperatives : Creation of ownership of businesses for HDPs; Management capacity and entrepreneurship through transfer of skills; Advancement of HDP employees through share and/or profit participation; and Adherence to the national BEE agenda affirmative action and procurement policies Empowerment strategy Approved R 5.6 bn (cumulative) to BEE Increased BEE approvals from 3 entrepreneurs to 191 p.a Increased value of approvals from R 61 000 2500 250

Value R'm Rm illio n IDC Empowerment approvals 1990 -2002 Financed 625 (cumulative) black entrepreneurs Number 2000 200 1500 150 1000 100 500 50 0

0 90/91 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 Financial Year N u m b e r Financial track record 2001/2002 produced a record 1 500 R million net attributable income of R 1.8 billion; Income 2 000 1 000 500 0

-500 98 99 00 01 02 Net attributable income Operating income Capital and Reserves Balance sheet remains strong. 25 20 R billion Capital and reserves grew at an average rate of 18% per annum over the past five years to reach R 26.4 billion at the end of the 2001/2002 financial year. 30 15 10 5

0 98 99 00 01 Capital and Reserves 02 Developmental track record Number and Value of IDC Approvals 8 600 In 2001/2002: 7 500 the IDC approved finance to 5 300 4 3

200 2 100 1 0 0 98 Assisted more than 500 99 00 Number entrepreneurs; 01 02 Value Jobs Created 30 000 Finance to empowerment firms 20 000 Number represented 37% of the

number and 42% of the value of approvals; 25 000 15 000 10 000 5 000 IDCs finance will create more than 23 000 new job 0 98 99 00 01 Direct Jobs Created 02 Value (Rbn) Number the value of R 4.9 billion, representing 6.9% of private sector fixed investment in South Africa; 6 400

NEPAD Fully committed to the New Partnership for Africas Development (NEPAD) Identifies sound investment opportunities Assists in the financing of exports of SA capital goods & services Provides consultancy services A catalyst & partner for investments in productive capacity throughout Africa NEPAD Sugar Mining Mining Fishing Energy Pharmaceuticals Mining IT Mining Tourism Pharmaceuticals Energy

Mining Telecoms Petroleum Tourism Tourism Mining Energy Mining Horticulture Tourism IT Aluminium Titanium Cotton Sugar Aquaculture Hotel Table grapes Mining Food processing Tea Coal Tourism

Energy Tourism Aquaculture Telecommunications Mining Wattle Distillery Frozen foods Includes projects implemented, under implementations and under Prospects for the future Greater involvement in social services sectors such as healthcare and education; Targeting poor provinces Play a leading role in facilitating broad based empowerment; Entrench IDCs financial sustainability through improved internal systems; Improved outward

communication regarding IDCs developmental role; and Increased human resource development within the IDC to ensure continuation of the high levels of professionalism within Thank You!

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