More than R70-billion will be injected into the economy over the next five years by the state-owned Industrial Development Corporation (IDC), it said on Thursday.

At the release of its results for the year ended March 31, 2009, the IDC said funding approvals were up 27 percent to R10.8-billion and funding in the rest of Africa up by 38 percent to R2.9-billion.

The IDC's approved funding activity would facilitate the creation of 24 200 direct jobs in South Africa, it added.

"In a difficult year that saw South Africa slip into a recession for the first time in 17 years, the IDC's workout and restructuring unit, which focuses on distressed companies, was particularly busy with more than R500-million spent assisting companies affected by the domestic economic slowdown," the IDC said.

"The corporation has set aside R6.1-billion to assist distressed companies through the crisis," it added.

CEO Geoffrey Qhena said that in line with the IDC's ongoing strategy, there was a clear emphasis on funding interventions that would help create and preserve jobs.

"There has been a continued focus on labour intensive industries such as agriculture, clothing, manufacturing sectors, services industries as well as support for small and medium enterprises.

"Our priority in providing assistance to distressed companies impacted by the economic crisis was and will continue to be on enterprises that have the potential to recover with the market, opportunities that enhance sector efficiency and ensure strategic capacity and competitiveness.

Risk-sharing

"We do this by stimulating private sector lending by risk-sharing with other financiers to improve market liquidity."

In addition to responding to the crisis, the IDC had continued to focus on funding projects and firms geared at addressing the structural challenges facing the economy, particularly those that address catalytic infrastructure, next generation and green investment as well as small and medium enterprises.

According to the IDC, the bulk of funding (52 percent) for the year under review was on start-ups and expansions; ownership changes accounted for 15 percent of loans, while restructuring and rescue absorbed five percent of funds approved.

"In line with its role to support sustainable economic growth and development, the IDC approved R8.9-million worth of business support grants to assist clients through skills development and consultancy services, up from R2.6-million in the previous year," the institution said.

Turning to its balance sheet, the IDC said its capital base had declined substantially as a result of the downturn in the market, necessitating a fair value adjustment of around R20-billion year on year.

"The value of investments now stands at R53-billion down from R73-billion last year.

"Despite this decline and increased investment budgets, the Corporation remains financially sustainable and well positioned to play a strong developmental role through the financial crisis."

Sapa

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