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 IDC’s 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 competitive industries and enterprises based on sound business principles

Operational structure 14 strategic business units (SBUs), focussed on specific economic sectors COO Kutoane Projects Jaco Kriek Industrial Sectors Raisibe Morathi Services Sectors Gerrit van Wyk CEO/President Khaya Ngqula HR and Support Services Lesé Matlhape Professional Services Geoffrey Qhena Finance and Funding Gert Gouws Legal Services & General Counsel Tony Tshivhase Corporate Secretariat Nomini Rapoo Internal Audit Eva Sam Manager in the Office of the CEO Mnathi Mcambi Marketing & Corporate Affairs Neo Sowazi Business Planning and Strategy Riaan Joubert Information Technology Joel Mpshe Project and Structured Finance Stephan Vermaak Corporate Finance Joanne Coetzee

Total Staff Complement As at 31 May President/CEO EVP’s/COO/CFO SBU/Dept Heads SAM/SPM/Specialists Professional Administrative & Support

Staff Composition : Male May 2003 (Total Male 258) May 2002 (Total Male 240)

Staff Composition : Female May 2003 (Total Female 212) May 2002 (Total Female 194)

Employee Age Profile Number of staff Age Average age : 38 (18%) (48%) (25%) (8%) (1%)

Core strategies Provide risk capital to a wide range of industrial projects Identify and support opportunities not addressed by market Build on and invest in human capital Establish local and global partnerships in projects benefiting SA or Africa Maintain financial independence

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 ScreeningBasic AssessmentTerm Sheet Due-diligenceDecision-makingLegal Agreements Disbursements Post investment management

The investment cycle One Finance Entity Balance sheet Borrowings Mature investments Development funds Business unit investment Funding Capital repayments (debt) Proceeds from exit (equity) Interest / Dividends Divestment (Debt repayment/ exit) IDC After-care

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 Metal Based Products Wood, Paper & Other Entrepreneurial Mining and Jewellery Chemicals, rubber and plastics, non-metallic mineral products, textiles, clothing, leather, footwear Basic iron and steel, casting/foundries, structural and other fabricated metals, machinery, motor vehicles, parts and accessories, and other transport equipment Forestry, logging, sawmilling and articles of wood, furniture, pulp and paper, articles of paper or paperboard and other manufacturing Junior mining, mining related activities, acquistions of mining assets by HDPs and jewellery

Sectoral focus (continued) Services Sectors Division Tourism Media & Motion Pictures Techno Industries Wholesale & Bridging Finance Wholesale Venture Capital 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 funding to intermediaries, who manage and administer finance on behalf of the IDC, on-lending to individual entrepreneurs 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 HDP’s; 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 Financed 625 (cumulative) black entrepreneurs Approved R 5.6 bn (cumulative) to BEE Increased BEE approvals from 3 entrepreneurs to 191 p.a Increased value of approvals from R

Financial track record 2001/2002 produced a record net attributable income of R 1.8 billion; Balance sheet remains strong. 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. Income R million Net attributable incomeOperating income Capital and Reserves R billion Capital and Reserves

Developmental track record In 2001/2002: the IDC approved finance to the value of R 4.9 billion, representing 6.9% of private sector fixed investment in South Africa; Assisted more than 500 entrepreneurs; Finance to empowerment firms represented 37% of the number and 42% of the value of approvals; IDC’s finance will create more than new job opportunities. Number and Value of IDC Approvals Number Value (Rbn) NumberValue Jobs Created Number Direct Jobs Created

NEPAD Fully committed to the New Partnership for Africa’s 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 Aluminium Titanium Cotton Sugar Aquaculture … Energy Tourism Aquaculture Tea Coal Tourism Wattle Distillery Frozen foods Mining Telecommunications Table grapes Mining Food processing Hotel Mining Energy Mining Horticulture Tourism IT Mining Tourism Pharmaceuticals … Pharmaceuticals Mining Energy Mining Sugar Mining Fishing Energy IT Mining Telecoms Petroleum Tourism Includes projects implemented, under implementations and under consideration

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 IDC’s financial sustainability through improved internal systems; Improved outward communication regarding IDC’s developmental role; and Increased human resource development within the IDC to ensure continuation of the high levels of professionalism within the corporation.

Thank You!