1. ICT (INFORMATION COMMUNICATION TECHNOLOGY) INDABA - POLOKWANE Day Month Year Loni Mamatela Regional Manager – Limpopo 18 December 2008

2. Agenda  Background  Sectoral Involvement  IDC Business Units  Financial Instruments  Financing Criteria  SME Development  Competitive Financing Structure  Examples of IDC Funded Projects

3. Background: Corporate profile The IDC’s Head Office in Sandton (Johannesburg) Established in 1940, the IDC is a self - financing, State-owned development finance institution Pays income tax at corporate rates and dividends to the shareholder Aims to maximise developmental and financial returns within an acceptable risk profile

4. Background : Vision Statement IDC Corporate Vision Statement To be the primary driving force of commercially sustainable industrial development and innovation to benefit South Africa and the rest of the African continent.

5. Background : Mission Statement IDC Mission Statement  Sustainable economic growth  Economic empowerment of the Southern African population  Promotion of entrepreneurship  Competitive industries and enterprises

6. 1997  Agriculture  Mining  Manufacturing  Property Now  Agriculture  Mining  Manufacturing  Services - related energy tourism IT telecoms motion pictures healthcare & education transport & storage venture capital government / corporate tenders franchising financial services construction 2010  Other public private partnerships development agencies New sectoral involvement

7. Funding by IDC business units Strategic Business Units: % share in terms of value (2006 & 2007) SBUs: % share in term of value 0510152025303540 Chemicals, Textiles and Allied Industries Food, Beverage and Agro Industries Metals, Transport and Machinery Mining and Beneficiation Public & Private Partnership Wood, paper and Other Franchising Healthcare and Education Media & Motion Pictures Techno-Industries Tourism Transport, Financial Services & Other 2010 & Construction 2006 2007 %

8. Financial instruments Flexible deal structuring – Equity – Quasi-equity – Commercial debt – Wholesale & bridging finance – Share warehousing – Guarantees – Export/import finance – Short-term trade finance – Wholesale venture capital IDC offers a wide array of financial instruments, including : These may be provided singly or in combination

9. Financial assistance is provided for the development of new projects, expansions or rehabilitation of existing projects Projects must exhibit economic merit (i.e. profitable) IDC finances fixed assets and fixed portion of growth in working capital requirements Reasonable contribution expected from promoter/s R1 million minimum Security Environmental compliance Financing criteria

10. Various approaches geared towards developing small and medium-sized enterprises (SMEs): –Franchising (providing finance to franchisor and franchisee) –Risk Capital Facility (targets private SME sector through BEE) –Special development financing schemes (Transformation and Entrepreneurship Scheme) –Non-financial forms of business support (entrepreneurial skills development; research assistance) SME development

11. SME development (cont.) Business support to SME sector: Providing greater pre-investment support for high potential / high impact investments Closer monitoring of clients Providing technical support post- investment Focused training to meet needs of specific entrepreneurs

12. SME support in 2006/07 Financing provided to 167 SMEs 69% of number and 17% of the total value (R985 million) of approvals for SMEs (2006: 69% and 27%, respectively) To provide finance to a wider range of SMEs (especially new entrepreneurs), some gaps need to be addressed: –Lack of skills –Lack of necessary support systems –Lack of access to financial institutions Entrepreneurial development initiatives introduced to enhance sustainability of IDC funded businesses –IDC business support to clients –More than 680 delegates attended entrepreneurship courses sponsored by the IDC throughout the country

13. Funding Broad-based BEE IDC, as a major South African DFI, remains fundamental to the national agenda to realise BBBEE objectives IDC has developed critical skills and experience in financing BBBEE To augment these BBBEE objectives and remain a significant player in BBBEE funding, job creation and BBBEE remain the overarching factors in all our funding activities:  facilitate ownership of businesses  ensure transfer of skills to enhance management capacity and entrepreneurship  advancement of HDSA employees (share and/or profit participation)  employment equity  procurement policies  women advancement in business

14. BBBEE & BEE financing in 2006/07 162 transactions totaling R3.4 billion to black empowered companies 67% of the number and 58% of the value of approvals for companies with more than 25% HDP shareholding (2006: 69% and 39% respectively) Specific targeting of expansions and new BEE companies, and reduced focus on BEE acquisitions financed 32% of funding approved was for expansions and start-ups by black business R1 026 million approved for acquisitions (2006: R295 million) Community foundations (6), workers trusts (15) facilitated through IDC investment

15. TES Structure Women Entrepreneurial Fund R 400 m 40% Investment: R360m Bus. Support: R40m Development Fund R 250 m 25% Investment: R242,5 Bus. Support: R7,5m Community Fund R 150 m 15% Investment: R145m Bus. Support: R5m Equity Contribution Fund R 150 m 15% Investment: R135m Bus. Support: R15m People with Disabilities Fund R 50 m 5% Investment: R45m Bus. Support R5m TRANSFORMATION AND ENTREPRENEURIAL SCHEME R 1 Billion

16. Some of IDC’s South African projects Vaccine production Nuclear power generation Satellite launch technology Canola oil extraction Fruit juice production Cold rolled steel Bio-reactor Fish processing Beta-carotene production Goat farming Abalone spat Fruit production Cotton ginning Fruit production Sugar beet Aluminium smelter Berries farming High pressure aluminium castings Biomass – fuel pellets Wood processing Citrus farming Barley and groundnuts Chrome chemicals Cut flowers Ferrochrome Alluvial diamonds Biodiesel Proxide production Silicon metal Apple farming Diamonds Cellular communications IDZ infrastructure Kenaf crop production Sugar production Orchid production Cassava production Biofuels Ceramic tile production Power station Citrus production Ferrochrome Biological pest control Alcohol production Coal mining Aluminium beneficiation Forestry Berries farming Coal mining Stainless steel Lime mine and kiln Coking coal briquettes Platinum Rail transport infrastructure Electro-activated water X-ray machines Legend Pre-feasibility Feasibility Pre-implementation Implementation

17. Day Month Year The Industrial Development Corporation Suite no 6, Biccard Park, 43 Biccard Street, Polokwane Suite 422, Private Bag X9307, Polokwane, 0699 South Africa Telephone (015) 299 4080 Facsimile (015) 295 4521 E-mail polokwane@idc.co.za Thank you The Industrial Development Corporation 19 Fredman Drive, Sandown PO Box 784055, Sandton, 2146 South Africa Telephone (011) 269 3000 Facsimile (011) 269 2116 E-mail callcentre@idc.co.za