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IDC changes tack on R40bn five-year pla... GDP figures knock growth prospect... EU leaders smooth over the wrinkles as... Business warns skills shortage could sin... Unimaginative SA destined to be stuck in... |
IDC changes tack on R40bn five-year plan
The IDC is shifting its emphasis to SMEs after government's review of the body's mandate, writes SVEN LUNSCHE
However, the programme is tainted with a lot more caution and is only set at the same level as the IDC's previous five-year plan, just completed. Over the five years to June 1997 IDC funding totalled R21.4-billion which leveraged total investments of R44-billion and generated 61 000 new jobs. The next five years are unlikely to see an acceleration in funding - a reflection as much of the weak markets for both mineral and agricultural-based commodities, as well as the IDC's new focus on small- and medium-sized businesses. IDC chief executive Khaya Ngqula also ruled out the group's privatisation during that five year period. "We are far too busy to consider a change of status," he said. Releasing its 1997 annual report the IDC reported that it approved only one of four scheduled industrial projects during its 1996/97 financial year - an R850-million steel processing project at Saldanha in a joint venture with Duferco of Switzerland. Since year-end the IDC has also announced the cancellation of a proposed R1.3-billion fertiliser project in Richards Bay. While most of its industrial projects yielded reasonable returns the IDC last year suffered a R92-million loss on its 33.3% stake in Columbus Stainless Steel, a joint R2.7-billion project with Samancor and Highveld. On the other hand, support for small-and medium-sized enterprises rose from R426-million to R538-million and export financing surged from R79-million to R641-million. Total funding for 1996/97 fell to R3.11-billion from R3.62-billion previously. The number of companies backed rose to 384 (1996: 330) - the bulk were small business with an asset base of less than R10-million. The IDC says its funding generated 11 157 jobs (14 962 jobs) and additional foreign earnings of R3.55-billion (R2.33-billion) last year. The shift in emphasis towards SMEs is the result of the government's review of the IDC mandate. In particular, says Ngqula, it has been tasked to stimulate entrepreneurial activity with an emphasis on black empowerment. "We cannot remain an island of prosperity in a sea of poverty," he says. At present the IDC is involved in or investigating industrial mega-projects with a total value of $6-billion and agricultural deals valued at R1.2-billion. The list of projects is headed by the $1.3-billion Mozambique Aluminium Smelter and the R2.7-billion Eastern Cape zinc smelter, both of which are joint ventures with Billiton. A $1.6-billion direct reduced iron and steel plant near Maputo is also planned. The IDC's report mentions a number of other major projects likely to get the nod in the current financial year: the R4.1-billion Palmag project near Palabora, on confirmation of a viability study; a R600-million Eastern Cape pine plantation, a venture with Anglo American and Mondi; and an R850-million glycol plant in KwaZulu-Natal. The IDC says the glycol project will use sugar to develop glycol, a raw material for polyester fibre, toothpaste and other consumer items. The project could employ 10 000 people and generate sales of R450-million a year. However, the report signals a further escalation of the cost of the Saldanha steel mill by R300-million to R7.1-billion as a result of the weaker rand. The income statement for 1996/97 shows an increase in turnover from R2.25-billion to R2.55-billion and a rise in net income to R725-million (R535-million). The retained income at the end of the financial year was R3.05-billion (R2.8-billion) while total net assets stood at R14.8-billion (R13.46-billion). The group raised a record R1.36-billion on offshore markets last year .
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