Possibilities in Eastern and Southern Africa Thokoane Tsolo Head: Africa Unit ABC Meeting (Woodmead), 9 March 2011
§ Established in 1940, the IDC is a self -financing, State-owned development finance institution § Provides financing to entrepreneurs engaged in competitive industries and enterprises based on sound business principles § Desired outcomes: – Sustainable employment – Regional equity (incl. development of the rest of Africa) – Growing SME sector – Broad-based black economic empowerment – Environmentally sustainable growth – New entrepreneurs entering the economy decreasing risk decreasing § The vision of the IDC is to be the primary driving force of commercially sustainable industrial development and innovation to the benefit of South Africa and the rest of the continent South Africa IDC Aaa Aa 2 A 1 A 2 ‘ 06 A 2 A 3 ‘ 09 Baa 1 ‘ 05 Baa 2 ‘ 03 Baa 2 Baa 3 ‘ 95 Ba 1 Ba 2 Ba 3 B 1 B 2 B 3 Caa 1 Caa 2 grade Investment grade troducing the IDC Credit strengths of IDC: • Sound financials • Fast-growing assets capital cushion provide sizeable
Introducing the IDC (cont. ) Greater importance on social and developmental objectives Greater importance on financial objectives Government / NGOs DFIs Commercial Financiers • Non-commercial focus • Fiscal transfers and grants • Development objectives (social) • Commercial and development focus • Sharing risk • Internally generated funds, government funds, loans • High commercial focus • Private sector capital • Financial objectives • Known risks • Industrial Development Corporation (IDC) • Development Bank of Southern Africa (DBSA) • African Development Bank • etc. • ABSA/Barclays • Standard Bank • etc. IDC does not directly compete with any of these institutions, but encourages cooperation with them in order to achieve its own mandate and goals
IDC’s strategic intent wrt regional development Pursue a more pro-active approach encompassing: q Dynamic involvement in large project-based investments with a long-term strategic potential; q Catalytic leveraging of private sector investment, both locally/ regionally and beyond Africa, so as to: Ø expand diversify regional productive capacity; Ø improve the competitiveness and innovativeness of industrial, mining, agricultural and other productive activities; Ø integrate value chains on a regional basis; Ø unlock latent potential through spatial initiatives; Ø enhance global participation by growing and diversifying trade capabilities; q Co-financing infrastructure development, rehabilitation and logistic improvements, so as to: Ø lower production costs and barriers to trade (incl. transportation, energy and telecommunication costs) and improve returns; Ø improve access to abundant natural resources and unleash the potential of hinterland communities; Ø permit cost-effective access to intra- and extra-regional markets; Ø encourage resource-seeking, market-seeking and efficiency-seeking investment;
Eastern & Southern Africa (excl RSA) … Indicative statistics: Countries 25 Surface area 16 million sq km Population 535 million GDP (2010) USD 654 billion Exports (2010) USD 174 billion Imports (2010) USD 177 billion Sources: Economist Intelligence Unit; Quantec Market perspective: § COMESA (Common market for Eastern and Southern Africa) § ECA (East African Community) § IOC (Indian Ocean Commission) § SADC (Southern African Development Community) § SACU (Southern African Customs Union)
SADC development – the integrated value chain approach Tourism • Hotels • Food and Bev • Catering • Laundry • Curios Petrochemicals • Oil • Paints • Plastics • Industrial textiles • Chemicals • Mineral extraction • Mineral beneficiation (e. g. – Diamond cutting & polishing – Jewellery design – Jewellery manufacture Food (all countries) • Agricultural inputs • Farmers/Producers • Processing • Distribution • Wholesalers • Retailers • Consumers Textiles • Cotton farming • Spinning • Manufacturing • Design
SADC development – the integrated value chain approach (cont. ) Example: SADC integrated petrochemicals value chain potential PRIMARY PRODUCTS 1 RAW MATERIALS Petroleum Gas Refining Primary chemical processing BULK FORMUALTION LPG, petrol, diesel, lubricants, tars, waxes Fertilizers Explosives Paints etc. Cracking/naphtha PRIMARY PRODUCTS 2 (FEEDSTOCKS) Ethylene, Propylene cellulose, fats, oils, rubber, ammonia, sulphuric acid etc. SECONDARY PRODUCTS Secondary chemical processing Polythene, PVC, Nylon, Polyesters, Rayon etc. Tertiary chemical processing FINE FORMULATION Adhesives, Cosmetics, Mining & Agro-chemicals, pharmaceuticals CONVERSION Plastics: bags, pipes Rubber: tyres, hoses Textiles: industrial clothing Refineries - South Africa - Angola - Namibia - Mozambique Oil and gas - Angola - Mozambique - Namibia - DRC Chemicals processing -South Africa -Namibia -Mozambique -Zimbabwe
SADC development – the spatial development initiative approach Source: Department of Transport
Current and potential IDC involvement … EGYPT • Agriculture/ Bio-fuels Eritrea • Mining TANZANIA • Sugar • Rice • Mining • Port • Tanzania-Kenya-Sudan Corridor Road • Dar es Salaam-Isaka. Kigali-Bujumbura rail KENYA • Sugar • Wind energy • Housing construction • Port • Tanzania-Kenya. Sudan Corridor Road • Commuter rail SUDAN • Infrastructure (Water) • Building S. Sudan Ethiopia • Agro-processing • Power generation • Cement • Leather processing UGANDA • Hotels & accommodation • Mining SEYCHELLES • Hotels & Accommodation Zimbabwe NAMIBIA • Agric. / agro-processing • Mining • Agro-industries • Mining • Hotels • Gas development • Infrastructure (power and BOTSWANA transport) • Mining • Hotels & Accommodation • Restaurant MALAWI • Mineral • Food and beneficiation Agriculture • Retail infrastructure • Rice D. R. CONGO • Energy • Mining • ICT • Infrastructure • Hotel/ accommodation Zambia • Storage/ warehousing, • Mining, • Healthcare MAURITIUS • Air transport Comoros • Air Transport LESOTHO • Telecoms • Mining • Clothing MOZAMBIQUE • Mining • Hotels • Manufacturing (Textiles) • Agro-processing • Wood processing • Energy • Transport infra. • Storage/ warehousing • Rail SWAZILAND • Basic chemicals • Mining • Power generation ZAMBIA • Storage and warehousing
Thank you The Industrial Development Corporation 19 Fredman Drive, Sandown PO Box 784055, Sandton, 2146 South Africa Telephone (011) 269 3000 Facsimile (011) 269 3116 E-mail callcentre@idc. co. za
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