FUND SIZE: R1.5 BILLION (Off-balance sheet)

Objective:

To help the struggling steel industry with an interest subsidy that offers discounts to qualifying clients.

Target Sectors

  • Foundry industries;
  • Fabrication sectors - focused on pressure vessels, pipes and pipe fittings sub-sectors; structural steel and any fabrication work in support of steel intensive designated sectors/products;
  • Parts and component manufacturers of steel-intensive products;
  • Valve and pump manufacturers;
  • Machining plants;
  • Capital equipment industries particularly steel intensive rail and rolling stock components; and
  • Any other steel-intensive business.

Qualifying Criteria:


  • Applicant can be a start-up and expansion; and
  • Enterprises that create net additional employment are prioritized, particularly opportunities with greater labour intensity. Saved jobs are also be considered.

Purpose of Funding

  • Finance provided for the following:
    • Modernization of plant machinery and equipment;
    • Upgrade of plant machinery and equipment to meet quality assurance requirements;
    • Capacity expansion of existing plants;
    • Process improvements for cost efficiencies and productivity and assist with plant optimization;
    • Working capital requirements or revolving facility;
    • Assist firms to achieve appropriate industry quality certification and standards including environmental standards; and
    • Development and testing of prototypes, as well as the testing and certification of new products.

Instruments and Pricing

  • Quasi equity and loans;
  • Maximum of R75 million per transaction;
  • IDC Risk Pricing less:
    • 2% for enterprises with annual turnover up to R123.5 million; and
    • 1.5% for enterprises with annual turnover greater than R123.5 million
  • Maximum discount period of 5 years; and
  • Standard IDC fees apply.

Exclusions:

  • Pilot plants
  • Integrated steel mills
  • Component manufacturers that qualifies for other incentives
  • Large multinational OEMs and assemblers and their subsidiaries that already benefit from a specific government support programme, e.g. Automotive Production and Development Programme (APDP)

satellite

Live from the event

Click here to view live streaming from the CEO Regional Roadshow (when available).

KWAZULU NATAL:
Download our CEO Regional Roadshow supplement in PDF format

NORTH WEST:
Download our CEO Regional Roadshow supplement in PDF format

MPUMALANGA:
Download our CEO Regional Roadshow supplement in PDF format

Engaging with key stakeholders in the regions

Since the establishment of IDC’s regional offices nine years ago, the regions have made a significant contribution to IDC’s mandate in driving industrial development and facilitating job creation.

The regional offices contributed R3.5 billon to IDC’s R11.5 billion funding approvals for the 2014/2015 financial year. This has resulted in 102 deals being funded, channelled through our regional offices. The IDC’s presence in the regions is critical, which is why the corporation has a footprint of 14 regional offices and 10 satellite offices.

The IDC CEO, Mr. Mvuleni Geoffrey Qhena will be embarking on a CEO Regional Roadshow from May to November 2016, during which he will visit the regions to engage with key stakeholders. These stakeholders include current and potential clients as well as other partners. The roadshow will also provide an opportunity to increase awareness about the sectors that the IDC supports in an effort to attract potential clients with the focus on women, youth and black industrialists.


The CEO Roadshow gets to Kimberley on 11 November 2016 - LiveStream it right here.

The CEO Roadshow, LiveStream on 10 November 2016

Live streaming from the CEO Regional Roadshow

Watch the video footage from 20 October 2016:

 

Business Toolkit

In line with one of our values, Partnership, we seek to enhance interactions and relationships with our current and potential clients through value-adding information. We look forward to your feedback on additional topics that you would like to see. Please contact us at service@idc.co.za.

 

103                            959

Funding Approaches
 
DTI Black Industrialist Scheme (BIS) Grant
  • Flexible repayment loan terms thus enabling entrepreneurs to service the debt.
  • As a Development Finance Institution, the IDC can structure loans with moratorium periods until the business builds up sufficient cash-flow to service the debt.
  • Grant funding or quasi equity/subordinated loans are good alternative funding mechanisms when entrepreneurs have low or no equity to fund their start-up businesses.
 
  • It is best for entrepreneurs to align their applications for funding from the IDC with the request to the dti for the BIS Grant. The main reason is that the dti grant is approved on the basis that co-funding has been raised/obtained.
  • The grant allows for the Black Industrialist to claim their approved funds to align with IDC (or other funders) disbursement.  The entrepreneur must ensure that they give the DTI 7 days to process claims/disbursements.
  • On a case by case basis, the IDC and the entrepreneur can arrange for an escrow account for a limited period not exceeding 3 months.  This could be in the case where Letters of Credit are used, or a deposit is required.  
ai     959 copy

Developing Prototypes
  
Exchange Rate
  • Grant funding can be used to develop prototypes.
  • Prototypes can be developed at University facilities which often have small pilot scale equipment that mimic the characteristics of large equipment. Alternatively, negotiate with established manufacturers to utilize some of their facilities for prototype production.
  • Prototypes allow entrepreneurs to evaluate the pre-sales appetite/the market before sourcing finance for large-scale manufacturing.
 
                                      
  • Be aware of the fluctuations of the rand exchange rate in capex purchases (e.g. buying imported equipment for production).
  • Cost over-runs due to currency weaknesses may negatively impact the sustainability of a business.
  • The IDC budget often includes a contingency for exchange rate fluctuations.
ps   mach 
     
PRODUCTION CHALLENGES
 
Technology-Transfer Challenges
  • In most start-ups, there are delays in starting operations, leading to cost over-runs.
  • Ensure investors/shareholders can put in extra equity or acquire grant funding to cover these costs – stand-by equity or debt facilities.
  • Also, factor in time overruns in the commissioning schedule by pushing the launch date of start-up operations.
  • Entrepreneurs should have access to a technical partner’s expertise to support them when problems arise in the production process, for example when the manufacturing plant does not work optimally or when the manufactured product does not meet the required quality standard. Technical supporter/advisors need to be near the manufacturing plant to assist production staff on demand and on the ground.
  • Do not underestimate the attention to detail and effort of labour required in assembling and packaging finished goods.
 
  • Entrepreneurs should be aware of the technology-transfer challenges from one country to the next, when setting up a manufacturing plant, including purchasing equipment.
  • There is no seamless transfer even when one buys the same machinery, e.g. the environmental conditions are different and the staff operating the machinery is different. Adjustments need to be made in physically re-assembling or re-configuring parts of the machinery.
  • Entrepreneur’s staff need to be up-skilled. A technician from overseas may spend some time with local staff installing and operating the imported machine but this may not necessarily mean that skills and knowledge have been transferred to staff.
  • Thus, interrogate how rigorous the training is, as follows:
    • Is the overseas technician a competent trainer?
    • Is the level of training given to the local staff of high quality?
    • Are staff knowledgeable, skilled and competent after having received training?
    • Can staff replicate the assembly and production process? Can they be declared competent?
    • If a technical problem arises with the equipment, can staff troubleshoot and fix the problem? If not, is the manufacturer a reputable supplier with an after-care sales support office in South Africa to support staff when the machine does not work optimally?
  bman    
     
MANAGEMENT STRUCTURE
   
  • Start-ups are often thinly resourced, with gaps in management. Be aware not to expand and grow a start-up business too quickly if the production volume or quality is still low due to technical manufacturing problems
  • Ideally, take the leap of faith and employ the right people with the right skills to take the start-up from zero-base to a medium-sized business, and beyond.
  • Often the founders of the start-up business may not be the best managers to lead the business forward.
   
Centre for Corporate Governance

lightbulbs

 

Be part of the IDC Panel for Nominee Directors
The IDC Centre for Corporate Governance invites you to submit  your expression of interest to be part of the IDC Panel for Nominee Directors.

 

The IDC Centre for Corporate Governance (“the Centre”) is an in-house centre established in January 2015 to enhance corporate governance so as to achieve business excellence as contemplated in Section 3(h) of the Industrial Development Act 22 of 1940.

The Centre aims to advance understanding and practice of corporate governance with the goal of positively impacting and improving corporate governance within the IDC and its Investee Companies.

The Centre currently has four focus areas namely:

Pillars