The IDC achieved commendable outcomes in a year characterised by high levels of uncertainty and by a slowing economic growth momentum, globally and domestically.

The rate of increase in world output, at 3.1% in calendar year 2016, was the weakest since the global financial crisis. Rather extraordinary geo-political developments at times dominated international headlines and affected investor and business confidence around the globe.

World trade remained under pressure, impacting on the performance of many export-reliant economies. Although commodity prices recovered during the course of the year, the underlying market fundamentals have not yet supported a sustained recovery. Alongside the relatively subdued demand for most industrial resources, this continued to affect the performance of many African economies. As a key market for South Africa’s manufactured exports, Sub-Saharan Africa’s subdued growth has been of particular concern.

South Africa’s economic growth has been declining gradually for a number of years. Its gross domestic product increased by only 0.3% in calendar year 2016, the lowest rate of expansion since the 2009 recession, and the economy entered a technical recession in the second half of the reporting period. Concerns over the possible outcomes of rating agencies’ reviews of South Africa’s sovereign credit ratings also loomed large.


The IDC’s stakeholders expect us to play a counter-cyclical role during an economic downturn. Our funding activity, both with respect to approvals and disbursements, support private sector investment activity, project conceptualisation and development, as well as business partners in distress due to the currently unfavourable economic environment.

Fixed investment spending by the private sector in the South African economy declined by 5% in real terms during the reporting period. The drop in IDC disbursements on a year-on-year basis reflects, to a large extent, the challenging operating conditions and investment climate faced by the business and investor communities over this period.

Notwithstanding the unfavourable economic environment, IDC funding approvals reached an all-time high in the past year, contributing to restoring business confidence and investment activity over the short- to medium-term.

South Africa’s economic growth has been below potential for several years and also at considerably lower rates than those of some of our emerging market peers. As a country endowed with a wealth of natural and human resources, we can and must turn this performance around.

We at the IDC are confident that our industrial development strategies, which are based on a value chain approach, will enable us to contribute effectively towards this objective.

The agro-processing and agriculture, chemicals and pharmaceuticals, and metals and mining value chains have been prioritised, and our efforts aimed at their expansion and improved competitiveness are achieving some notable successes. While exploiting opportunities for their downstream and upstream development, with the local, regional, and/or global economies as target markets, the associated business activities funded by IDC are generating much-needed employment opportunities and preserving existing jobs, directly and indirectly.

The Board has noted the progress achieved in value chain development, and emphasised the need for a more integrated approach for greater impact, particularly with regard to competitiveness improvements, jobs-rich and inclusive development, as well as economic transformation.

Although our strategies did not deviate significantly from the previous year, the environment in which the Corporation is operating has necessitated the prioritisation of existing initiatives, such as those aimed at addressing economic inclusivity and assisting businesses in distress.

South Africans have manifested frustration with the slow pace of transformation of the economy. In this regard, the IDC’s strategies to enhance inclusivity are bearing fruit. The funding approved for Black Industrialists and black-empowered companies, as well as for women and youth entrepreneurs was substantially higher in the year under review. This is enabling their increased participation in the formal economy and in sharing the rewards of its growth.

In February 2017, the Ministers of Trade and Industry and of Economic Development reached an agreement that the National Empowerment Fund should become a wholly-owned subsidiary of the IDC. This will be an important milestone in South Africa’s quest for inclusive growth and economic transformation. A legislative process needs to be followed and we are currently in the process of obtaining all requisite approvals.

Financial sustainability is imperative for the IDC to continue delivering on its mandate in the long run. In the current difficult economic environment, which not only affects the performance of our existing portfolio, but also tends to raise the risks associated with new funding applications, we are monitoring trends in key financial indicators such as impairment levels very closely, and are taking the necessary pre-emptive actions. The performance of our subsidiaries is also crucial in this regard, hence the emphasis on closer oversight and strategic decision-making on future support so as to achieve the required return on investment.

We also embarked on certain new initiatives during the year, including an assessment of our leadership’s competencies vis-à-vis the strategic requirements. The process started with the executive team and will be followed next year by our senior managers and their possible successors. The aim is to enhance the IDC’s leadership capabilities and ensure continuity by building leadership bench strength.


The trust of our stakeholders is of paramount importance. We believe that we have earned and maintained their trust over the years, but do not take it for granted.

Our robust governance system, which is based on best practice globally, has played a major role in this regard. Sound corporate governance is vital for the IDC’s success and, accordingly, the Board and management are committed to applying the principles and processes deemed necessary to ensure that good governance is practised in all of its dealings and other day-to-day operations

Taking into consideration changing circumstances and the feedback received from stakeholders, we reviewed the Board Charter during the year. The emphasis was on avoiding and/or managing directors’ conflicts of interest, decision-making by consensus and voting mechanisms in instances where consensus is not possible, improved transparency, and refining the role of each Board Committee. The Directors’ Rotation Policy was altered to limit the participation of individual directors on the Board to a maximum of three terms of three years each.

We approved changes to the Directors’ Conflict of Interest Policy, which now prohibits directors from doing business with the IDC. On matters in which directors are regarded as being conflicted and in line with the requirements of the Public Finance Management Act (PFMA), it ensures that they are not provided with the respective Board documentation or participate in the relevant deliberations so as to safeguard objective decision-making.

In keeping with high levels of transparency, the Corporation is identifying appropriate forms of disclosing transactions, including those involving politically exposed persons.

In addition, and complementing the messaging already effected through our website and media releases, the IDC is making increased use of public announcement platforms, such as the Johannesburg Securities Exchange SENS system, for timely communication of important matters.


On behalf of the Board, I congratulate the Chief Executive Officer, Mr Geoffrey Qhena, his executive team, as well as the management and staff of the IDC for achieving admirable outcomes during a challenging year.

We thank Mr Brian Molefe, who retired during the year under review, for his contributions to the Board’s deliberations.

Our gratitude is also extended to the Minister of Economic Development, Mr Ebrahim Patel, the Economic Development Department under the leadership of Acting Director General Mr Malcolm Simpson, and to the members of the Portfolio Committee for Economic Development and the Select Committee on Economic and Business Development, for the invaluable guidance and support provided to the IDC in executing its important developmental mandate.

BA Mabuza
Board Chairperson

28 June 2017