Spreading the love

2013-08-22 00:00

THE Industrial Development Corporation is growing steadily in KwaZulu-Natal — its three- year-old Pietermaritzburg office alone has helped to fund private-sector projects involving over R700 million, says the IDC regional manager in Pietermaritzburg, Manoj Seonath.

The Pietermaritzburg office services projects from Hammarsdale through the Midlands, to as far as Newcastle, Vryheid and Kokstad, while the Durban office, managed by Pat Moodley, focuses on the coastal areas of KwaZulu-Natal.

Many companies and entrepreneurs struggle to find ways to finance working capital or find money for new projects. The IDC regional offices in Pietermaritzburg and Durban facilitate funding for regional enterprises, and have partnerships with business chambers, major corporations, other development finance institutions and government business-support organisations.

The IDC helps to identify and fund projects with a high economic impact, uses its industry expertise to drive growth in priority sectors and shape policy, takes up higher-risk funding in the early stage and big projects, delivers economic, sectorial and industrial research, and works towards reducing industry’s environmental impact.

In KZN, the IDC has provided over R1,1 billion of financing to businesses, which has created more than 7 800 new jobs directly, for the financial year ending March 31, 2013.

Seonath said in an interview recently that their funding activities in KwaZulu-Natal span from small deals requiring a few million rands, to larger deals requiring hundreds of millions of rands.

He said that for the IDC, the first consideration is the economic merit (viability, sustainability and profitability), and the development impact these projects create, mainly focusing around job creation and poverty alleviation.

As the IDC provides debt and equity finance, it requires that the loans be repaid, and hence economic sustainability of the project is crucial, said Seonath.

Economic merit is usually determined by market research by both the funding applicant and the specialist industry teams working within the IDC, as well as the strength of additional business relationships tied to the project, such as marketing and technical partners, and other funders.

Seonath said that often the lack of corporate governance or systems and procedures, poor financial management, and the lack of marketing and technical expertise are a challenge, and the IDC does, at its discretion, provide business support to entities it funds that may require this intervention. The IDC requires that corporate governance be adhered to for it to provide finance. This includes issues such as up-to-date tax-clearance certificates, maintaining proper financial records and adhering to Fica requirements.

The IDC has a range of schemes that offer reduced interest rates of up to prime less three percent for job creation.

Seonath said that businesses don’t only benefit from favourable financing and interest rates, but also from a partnership relationship with the IDC.

Some of the specific industries that the IDC has been financing in KwaZulu-Natal over the past three years include clothing and textiles, agro-processing, forestry, metals processing, health care, tourism, ICT, chemicals and electricity cogeneration, although there are other sectors that could be considered for financing.

In the recent 2013 FNB KwaZulu-Natal Top Business Portfolio Awards, the IDC KZN office won the award for the leading organisation for private public partnerships.

• edward.west@witness.co.za

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