How one organisation is creating a future for South Africa by funding projects that will make a difference to the economy.

Gypsum is not a product that gets a lot of people excited - especially not someone who has recently been making waves in the film industry - but for Geoffrey Qhena, it represents why he got into the development finance in the first place.

The CEO of the Industrial Development Corporation gets very animated when he talks about the potential to use the byproduct mineral - a byproduct in the creation of phosphoric acid - to make low cost housing.

"It's my pet project at the moment, it can be used to cut the costs of building by as much as 30%," he says. He adds that it is this sort of tangible benefit that gets into your blood when you work for a development finance institution.

That's not to say running a development finance institution is plain sailing and feel good projects. Qhena admits that the current global slowdown presents massive challenges as does the strain currently placed on much of South Africa's industrial infrastructure.

"Power is the key concern and we have been looking at a number of potential solutions," he says, "One of the more exciting prospects is that of solar farms and, the IDC is in well-advanced discussions with various stakeholders."

But this is just one of many focus areas for the organisation that has come a long way since it was founded in 1940. It is now involved in 14 different sectors funding and supporting projects in everything from the commercialisation of goat farming to Oscar winning films and the beneficiation of rough diamonds.

Asked what exactly the IDC's criteria are, Qhena smiles, already expecting the question - what does the film industry have to do with the IDC?

"The mandate of the IDC is the promotion of industry in the country and the promotion of entrepreneurship. We look for endevours that create jobs and exports in areas where there are clear market gaps.

And, the strategy seems to be working; the group's balance sheet has grown threefold in the period between 2004 to date and currently sits at just over R90bn. While, in the 2008 year, funding approvals grew to a record R8,5bn, more than 75% of which went to expanding existing businesses and to start-ups. According to the group's latest annual report, 56% of the total number of businesses funded, are small medium enterprises (SMEs).

Asked about the film industry, Qhena says, the interest in the film sector came about as a way to provide entrepreneurs in the arts with an avenue to develop the industry.

"The definition of industry has broadened since 1940. In the 1990s it was broadened to include service sectors like agriculture and tourism and now film.

"It was tough in the beginning and it is definitely not for sissies but it has enormous potential to create jobs as the sector grows and it also has the added benefit of helping to promote South Africa as a destination for tourists and so in the long run will help other sectors such as tourism."

Understandably, Qhena, while optimistic, is realistic about the challenges facing both the country and the world.

"We have recently bolstered our team dealing with SMEs because, in a downturn SMEs feel it first and we have already seen some businesses struggling. But, he says, the numbers for the current six months are strong."

Asked about funding and the ability to borrow money in the current climate, especially when there is such an urgent need for increased spending on industrial infrastructure, Qhena says from an IDC point of view, it is not looking to go into the markets in the current environment.

"We are not going to be looking to raise much capital in the next 12 to 18 months," he says, "the balance sheet is strong and we have more than we need for the current projects."

COMMENTS

  responses to this article

View disclaimer

ADD YOUR COMMENT

Name:
Surname:
Email:
Subject:
Comment:

if (theForm['attribute_1327'].value == '' || theForm['attribute_1327'].value == '0') { ccs.ugc.capture234727.addValidationError(234727,'Comment:',1327, 'is mandatory') };

View disclaimer