Report search
Corporate profile

Chairman's statement 12


The IDC has taken the first step in the journey towards integrated reporting. The issues deemed material through stakeholder engagement are articulated in this report and we also set out salient elements of our business strategy, both financial and non-financial. Beyond the traditional performance review, we share our medium- to long-term plans with our stakeholders.

The South African economy, like many others, continued to recover from the after-shocks of the global economic and financial crises during the course of calendar year 2011. However, its goods-producing sectors reported lower output growth as global demand conditions deteriorated gradually.

The intensifying sovereign debt crisis and austerity measures in a number of countries on the Eurozone’s periphery, coupled with the natural disasters in Japan early in the year, had a profound impact on economic growth in major parts of the advanced world. Emerging and developing economies were adversely impacted by falling or subdued export demand, a situation often exacerbated by weakening domestic consumption. Consequently, the rate of increase in global export trade slowed sharply, commodity prices either moderated or declined and industrial production was severely constrained in the latter part of the year.

South Africa’s manufacturing sector saw its output growth more than halved as key sub-sectors found it increasingly challenging to maintain higher production activity. In turn, the mining sector’s output was only marginally higher than in 2010, with industrial action in the platinum industry over the final quarter of the year having had a considerable impact on overall production.

Domestic fixed investment activity rebounded after two consecutive years of contraction although still falling short of pre-crisis levels. South Africa also managed to attract a substantial inflow of foreign direct investment. Business confidence remained relatively weak throughout calendar year 2011, experiencing a sharp decline in the second half of the year but recovering in the first quarter of 2012. The low levels of confidence prevailing among manufacturers were clearly reflective of difficult trading conditions in both local and export markets. On the labour front, some encouraging signs of improvement were visible during the year, although there is still hesitant demand for higher employment in many sectors of the economy.


Notwithstanding a challenging operating environment, the IDC recorded an unprecedented level of funding activity, having approved R13.5 billion in 293 transactions over the course of the financial year. A significantly larger entrepreneurial base was served, many of whom are new clients. Our proactive efforts in support of the economic recovery and the development of industrial capacity include the offer of special schemes, catalytic financial support for participants in the nascent renewable energy segment, increased project development and the continued provision of funding to companies in distress. These efforts have come at a cost to investment performance as reflected by the steady increase in impairment ratios. This underlines the importance of our solid due diligence and risk management practices so as to ensure the financial viability of investments and the long-term sustainability of the IDC.

Financial year 2012 was the first year we implemented our Leadership in Industrial Development strategy. This required an alignment of our operational activities with the priority sectors and respective objectives as set out in Government’s New Growth Path (NGP) and Industrial Policy Action Plan (IPAP). We reviewed and restructured our funding divisions and established a business unit dedicated to the development of green industries. The IDC has earmarked R25 billion over five years towards the development of green industries in South Africa, demonstrating our resolve to contribute catalytically to our economy’s transition to a greener growth path. The Green Industries SBU has already made significant investments in one year of existence.

12