DEVELOPMENT FUNDS DEPARTMENT
The primary objectives of the Development Funds department is to:
- Conceptualise, negotiate, establish, administer and monitor IDC’s ring fenced and third party funds together with relevant fund owners and SBUs.
- Collaboration with SBUs on the application of investment funds to qualifying clients
- Performing pre and post investment activities in respect of third party funds (currently CTCP, TVC and SPII).
- Impact assessment and reporting on achievement of fund objectives.
Funds are grouped as follows:
- On-balance sheet funds: ring-fenced off IDC’s own balance sheet with the risk of default carried by IDC. The low-interest rate cost of the funds is a direct cost borne by IDC. These transactions go through the normal SBU due diligence processes and are approved by the relevant IDC credit committee.
- Externally matched on-balance sheet funds: are credit lines on IDC’s balance sheet where IDC has a repayment obligation and therefore the risk of default rests with IDC. The funds are borrowed by IDC at low interest rates which are passed on to clients with a small premium. Changes to the terms of the fund are negotiated with the provider of the credit line. These transactions go through the normal SBU due diligence processes and are approved by the relevant IDC credit committee. Development Funds Department reports the status of the funds to the investor at regular intervals and in the format required by the respective agreements.
- Off-balance sheet funds: managed by IDC but IDC has no repayment obligations; all credit risks are carried by the fund. Interest and capital repayments are reinvested during the term of the fund which extends its reach. All terms and conditions of the fund are governed by an agreement between IDC and the provider of the funds and any changes require approval by the fund provider. Funds are held in separate Money market accounts that earn interest.
- Funds managed on behalf of the dti: are grant funds managed by IDC as IDC has the required specialised/industry skills to perform the due diligence required to consider the applications. These funds have its own Investment Committee that consist of members of IDC and the dti that considers applications for funding. Each fund also has a Project Steering Committee where policy issues are considered as well as the status and impact of the fund is reported on. Funds relating to these funds are held in separate Money market accounts that earn interest.
Development Funds Department’s (DFD) focus during the year under review was to review funds and align to the requirements of Project Evolve. Activities for the Clothing and Textiles Competitiveness Programme (CTCP) and the Technology Venture Capital Fund (TVC) (managed on behalf of the dti) continued. The Support Programme for Industrial Innovation (SPII) (also, managed on behalf of the dti) was re-integrated into the dti with effect from 1 April 2015. IDC remains responsible for the post investment activities relating to SPII transactions that was approved prior to the reintegration of the programme.
Funding approved and disbursed under special schemes managed by DFD are as follows:
The socio-economic impact of the abovementioned investments are as follows:
The department’s major stakeholder is the dti and other fund owners such as UIF, KfW, AFD and EDD. Reporting requirements of each fund is determined in the agreements between IDC and the fund owner and reporting is done in line with such requirements.
There were no governance issues during the year under review.
The availability date of all of the on-balance sheet funds, except for Gro-e Youth, expired during the year under review and, due to the current pressures on IDC’s balance sheet, it was decided that none of these funds would be extended at this stage. No further on balance sheet funds have also been approved in the current year.
As a result of the current economic environment and the limited available capacity for IDC to provide concessionary funding off its own balance sheet, the DFD team will look for alternative avenues to source concessionary funds for co-investment with IDC’s funds going forward.
Below is a list of the special funding schemes administered by the IDC:
* Excess funds were advanced from underutilised funds.