What the IDC can do for your company
On 31 July 2014, Khayelihle Sibiya of the Industrial Development Corporation (IDC) addressed members of the Johannesburg Branch on the services rendered by the IDC to industry and to the lighting industry in particular.
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Khayelihle Sibiya of the ICT Business Unit. |
Established in 1940, the IDC is a national industrial development finance institution which aims to promote economic growth and industrial development in South Africa and the rest of the continent. It is owned by the South African government under the supervision of the economic development ministry.
The IDC is tasked with creating sustainable jobs via industrial development and economic growth. It has approved over R20 billion in grants over the past twelve months and, in doing so, has contributed to the creation of more than 40 000 local jobs, in line with its job creation mandate.
The IDC's current committed portfolio for the information and communication technology (ICT) sector amounts to over R4,7-billion. It views LED manufacturing as an ICT strategic objective, meaning that companies which populate components onto printed circuit boards, either in-house or outsourced, are eligible to partner with the IDC.
IDC funding schemes
Gro-E scheme
The IDC is investing R10-billion in economic growth and job creation over the next five years through its Gro-E scheme.
This scheme offers financial support to start-up businesses including funding for buildings, equipment and working capital. It also funds companies wishing to expand. The proviso here is that they must show an ability to create jobs. Businesses should also operate in sectors supported by the IDC.
The Gro-E scheme scheme funds businesses at prime less 3% for loans and the real after-tax internal rate of return (RATIRR) of 5% for equity financing. A minimum of R1-million with a maximum of R1-billion per project is allowed. The funding is available over five years or until the scheme is exhausted.
The reduced loan pricing is available for five years, after which normal IDC pricing applies and finance required in excess of the scheme's limit can be accessed through normal IDC funding.
Incentives for existing manufacturers
The Manufacturing Competitiveness Enhancement Programme (MCEP) offers a new suite of incentives for existing manufacturers designed to not only promote competitiveness in the manufacturing arena, but also to ensure job retention in this sector.
The MCEP consists of industrial financing loan facilities managed by the IDC and production incentive grants administered by the Department of Trade and Industry.
The programme id for working capital facilities only and offers a maximum approval of R50-million per applicant at an interest rate fixed at 4% for four years, followed by normal IDC pricing. At least one year's trading experience is needed.
Case study 1
A private, 100% white-owned LED manufacturer in Western Cape Province with over 40 employees and a BEE level rating of 3 could wualify for IDC facility approval of approximately R10,5-million.
Case study 2
A private, 100% women-owned LED manufacturer in Gauteng with more than 30 employees and a BEE level rating of 4 could receive IDC facility approval for an equipment loan and working capital facility to the total of approximately R5,5-million.
How to apply
Contact Khayelihle Sibiya at the ICT Business Unit on 011 269-3438 or 076 871-5594, or at khayelihles@idc.co.za. Alternatively, submit a business plan to the IDC call centre at callcentre@idc.co.za or visit www.idc.co.za for more information or to submit an online application.
Contact Sue Swash, IESSA, Tel 011 476-4171, sue@iessa.org.za