UNLOCKING REGIONAL OPPORTUNITIES Growing sustainable small and medium enterprises Partnering you. Growing the economy. Developing Africa. Message from Head of Small Business Finance and Regions he Industrial Development Corporation (IDC) actively promotes investment across all provinces in South Africa. Our key objective is to support entrepreneurs who seek to invest in industrial capacity development and job creation within the Small and Medium Enterprises (SME) sector. As an organisation we have a keen interest in developing and growing regional economies, and as such, have offices in all nine provinces to ensure that entrepreneurs are opportunely serviced in the provinces they reside in. Always striving towards continuous improvement, the IDC underwent an optimisation exercise and enhanced its offering at regional level and transfigured regional operations to the Small Business Finance and Regions (SBF) strategic business unit (SBU), which is geared up to streamline offerings, and better serve the IDC’s diverse clients. This change has turned our regional offices into turnkey operations which cover transactions up to R20 million, limiting customer touchpoints and ensuring faster turnaround of deals. We have managed to see a much-improved impact of our funding within the regions over the past 24 months of this SFB model being implemented and regional offices have contributed immensely to the IDC’s record performance in the past financial, with the Corporation achieving some of its highest-ever performance figures. SBF Mandate The SBF has a focus on stimulating local and regional economic activity through targeted funding and investments towards SMEs. By supporting the development of an active SME environment, as a unit we contribute towards job creation, promotion of youth and women entrepreneurs and operators, and strengthening of SME capacities to improve their competitiveness in domestic, regional and global markets. We specifically cater for businesses looking to access funding from R1 million to R20 million in the mandated sectors that the IDC funds. With our wealth of expertise, our unit can structure customised funding solutions for a wide range of enterprises, from new/greenfield ventures to expansion considerations for existing businesses. Our key driver is the development of the SME sector, with linkages to priority sectors through the provision of appropriate funding products better suited to SME needs. Our objective is to support entrepreneurs who seek to invest in industrial capacity development and job creation within the SME sector. Successful Partnerships We have fostered fruitful strategies over the past year which have given birth to successful partnerships with intermediaries, larger corporates and other strategic partners to specifically extend our reach to sectors such as services and primary agriculture respectively, which would not have been possible without these partnerships. Some of our key partnerships include: • The SA-SME fund which saw IDC funds flowing to over 260 SMEs and SMMEs, saving just over 1000 jobs • Our partnerships with other intermediaries has seen over 774 SMEs and SMMEs receive IDC funding and more than 5 600 jobs saved • Driving greater SME development and support through our tailor-made SME-CONNECT programme which facilitates Enterprise and Supplier Development with larger corporates seeking to support SME development in their supply chains with higher buyer commitment Overcoming Challenges he economy has been challenging over the last 36 months, not just locally, but globally, with the world at large having been crippled by the pandemic. From an economic perspective, regions took a huge knock from the natural rain disasters that largely affected KwaZulu-Natal and had downstream effects as far down as the Northern Cape farming areas and even further affected other regional economies, including the Free State and Eastern Cape and the Northern Cape. Disaster relief funding, of over R1bn in approvals ensured that businesses that were in distress as a result of floods, saved in excess of 7 500 jobs. The Future We look forward to deepening the work done in the past 36 months by the Small Business Finance and Regions unit. Through the continued streamlining of our services to clients, employing fit for purpose digitisation in our processes and cultivating more strategic partnership, we aim to unlock even more opportunities for small and medium enterprises, enabling their continued growth, development and sustainability. Our country has faced massive energy challenges which have, in the worst circumstances, caused many SMEs to shut their doors and thousands of jobs to be lost. One of our key focuses as a Corporation is to give our clients a helping hand through tailor-made, competitive alternative energy solutions to keep their businesses running. We have plans to increase our efforts in stimulating the Township Economy, creating additional centres of employment where they are needed the most. Naomi Mtshali Acting Head Small Business Finance and Regions SME-CONNECT Programme The SME-CONNECT programme follows a strategic collaboration model to expand and deepen industrial development in the small industrial business segment through leveraging the skills, balance sheets, resources, networks and influence of all partner entities to develop and grow SMEs through the following three levers: • Increasing market access for small industrial businesses to improve the predictability and consistency of their cashflows and margin improvement by linking SMEs to local supply chains of large corporations and export markets to improve their long-term sustainability; • Access to appropriate and timely finance aligned to the operational, investment and expansion needs of targeted small industrial businesses. Ensuring SMEs have access to the right financial instruments including incentives and concessionary loans that cater for their investment and expansion needs; and • Focused business and technical support that delivers value for customers and builds market share for targeted small industrial businesses. It is an intentional solution to provide SMEs with access to financial and operational expertise to assist them with building resilient and sustainable enterprises. ince inception in late 2021, the SME-CONNECT programme has engaged directly with 180 opportunity providers, which includes corporates, incubators, accelerators and other business development support providers within the ecosystem. Through these proactive business development activities, a total of 137 transactions have been cultivated for the IDC’s deal pipeline, with a total value of R2.6 billion. To date, the IDC has approved R721 million of these transactions.
Partnering you. Growing the economy. Message Developing from Africa. Regional Manager Spatial distribution of IDC funding The Limpopo office plays a pivotal role in growing the regional economy, tackling the province’s ravaging unemployment by creating sustainable jobs for the people of Limpopo. This office forms part of the Industrial Development Corporation’s (IDC) footprint across the country. Our office has grown in leaps and bounds over the past few years and has become one of the IDC’s top deal-contributing offices. In the Corporation’s last audited results, we contributed R4.4 billion to the IDC’s total approvals of just over R20 billion. Regional Drivers & Opportunities One of our key strategies as a regional office is to support Small and Medium Enterprises (SMEs) in the province. We foster beneficial financial platforms for SMEs and small industrial businesses across our entire province, with various product offerings tailored to suit each business’s needs, from the budding entrepreneurs, to those ready for expansion. The Limpopo province’s economy is largely driven by the agriculture, mining and tourism sectors. The province is responsible for growing the most tomatoes in the southern hemisphere, more than South America where tomatoes originate from. Besides having very fertile soil for primary agriculture, our province also has vast opportunities in the agro-processing space, with identified gaps mainly in the packaging and storage areas. On the mining front, the province has a number of opportunities within the platinum group metals and coal industries. Junior miners and suppliers to mines have ripe opportunities which can be supported through our myriad of funding solutions, including our SME-CONNECT initiative. Through this initiative we can partner with the big mining houses and tap into their enterprise supplier development programmes thereby creating valuable linkages for SME support. The Limpopo province has also experienced significant growth in the tourism sector over the past few years. A prime example is the recent increase in the number of lodges and hotels being established in the Vhembe District. Other opportunities for tourism exist across the province especially around the Kruger National Park and the Burgersfort area. In addition, it is expected that the implementation of the Musina Makhado and the Fetakgomo-Tubatse SEZs will also create opportunities for entrepreneurs within the tourism sector especially with regards to the business tourism. Supporting Communities Our office is not only centred on growing our regional economy and financing entrepreneurs. At the heart of our operation is our commitment to assisting those in our communities who are marginalised and need a helping hand. On the humanitarian front, we have teamed up with our Corporate Social Investment (CSI) unit in support of communities; in Ga-Mathabatha we have partnered with Fanang Diatla Self-Help project where the IDC is assisting them with the procurement of bakery equipment for their baking project. Furthermore, we have partnered with the Letaba TVET College, purchasing 140 computers for four of their campuses in Tzaneen, Modjadji, Maake and Giyani, while the Capricorn TVET College in Senwabarwana was assisted with a state-of-the-art automated greenhouse to help agriculture students. These are just a few of our CSI projects in addition to a number of strategic partnerships with Non-Profit Organisations, with whom we have managed to build and upgrade schools, providing basic needs to name a few. Into the Future Businesses not only in our province, but the entire country, have suffered because of electricity supply constraints. As a regional office, one of our key focus areas is assisting SMEs to alleviate the impact of loadshedding and offering them competitive funds which will provide them with an alternative energy supply. Another key focus area is to work closely with the various Special Economic Zones (SEZs) and industrial hubs to expand our reach in the province. We will continue to partner with other development finance institutions and commercial banks in our efforts to support SMEs and drive economic growth in Limpopo. Mashweu Matsiela Limpopo Regional Manager Limpopo Case Study Northroost is a start-up commercial hatchery business in Makhado, Limpopo. The business is owned and operated by 28-year-old farmer Clive Tigere. Northroost supplies both the formal and independent markets in and around Limpopo. Having started in 2017 in a home garage hatching 1 000 eggs a week, Northroost is now among the largest hatcheries in the province. Tigere entered into a strategic partnership with two established integrated poultry businesses, which provide his company with technical support. IDC funding will take Northroost close to 200 000 day-old chicks a week, making it the second -largest hatchery in Limpopo. This investment aligns with the Black farmer empowerment objectives of the Poultry Masterplan. The project is 60% Black owned, with a 10% employee share scheme, and has created 22 jobs. 1st Floor, Baobab Office Park, Corner Munnik Avenue and Range Entrance Road, Polokwane, 0699 Tel: +27 15 299 4080 - 4099 Email: lp@idc.co.za www.idc.co.za/our-regions/limpopo/ Partnering you. Growing the economy. Developing Africa. E+I 10491
