South Africa’s Industrial Development Corporation (IDC) is optimistic of converting the rise in business confidence that has accompanied the recent easing in loadshedding and visible efforts to address freight logistics bottlenecks into higher levels of investment this year, following a decline in disbursement during its 2024 financial year.

The development finance institution disbursed R15.9-billion in the financial year to
March 31, 2024, representing an 11% decline when compared with the R17.8-billion disbursed in the previous year.

Approvals fell 16% to R17.3-billion from a record level of R20.7-billion in the previous financial year.

Interim CEO David Jarvis, who stepped into the role in October after TP Nchocho’s departure, told Engineering News in an interview that he was confident that approvals would rise towards the target of R22-billion, owing to the more supportive climate for investment and the realisation of some of the projects that had been originated by the IDC itself.

Industrial projects valued at R3.7-billion had graduated from development stage to bankability during the period under review.

Notwithstanding weaker commodity markets, which impacted the IDC’s financial performance, Jarvis indicated that the group saw significant potential in critical minerals projects in South Africa and Africa, where it was pursuing projects aimed at developing minerals-related value chains.

“Two of our investments were to support battery-grade manganese projects during the course of the year, as well as a battery-grade graphite investment.

“So these are important investments which we're making to support that play towards a [critical minerals] industry which is going to grow five times over the next 20 years,” he said.

He also revealed that the IDC was in communication with Chinese companies with a view to pursuing co-investments in regional minerals value chains. This disclosure comes ahead of an upcoming State visit by President Cyril Ramaphosa to China, which will take place from September 2 to 5, where the issue of minerals value addition is expected to be on the agenda.

However, softer commodity market conditions negatively impacted the group’s financial performance during the year as well as the IDC’s listed equity portfolio, the value of which fell to R45.5-billion from R51-billion, largely on the back of a fall in Sasol shares.

In addition, the IDC’s mining and metals exposure made up 42%, or R12.4-billion, of total nonperforming loans, while dividend flows from companies in the sectors also decreased.

Supporting green growth and low-carbon transitions was also high on the IDC’s investment agenda, with the group having already played a role in supporting various renewable electricity projects and having been appointed as the project management office of the green hydrogen and new energy vehicles components of South Africa’s Just Energy Transition Investment Plan.

However, Jarvis also highlighted the IDC’s alignment with the Government of National Unity’s priority to support inclusive growth through jobs-rich industrial development, including in agriculture, manufacturing, tourism and services.

In the key area of manufacturing, the IDC has already announced a partnership with
Stellantis to establish a plant that will manufacture 50 000 Peugeot Landtrek bakkies and it is also still aiming to up production at the BAIC plant at Coega, in the Eastern Cape, which has underperformed relative to initial expectations.

“The continued commitment to inclusive and sustainable industrialisation is evident in our corporate plan for the 2024/25 to 2026/27 period wherein we've committed to deploy over R60-billion of on-balance-sheet funding over that period,” he said.

The IDC also confirmed that it would be returning to the bond markets following a hiatus, which arose because of the liquidity generated from extraordinary dividend income arising from its listed investments during the previous commodity upcycle.

“It is our intention, before the year is over, to go to the market to issue bonds,” CFO Isaac Malevu confirmed.

Malevu did not provide any indication regarding the size of the issuance, but the board had given its approval for R4.6-billion to be raised through private and public bonds.