The Industrial Development Corporation (IDC) presented its Corporate Plan and shared some deep concerns about the current economic conditions as influenced by the credit rating downgrade and how the junk status will affect the Corporation’s ability to disburse funding to its clients. In light of the current economic conditions, the Corporation ensured it maintained its financial sustainability and put measures in place to ensure that it continued to play its developmental role in the economy.
Despite recent downgrades, SA’s GDP was expected to expand in real terms in 2017. Although economic growth was likely to remain subdued in 2018, a gradual recovery was projected to ensue in subsequent years. Overall fixed investment activity was likely to remain weak in the short-term due to spare production capacity and low business confidence in most sectors of the economy, and lower spending by State Owned Enterprises in real terms. The IDC anticipated the ratings downgrades, and some of the negative impacts of it including, negative effects on disbursements, job losses due to businesses reducing levels of activity, more impairments and debt write-offs. On the positive side, price performance of listed shares could improve as a result of a weaker Rand and commodity prices and export focused business partners were likely to benefit from a weaker exchange rate. Overall, this could result in a greater demand for distressed funding. Financial sustainability was the baseline on which the IDC ensured increasing its industrial development impact. Through the National Development Plan, and all the other legislative prescripts, it continued to maintain its financial soundness and sustainability. The current economic environment produced some difficult times but the IDC will continue playing the counter-cyclical role while ensuring it maintained sustainability. Globally, there i]was a strong economic unit as economic growth was expected to modestly improve over the medium term. The Corporation expected that it will support companies in distress more but it will make sure that risk management measures were put in place. Conditions were quite poor in the economy but as the Developmental Financial Institution (DFI) it will ensure it supported companies in distress and its subsidiaries. The IDC aimed to improve its development impact and scrutinise the development outcome strategies to ensure it was done whilst maintaining the financial sustainability. The Corporation was planning to increase disbursements despite the current economic condition.
Development outcomes over the next three years, to March 2020, reflected a target scenario of 104 298 direct jobs to be created and saved, inclusively, and the provision of R23.5 billion in funding to black industrialists - R3.1 billion of this to black women and fund women-empowered businesses to the value of R7.8 billion as well as assisting youth-empowered businesses with R5.2 billion in funding. The baseline scenario was to create and save 84 714 direct jobs and provide R15.9 billion in funding to black industrialists - R3.1 billion of this to black women. There were also targets to fund women-empowered businesses to the value of R6.2 billion and assist youth-empowered businesses with R4.0 billion in funding.
Looking at financial implications over five years, to March 2020, the baseline scenario provided for total disbursements of R97 billion while maintaining an average cost-to-income ratio (including dividends from all investments) of 22%. The targeted amount for disbursement over this period was R123 billion, the baseline of profits amounts to be achieved was R6 billion (excluding gains on equity disposals), whilst the targeted profit was recorded at R3.1 billion also excluding gains on equity disposals. The IDC’s long-term strategy for 2017/18 onwards did not deviate significantly from the previous year but the environment in which the organisation operated necessitated some new initiatives, and prioritisation of existing initiatives, to ensure that the Corporation delivered effectively on its mandate.
The Corporation was granted the B-BBEE facilitator status in order to assist with transformation in the early stage projects and venture capital, distressed clients, black industrialists and addressing barriers to entry for black industrialists.
The Economic Development Department (EDD), in the presence of the Minister, laid out its Strategic and Annual Performance Plan for the year 2017/18, reported on its strategic objectives and Key Performance Indicators (KPIs). The revised APP took into consideration the need to improve the quality of the products produced by the Department, addressing concerns to have KPIs wording and products in a form that improved auditing thereof by specifying the products more clearly and recognising the flexibility required by the EDD in a fast-changing economy that was dynamic. The revised APP set out six strategic objectives that provided direction, 23 KPIs to give effect to the strategic objectives and 180 products/outputs from the KPIs.
Members asked questions about whether the IDC had any strategy to invest in tourism and identified areas within tourism that can bring in revenue and development concurrently, how the Corporations’ programmes impacted the provinces, because the capacity (accessibility) of the IDC in provinces was very low, how the Corporation was planning on assisting small businesses to ensure that development for SMMEs continued and possible consolidation between the Small Enterprise Finance Agency and the National Empowerment Fund (NEF). Members were interested in how the NEF will contribute to the financial sustainability of the IDC, why the IDC thought having a partner on board will resolve the problems faced by Scaw, how the NEF, with a deficit of R13 billion, would benefit the IDC and what the Corporation was doing to assist communities and improve the disbursements to provinces and townships.
The Committee probed the IDC regarding Politically Exposed Persons being made public, how the Corporation planned to mitigate the R800 million loss in Foskor, what the likelihood was of getting a strategic partner for Scaw and whether the Ministry had tested the levels of capacity to try and achieve what it tabled on the presentation. Further questions were posed around the Ministry sharing how the recent downgrades impacted the work of the Department, as this was not reflected on the current APP, proposed amendments in the legislation for ITAC, what the Minister’s sentiments and thoughts were considering demising Scaw and need to look for smaller and developing players in the steel industry that can potentially create more jobs and produce profits and how the B-BBEE facilitator status granted by the Department of Trade and Industry was going to benefit the IDC, why the status was necessary and what its expected impact was.
Chairperson Opening Remarks
The Chairperson, after welcoming remarks, appreciated the presence of the Industrial Development Corporation (IDC) – she looked forward to the entity shedding some light on what it had been doing, how it would be contributing towards economic growth and assisting in transforming the lives of South Africans.
Briefing by the Industrial Development Corporation on its Corporate Plan (2017/18 – 2021/22)
Ms Busisiwe Mabuza, Chairman of the Board of Directors at IDC, highlighted that the downgrading of the country was starting to manifest because it had indeed affected the funding abilities of the IDC. However, the IDC had been stretching itself forth to ensure it continued to assist its clients, but in so doing, it was mindful of the status of the country regarding credit and ensuring that it did not exceed its financial capabilities.
The IDC was taking initiatives to do better going forward, it increased its targets (discretionary) and had tried to disburse more funding to clients despite the current economic conditions.
Mr Geoffrey Nqena, Chief Executive Officer at IDC, highlighted some key issues that the SA economy including a declining growth trend in recent years with the weakness fairly broad-based across all sectors of the economy. The current downgrades might prolong recovery. The unemployment rate in SA fell to 26.5% in the last three months of 2016 after reaching a mid-year high of 27.1%. The agricultural sector was severely affected by the worst drought on record, while weak global demand and lower commodity prices impacted adversely on the mining sector. However, the IDC operated and continues to play a counter-cyclical role in all the sectors affected by the current economic conditions.
Economic growth was expected to modestly improve over the medium term because faster rates of expansion in advanced economies in some emerging markets, such as India, may lift global growth to 3.4% (2016: 3.1%). Although an upward trend in commodity prices was expected, especially in the short-term, underlying market fundamentals remained generally unsatisfactory. Despite recent downgrades, SA’s GDP was expected to expand in real terms in 2017. Although economic growth was likely to remain subdued in 2018, a gradual recovery was projected to ensue in subsequent years. Overall fixed investment activity was likely to remain weak in the short-term due to spare production capacity, low business confidence in most sectors of the economy and lower spending by State Owned Entities (SOEs) in real terms. The IDC anticipated the ratings downgrades – negative impacts of the downgrade included affecting the disbursements negatively, job losses due to businesses reducing levels of activity, more impairments and debt write-offs. On the positive side, price performance of listed shares could improve as a result of a weaker Rand and commodity prices and export focused business partners were likely to benefit from a weaker exchange rate. Overall this could result in a greater demand for distressed funding.
It was highlighted that slide 10 of the presentation covered developmental outcomes (R3.1 billion to black women and R4 billion to youth were five year figures).
Ms Nonkululeko Dlamini, IDC CFO, stated that the IDC tried to respond to the environment in which it found itself which was why it ensured that it was aligned with government priorities. Financial sustainability was the baseline on which the IDC ensured that, in increasing its industrial development impact through the National Developmental Plan and all other legislative prescripts, it continued to maintain its financial soundness and sustainability. The current economic environment had produced some difficult times, but the IDC will continue playing the counter-cyclical role while ensuring it maintained sustainability. Globally, there was a strong economic unit as economic growth was expected to modestly improve over the medium term. However there was an element of uncertainty in the global market, particularly in the US – there had not been a clear policy from the US in terms of its outlook on the African economy. Notably, it was important to emphasise that the rating downgrade had negatively impacted disbursements, borrowing costs, the inflation rate, job losses and the raising debt will be more challenging with foreign lenders reducing exposure to the country.
Mr David Jarvis, Corporate Strategy at IDC, advised that there was much closer focus on the subsidiaries, as some of them had been operating on losses. The IDC however recognised the importance of its subsidiaries. The IDC was expecting that it will support companies in distress more but it will make sure that risk management measures were in place - conditions were quite poor in the economy but as the Development Finance Institution (DFI), the IDC will ensure that it supported these companies. The IDC aimed to improve its development impact and scrutinising the development outcome strategies to ensure this was done whilst maintaining financial sustainability. The Corporation was planning to increase the disbursements despite the current economic condition.
Development outcomes over the next three years, to March 2020, reflected a target scenario for job creation of 104 298 direct jobs and the provision of R23.5 billion in funding to black industrialists - R3.1 billion of this to black women and to fund women-empowered businesses to the value of R7.8 billion as well as assisting youth-empowered businesses with R5.2 billion in funding. The baseline scenario was to create and save 84 714 direct job and provide R15.9 billion in funding to black industrialists - R3.1 billion of this to black women. There were also funds for women-empowered businesses to the value of R6.2 billion and to assist youth-empowered businesses with R4.0 billion in funding.
Looking at financial implications over five years, to March 2020, the baseline scenario provided for a total of disbursements of R97 billion while maintaining an average cost-to-income ratio (including dividends from all investments) of 22%. The targeted amount for disbursement over this period was R123 billion, the baseline of profits was to achieve R6.0 billion of profits (excluding gains on equity disposals), whilst the targeted profit was recorded at R3.1 billion of profits (excluding gains on equity disposals). The IDC’s long-term strategy for 2017/18 onwards was not to deviate significantly from the previous year but the environment in which the organisation operated necessitated some new initiatives and prioritisation of existing initiatives to ensure that the Corporation delivered effectively on its mandate.
The IDC had been granted the B-BBEE facilitator status on 13 September 2016 which was set to assist with transformation especially in early stage projects and venture capital, distressed clients and black industrialists because black shareholders may not be able to raise the applicable equity finance and the IDC shareholding may assist in keeping the B-BBEE rating at the required majority level again to enhance the financial position of the company. It would also address the barrier to entry for black industrialists because entering the manufacturing space can be extremely expensive and prohibitive to black entrepreneurs due to the high set up costs.
As per project design, value chains will receive the largest portions of capital allocation. Given the need to support more labour intensive sectors, the allocation for industrial infrastructure was reduced by 6% under the baseline and was limited to a 7% increase under the target scenario. These changes should result in the IDC’s direct impact on job creation and the relative cost per job improving over the forecast period while ensuring that the Corporation can still play a catalytic role in industry development and the indirect jobs related to this.
Ms Dlamini advised that the IDC had a south funding model – it did not utilise the support from the shareholders and introduced processes and measures to ensure monies lent out were actually collected. Hence, the establishment of a Post Investment and Monitoring Department looking specifically at investments made by the IDC to ensure impairments were low and maintained and that those investments were actually monitored. Scaw had been impacted significantly by the current economic conditions – the IDC indicated it will identify a strategic partner to assist with the management and revitalisation of Scaw as well as assisting in funding. With regards to Foskor, the plant needed revamping - in the next five years it was expected that it will be turned around and would start generating revenue because the plant was in operation right now. The IDC was working very closely with Small Enterprise Finance Agency (Sefa) to share knowledge and systems and ensure the impairments Sefa was experiencing were reduced and eliminated.
Ms Nomvuzo Mnxasana, Chairperson of the Audit Committee, stated that the role of the audit committee was to monitor the impairments of the Corporation. Hence, the post investment monitoring function was established to ensure this happened. The cost of borrowing might increase given the credit rating downgrade - the audit team and committee will ensure the cost/income ratio was monitored very closely because the aim was to ensure costs did not exceed revenue.
Mr Nqena said the IDC appreciated risks will have to be mitigated - with that came the monitoring of investments. Pricing was very important and there were specific interventions put in place to ensure the pricing was set at a level that contributed towards development in way that it was not set too high but also ensured returns and development. The IDC seeks to make the environment a lot easier for young entrepreneurs.
Mr P Atkinson (DA) understood trading negotiations were very difficult given the current economic status so he pleaded with the IDC to seriously look into impairments in the Corporation. He asked for an update on the potential delay on the nuclear deal.
With regards to Project Evolve, tourism remained a major issue. The fact that infrastructure was lacking in that space continued to make it difficult for tourism to develop. Did the IDC have any strategy to invest in tourism and identify areas within tourism that can bring in revenue and development concurrently?
Ms D Rantho (ANC) shared her concerns on the strategy for developing industries and identifying them as drivers for growth and employment in the future. The strategy and programmes coming out of the strategies was good but how did those programmes impact the provinces? Capacity (accessibility) of the IDC in provinces was very low – this could potentially hinder IDC outreach and footprint in assisting people that were on the ground and needed financial assistance.
She also shared some concerns regarding the interest charged by the IDC to its clients, as a DFI. How was the Corporation planning on assisting small businesses to ensure that development for Small Medium and Micro Enterprises (SMMEs) continued? As the national office, did the IDC have plans and programmes that will be more impactful in rural areas because in those areas people were mostly likely to establish agricultural cooperatives?
Mr M Mbata (EFF) asked for more clarity regarding Sefa and the National Empowerment Fund (NEF) -there were always fruits to bear to consolidate some organisations that shared the same mandate. If the deal with the NEF would be consolidated, what would it do in the long term for financial sustainability of the IDC? Furthermore, was there alignment of goals and objectives between the NEF and IDC?
There was always something good about junk status - something good can potentially come out of the rating downgrade especially with organisations like the IDC because it was forced to start focusing on the smaller players, such as developing SMMEs, because they were labour driven and can create more jobs while big organisations became more profit driven while the DFIs ended up overlooking supporting small businesses.
Mr S Tleane (ANC) asked about Scaw and Foskor as the IDC invested a lot of money in those entities so there was a lot that was involved. He shared concern about bringing in a strategic partner to rescue Scaw. If one looked at the steel industry globally it was not very good. Why did the IDC think that having a partner on board will resolve the problems faced by Scaw?
With Foskor, the losses had become larger and larger and its problems were recurring – he asked the IDC delegation team to provide more information on Foskor in terms of its conditions and its status.
He shared his concern about the NEF being brought to the IDC with a huge deficit of R13 billion – what was the arrangement of this deal and how will it benefit the IDC?
With regards to the R96 million allocated to the IDC by the Department of Trade and Industry (DTI) to support the development of the steel industry, what plans did the IDC have in place for that money? In terms of issues around the paradigm on radical economic transformation, can it be related to township and rural businesses in order to get a sense of how the IDC intended to transform those economies?
Ms C Matsimbi (ANC) asked about the IDC’s impact on provinces as since the last engagements, the gap of disbursements to provinces and local/township businesses was too much. Recently there was an outreach in the Member’s constituency where people were complaining there was no access to the IDC even through the internet – what was the Corporation doing to assist those communities and improve the disbursements to provinces and townships?
Dr M Cardo (DA) asked about Politically Exposed Persons (PEPs) regarding Scaw in reference to the equipment figure for 2016/17 and the proportion of the impairment on the overall portfolio. How will the information regarding PEPs be made publicly available?
The IDC envisaged a loss of over R800 million for Foskor - how will the IDC mitigate this loss and what plans were put in place to ensure this did not happen? Lastly, what was the likelihood of getting the strategic partner for Scaw?
The Chairperson noted the IDC intended to save about 400 000 jobs - how will the IDC go about saving these jobs, as reported in the corporate plan? There needed to be a breakdown per sector.
With regards to finding a strategic partner for Scaw, was the IDC one hundred percent convinced that having the strategic partner will make a difference? With the information required for PEPs, which will then be published, would the information be acquired via interception in order to also get information on beneficiaries as well as intergenerational beneficiaries? It would not be fair to only publicise PEPs non-retrospectively?
Mr Nqena stated that the NEF had been receiving funding from government, except for the last two years. This was an opportunity for the IDC to get into sectors it did not normally tap into such as retail which had historically discouraged some entrepreneurs from applying for funding. Government money (allocated to the NEF) can be channelled towards assisting some entrepreneurs. Some of the experiences the NEF possessed can be shared and used as a point of reference to improve the IDC’s reach and footprint. The recent financial position was clouded by much impairment - if the balance sheet was not big enough it cannot handle the shocks.
The IDC’s focus will now be on smaller players, through the NEF, as well as some of the benefits to come with the NEF assisting SMMEs without underplaying its financial position. The IDC however will ensure it scrutinised the books thoroughly to ascertain that there were no aspects overlooked. The NEF will really provide a good base and opportunity in terms of opening up the doors to smaller players.
Foskor had two businesses - Phalaborwa and Richards Bay. One of the reasons for the plant in Richards Bay failing was because it was an old plant. IDC investment aimed refurbishing the plant and retaining the business. Production process of the phosphate was more costly for Foskor as compared to its competitors due to where the plant for further processing was located. This also made production costs much higher. Foskor made more money when the Rand got weaker as its largest consumer was India so it exported largely to India. Foskor will increase the value of the iron content to open up opportunities for new consumers in China. As for Scaw, the IDC had engaged with various independent advisers as well as interested parties to be strategic partners. People had been short-listed and the board had done its approvals. The business will be sold in three parts but the IDC will not sell the entirety of its equity interest. It will retain its equity interest in some major parts of Scaw because Scaw had three major business parts.
With regards to the motor plant (BAW) in Port Elizabeth, the construction of the plant was behind due to content regarding getting local businesses and players involved. In terms of the deal, it still stood and was not affected by the delayed schedule.
Ms Dlamini said the December to March projections showed significant improvement in impairments and, consequently, the IDC reported a net profit of R223 million. For this current year, the audit was currently under way as the year had been closed. The IDC anticipated a better performance (net profit) than the previous R223 million reported last year. The income statement reflected an impairment charge of R3 billion but the IDC had budgeted accordingly for impairments.
In light of collections, if the entity the IDC invested in cannot pay it back, the focus was to ensure the IDC was close to the client and gave it a window period of 24 months before the entity can start paying back the money. This will help give the client some leeway and a grace period to get to a financially viable position. The ability of the IDC to disburse more funding was reliant on those that were doing well and paying back the monies owed, hence the investment monitoring function was crucial.
Mr Nqena advised that everybody that will be getting funding from IDC will be disclosed, it is not only limited to PEPs and the Corporation is going back to the deals it has already signed to disclose the relevant information that is deemed necessary for public purposes, and particularly regarding PEPs. All the PEPs will be flagged together. However, there are limits in terms of how far or big the circle is, and if someone is outside that circle then they may not be flagged. As far as disclosing PEPs and intergenerational beneficiaries retrospectively may be difficult but the corporation welcomes the discourse around this.
The Chairperson emphasized that it will not be fair to only start disclosing PEPs effectively from a particular date, it needs to go as far back as it can possibly go, because the issue of PEPs has been around for too long.
Mr David stated that the steel fund from the Dti sounds like its a lot of money but when it comes to manufacturing it is quite small and so the funding will be used to provide funding to smaller in the steel industry and the funding will be down-streamed accordingly. It will be granted based on the size of the company. As part of project evolve, internally IDC has looked at its strategies in terms of how best the townships businesses can be supported and this is where Sefa comes in which focuses more on SMMEs and Cooperatives, the IDC is able to reach those areas through the agency. In terms of jobs, most of the jobs are in the value chains (about 100 000 jobs in that area) and 50 000 in other areas but we see a lot of jobs being created in agriculture and agro-processing.
Mr Nqena concluded to say that in light of financial sustainability, there needs to be a balance, but also we cannot sacrifice development or do a trade off by reducing loans and disbursements. With the downgrade rating, the cost of borrowing is high but the Corporate aims at ensuring that it continues disburse funds at affordable costs.
Briefing by the Department of Economic Development on its Strategic and Annual Performance Plan 2017/18
Mr Ebrahim Patel, Minister of EDD, took the Committee through the Strategic Plan (SP) and the APP. He outlined the revised APP and the strategic objectives. With regards to Key Performance Indicator (KPI) one, he noted the Department planned to achieve an unqualified audit opinion in Quarter Three and in order to achieve this outcome, the Department was expected to systematically address concerns and weaknesses identified in preceding years’ audit reports and maintain high standards in all other areas.
KPI two is a new one that had been introduced in order to monitor performance of the Department in the Management and Performance Assessment Tool (MPAT) used by the Department of Performance Monitoring and Evaluation (DPME) in assessing Governance and Accountability (G&A).
With regards to the budget, the detailed budget would be substantiated by the DG. Given that there were a number of entities that reported to the EDD, such as the IDC, International Trade Administration Commission of SA (ITAC), Presidential Infrastructure Coordinating Commission (PICC) and the work of the Department itself, EDD was trying to find opportunities on it could connect. Budget allocation per departmental programme was then outlined.
Mr Tleane appreciated progressive changes continuously made the Department from time to time but in the presentation there was a lot of emphasis on research and there was a lot of research that was going to be done. In other presentations there was also a lot of emphasis on reports to be tabled. Due to the work going to be done, had the Ministry tested the levels of capacity to try and achieve what had been tabled on the presentation? What was reflected in KPI 21 was constructive such as the Department becoming more involved in mergers, acquisitions and the demise of cartels. This was on top of the good work the Department was already doing. He asked the Minister to elaborate on how the Department would carry this work out.
Dr Cardo asked that the Ministry share how the recent downgrades impacted the work of the Department as compared to the APP tabled last year – this insight was not included in the APP. He also asked about the proposed amendments relating to ITAC’s legislative prescripts.
The Chairperson questioned the Minister’s thoughts on Scaw regarding sentiment of its demise and the need to develop new players that had potential. Why the B-BBEE facilitator status granted by the DTI necessary? What impact or effect would it have on the IDC? With regards to the sector (NGP job drivers), was it not possible to identify a few and just focus on those instead of wanting to report on all ten job drivers?
Dr Cardo asked why there was a lot of action for Strategic Integrated Projects (SIPIS) in quarter four of the current financial year.
Minister Patel, with regards to capacity inside the Department, explained that when the APP was done, EDD remembered that if it remained in the same trajectory of doing things, many things the Department aimed to achieve will not be achieved. The Department aimed to use both full time staff, within the Department, and some technical capacity, that the Department had in universities across the country through the Memoranda of Understanding (MOUs), and set Ministerial expert panels that will assist in enhancing capacity. In the US, for example, there was a much better connection between government and universities. SA was battling to implement this model but he remained convinced that some of the challenges of capacity within government will be addressed. If this model can be implemented, the Department can address the issues of capacity.
The Department can institutionalise the progress that it was making on its partnership levels regarding handling mergers and acquisitions – one did not have to reinvent the wheel all the time provided that one set up key partnerships and systems in place and then used that as the template to deal with similar merger situations.
With regards to the rating downgrade, it will impact the economy and if one was in denial about it the ability to fix the problems in the economy will be significant. There was a need for a road back to an investment grade - as long as SA remained a net borrower as a country, ratings mattered. The overall strategy to counteract the downgrade was needed on the fiscal level. Fundamentally what ratings agencies looked at was whether when the country could borrow money and had the capacity, will and resources to pay it back. This in turn affected public entities, such as the SOEs, which themselves suffered from poor governance. This was where change needed to start happening in order to build the confidence that SA was able to pay back its creditors with its fiscus.
With ITAC and the legislative amendments, ITAC had looked at two sets of questions – one was structuring ITAC to take in concerns made by the South Africa Customs Union (SACU). The discussions were on-going so the Minister could not comment at this at the moment. The second area just basically looked at the legal implications regarding ITAC. There was no formal submission at the moment but the Committee will be updated in due time. Amendment to the Competition Act were also in the pipeline as the Department ensured amendments suggested will have an impact, and not clumsy processes or outcomes, to end up with possible intended consequence outcomes.
With KPI 10, very often the work that required to break an infrastructure project may take more than three months – this was why the action minutes were grouped as many in Quarter Four.
On the steel development fund, more details will be provided on this- the intention was to strengthen the existing steel base which was more important right now. There was a global surplus of steel and a lot of consolidation that was going on in the world. In the short run more steel would preserve more capability. There were certain parts of steel manufacturing that had been kept up but there were technology advances all the time – the task would be difficult if SA did not stay up to date with current technology advancements. In the case of Scaw, the Department was trying to get a lot of external capacity to help get it up and running.
With regards to the IDC B-BBEE facilitator status, in the existing BEE framework, in a number of areas it as quite important for companies to have BEE status. In the IDC case, the Corporation was often the majority owner of a company, so without BEE facilitator status the company will be regarded as un-transformed. It would be an anomaly to have a public entity that was give a mandate to develop and could be trumped by a company in terms of BBE Ratings. This might affect the IDC’s subsidiary to acquired contracts that required certain BEE ratings.
The Department had not done a lot of work in the rural areas. This was probably because there were not a lot of economic activities in those areas. However the EDD presented to the PICC the income or poverty profiles between the rural areas so measures will be put in place to ensure that more work became evident in those parts of the country.
The meeting was adjourned.
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