The Industrial Development Corporation of South Africa continues to receive funding applications from the country’s companies in dire need of funds for recapitalisation but said it would only invest in projects that made business sense.
In a written response to NewsDay, IDC-SA executive director Ufikile Khumalo said his organisation would restrict the credit lines to development finance institutions that were owned by government for onward lending to local companies and not individuals.
“Our investment decision outside SA (including Zimbabwe) is dictated by the availability of entrepreneurs also willing to Invest. When approached for funding, our institution will be only too happy to invest in those projects that show economic merit,” said Khumalo.
“We have noted that foreign direct investment has reduced significantly in the last few years and that a concerted effort would be required to attract foreign investors in general. Our institution continues to invest in Zimbabwe.”
Khumalo said IDC-SA’s impact would be felt in industrial development and job creation.
He said several local companies in the mining, agriculture and financial services sectors had approached the organisation for funding.
In March this year IDC-SA unveiled a six-year $30 million line of credit facility to the struggling Agribank. Speaking after the signing ceremony in Harare, Agribank chief executive Somkhosi Malaba said the facility would support the agro-processing and food manufacturing industry and the farmers indirectly.
“The facility should lead to job creation and will also help increase agricultural productivity by improving access to inputs at affordable prices by farmers,” said Malaba.
“It will also address the general lack of liquidity that has resulted in the absence of clearly defined funding for agriculture from the banks.”
The country has been struggling to attract foreign investors, who have been rattled by the government’s indigenisation plans that seek to transfer 51% shareholding of mining companies to indignenous locals.
The International Monetary Fund last week in its review of the country’s economy said:
“To attract private investment, directors stressed the need to maintain the rule of law, ensure security of land tenure, improve governance, particularly in the diamond sector, and increase the flexibility of the labour market.”