Pretoria – The National Empowerment Fund (NEF) will become a wholly-owned subsidiary of the Industrial Development Corporation (IDC), the Ministers of Trade and Industry and Economic Development announced on Wednesday.
Making the announcement in Cape Town, Trade and Industry Minister Rob Davies and Economic Development Minister Ebrahim Patel said the incorporation of the NEF into the IDC is to meet the demand for funding by black entrepreneurs.
The merger will promote increased broad-based black economic empowerment with a specific focus on promoting black industrialists.
The decision is in line with the affirmation by President Jacob Zuma in the State of the Nation Address (SONA) last Thursday. President Zuma said: “The quest for radical economic transformation must seek fundamental change in the structure, systems, institutions and patterns of ownership, management and control of the economy in favour of all South Africans, especially the poor, the majority of whom are African and female.”
Government has identified both the IDC and the NEF as central in implementing radical economic transformation and development policies, particularly in light of renewed efforts to develop black industrialists.
The Department of Trade and Industry (dti) and the Economic Development Department (EDD) will appoint a technical team to drive the merger of the two institutions, while Minister Davies will continue to provide legislative and policy guidance to the National Empowerment Fund.
The two Ministers are confident that this historic integration of two leading development finance institutions (DFIs) will enhance the country’s developmental aspirations, as outlined by President Zuma in the SONA.
Industrial Development Corporation
Over the last 75 years, the Industrial Development Corporation has been involved in implementing the country’s industrial policy and establishing key industries. This includes the manufacturing sector: petro-chemicals, mineral beneficiation, fabricated metals, agro-processing and clothing and textiles.
In the recent financial results announcement for the period ending 31 March 2016, the corporation reported R14.5 billion in approvals, including R11.4 billion in disbursements. In the same period, the IDC has approved R4.9 billion for black empowered companies, R2.9 billion of which was for black industrialists.
National Empowerment Fund
Meanwhile, in 2005 the NEF was capitalised by government to the value of R2.4 billion, all of which had been fully disbursed by 2010.
Since then, the NEF has been self-financed from loan repayments, dividends and interests from its investments and proceeds from the sale in 2007 of its stake in cell phone network provider MTN through the NEF Asonge Share Scheme.
Since operational inception in 2005 to date, the NEF has approved over R8.5 billion worth of transactions to 839 black companies countrywide, which have supported in excess of 89 900 decent jobs.
Both DFIs possess exceptional skills necessary for meaningful impact in driving economic growth and transformation across industries and the country as a whole.