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- Development financier, Industrial Development Corporation recorded a record funding approval in the 2022/2023 financial year.
- The group also recorded increased profits due to subsidiary turnarounds, including phosphate producer Foskor that recorded a profit for the first time since 2012.
- However, executives have said the IDC has failed to meet its transformation targets.
- For more financial news, go to the News24 Business front page.
State development financier, the Industrial Development Corporation (IDC), has announced record funding approvals for the 2022/2023 financial year at R20.7 billion, as the company said it has achieved financial sustainability since the Covid-19 pandemic.
In a statement on Tuesday, the group said it had doubled its disbursements to R17 billion and increased funding towards renewable energy projects, manufacturing, and funding of small businesses.
IDC also announced a 38% increase in revenue to R25.6 billion compared to the previous financial year and a profit of R10.7 billion. Company profit increased by 119% to R5.9 billion, compared to R2.7 billion in 2021/2022.
The group recorded a R21.7 billion profit in the 2021/2022, after reporting a R33 million loss in 2020/2021.
IDC chief financial officer Isaac Malevu said the group had benefitted from improved dividend flow on its investments, rising interest rates, increased capital repayments from clients, and improved revenue from its subsidiaries.
Subsidiary and phosphate producer Foskor was able to turn a R2.8 billion profit, for the first time since 2012, after suffering a R477 million loss in the 2021/2022 financial year.
Meanwhile, subsidiary Cast Products remained in business rescue since February last year, while Small Enterprise Finance Agency suffered a R120 million loss due to credit risk impairments.
Malevu said the group has struggled with increasing impairment ratios due to client defaults and challenging socio-economic conditions despite improvements.
The group has also failed to meet its 25% non-performing ratio goal as it currently stands at 34%.
Speaking to News24, he said: "We do report that the impairment ratio is still high. This is mostly with our legacy business partners, such as clients in the mining and metal sector, where there are R5 billion of non-performing loans. Another tourism company accounts for 10% of our exposure."
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Tranformation mandate
Malevu also said the group had fallen short of its transformation target.
A sum of R32 billion has been invested in transformation in the past five years, with R29 billion allocated for black-owned companies.
In the current year, R6 billion has been invested in black-empowered businesses.
Trade, Industry and Competition Minister Ebrahim Patel criticised the financier in its integrated report, saying there needs to be improved development in its transformation targets to fund women and youth entrepreneurs and black industrialists.
Chief executive officer Tshokolo Nchocho said the country's challenging economic conditions have threatened the company's ability to assist with its transformation mandate.
"A crippling energy supply and slow growth have hamstrung growth over the years, yet our economy is resilient. We need higher levels of GDP growth to effectively deal with challenges of poverty, inequality, and unemployment," Nchocho said in a statement.
