Agri09 day iii - session v - part ii - rian coetzee - idc


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Agri09 day iii - session v - part ii - rian coetzee - idc

  1. 1. Meeting Investment Capital NeedsThe Role of Development Finance Institutions (DFIs)Presentation by Rian CoetzeeHead: Food, Beverage & Agro Industries, IDCat the Agri Business Forum 2009Cape Town13/06/2009
  2. 2. The positioning of a development finance institution• Crowding-in of commercial funders• Address market failures - provide additionality and encourage investments which move the economy in the desired direction• Catalytic role - encouraging private sector investment• Leadership role – others follow if DFI is successful and proves a market (project developers)• Risk-takers – more equity-orientated with flexibility important• Key performance indicators - ability to identify, and successfully address, new gaps in the market, before its current market is taken over by other financial institutions
  3. 3. IDC – a pure African development finance institution (DFI) …• Established in 1940, owned by the Government of South African & 100% self-financing• Provide risk capital to commercially viable businesses in various sectors• Objectives: – Supporting industrial development capacity – Promoting entrepreneurship• Mandated to invest in the whole of Africa (since 2000)• Strong capital base developed through years of sound investments• Differentiation: – Identification & funding of projects in partnerships with others – Promotion of & investment in viable new industries – through risk-taking and flexibility in structuring
  4. 4. IDC Agri-business portfolio Sugar milling Bio-ethanol Nuts Fruit - Grapes Fruit - Apples Fruit - Citrus Processing - Meat Tea Wholesale Fruit - Berries Fibre Fruit - Subtropical Flowers Processing - Snacks Processing - Fish • Total exposure & commitment = ZAR3,4bn Starch • 20% (of value) outside South Africa Fruit - Persimmon Beverages • 80% (of value) in equity investments Processing - food Biotech Acquaculture Fruit - Cherry Meat processing Vegetables Oils Other ZAR 100.000.000 200.000.000 300.000.000 400.000.000 500.000.000 600.000.000
  5. 5. Food price crisis The IDC’s Response Strategic Pillar 1: Strategic Pillar 2: Strategic Pillar 3: Strategic Pillar 4: Supporting Creating increased Food security Responsible & increased competition in food through co- innovative biofuels agricultural processing ordinated SADC support supply/production production in crop farming Strategies Strategies Strategies Strategies Emerging Farmers SME grain & oil seed Identify pockets of Food sensitive + milling food vulnerability biofuels projects Sizable intervention in + + + deep rural 2 nd Co-operatives Optimal allocation of Explore 2nd economy production in SADC generation environments + technologies + Project facilitation & Restituted farms funding
  6. 6. Financial crisis• Counter-cyclical role in the economy• No bailouts – economic merit non-negotiable• Opportunity - Sector efficiency and promote competitiveness• Working through broader sectoral stakeholders in affected industries to ensure co-ordinated remedies• Stimulate private sector lending with other financiers and stimulate the flow of credit, thus helping to improve market liquidity• Restructuring of existing facilities
  7. 7. Small farmer development Wholesale partnerships “Hub” partnerships Strategic partner Agribusiness Small farmers 170 emerging cash 16 citrus farmers in crop farmers in Alice/Kat River area, North West & Free Eastern Cape State
  8. 8. Broad-based black economic empowerment Community empowerment - Amajuba Berries Worker empowerment - Keboes Fruit farms Description – 500ha table grape development inDescription - 60ha raspberry farm in Volksrust, KZN Northern Cape, producing 1,91 million cartons of tableIDC investment – R14m equity; R11m debt grapes p/aIDC role – project identification & facilitation; equity IDC investment – R60m equity & quasi-equityinvestment; partner identification; business support IDC role – share warehousing for BEE group &Development outcomes – 440 jobs; community workersownership; new industry; R30m/a exports; rural Development outcomes – 1,000 jobs, workerdevelopment empowerment; rural development BMFI
  9. 9. Pro-active project development Biofuels - Arengo Kenaf - Sustainable Fiber Solutions Description – The production of 90 million liters of fuel Description – Plant based in Winterton, KZN, involved grade bio-ethanol p/a from sugar beet in the Eastern in the de-corticating of kenaf stalk and produces base Cape. fiber, core and fines used in the manufacture of bio- IDC investment – R414m equity & debt composites in the for automotive use – now also used for construction material & oil spillage IDC role – pre-feasibility & feasibility funding; sponsor role; equity & debt underwriting IDC investment – R85m in equity Development outcomes – new sector; small scale IDC role – feasibility funding (trials); farmer development; empowerment; rural development Development outcomes – new industry; massive job creation through the agricultural development; rural development
  10. 10. Foreign direct investment in the rest of Africa Matanuska, Mozambique Casquip Starch, Swaziland Description – 3,000ha of banana plantation, Nampula, Mozambique Description – Cultivates cassava and produces starch in Swaziland IDC investment – USD10m quasi equity; USD10m debt IDC investment – R37m in quasi-equity IDC role – co-investment & partner selection IDC role – co-investment & partner selection Development outcomes – 5,000 jobs; infrastructure Development outcomes – 1,500 jobs; rural development; rural development development; SADC import replacement
  11. 11. Day Month YearThe Industrial Development Corporation19 Fredman Drive, SandownPO Box 784055, Sandton, 2146South AfricaTelephone (011) 269 3000Facsimile (011) 269 2116E-mail