How the IDC can stimulate SA agriculture …How the IDC can stimulate SA agriculture …

Rian CoetzeeHead: Food, Beverage & Agro Industries

Agri Outlook Conference30 September 2009

The context – a Developmental State

“The developmental state concept is an attempt to bridge the gap between a centrally planned economy and a free market system,

without emphasizing an ideological position.”

Ben Turok

Wealth Doesn’t Tricle Down: The case for a Developmental State in SA

2008

Introducing the IDC …

IDC Head Office, Sandton

(also 8 regional offices)

• Established in 1940, owned by the Government of South African & 100% self-financing

• Provide risk capital to commercially viable businesses in various sectors

• Mandated to invest in the whole of Africa (since 2000)

• Strong capital base developed through years of sound investments

• Differentiation:

– Identification, development & funding of projects in partnerships with others

– Promotion of & investment in viable new industries

– through risk-taking and flexibility in structuring

Passion, Partnerships & Professionalism

Growing sectoral diversity

Leadership in Development

Vis

ion

Mis

sion

Obj

ect

ives

Out

com

es

To be “the primary driving force of commercially sustainable industrial development and innovation to the benefit of South Africa and the rest of the African continent”

The IDC is a self-financing national development finance institution whose primary objectives are to contribute to the generation of balanced, sustainable economic growth in Africa and to the economic

empowerment of the South African population, thereby promoting the economic prosperity of all citizens. The IDC achieves this by promoting entrepreneurship through the building of competitive industries and

enterprises based on sound business principles.

Supporting industrial development capacity

Promoting entrepreneurship

Sustainable employment

Broad-based black economic empowerment

New entrepreneurs entering the economy

Growing SME sectorRegional equity

Industrialisation in the rest of Africa

Environmentally sustainable growth

Growing export sectorLocal beneficiation

Agricultural value chain

Sector map

Biotechnology

Intermediate inputsEnergy; WaterIrrigation equipmentFertilizer; ImplementsPackaging; FencingStructures; ToolsPumps & generators; Medicine

Maize

Wheat

Hay

Grain sorghum

Sugar cane

Ground nuts

Tobacco

Sunflower seed

Cotton

Viticulture

Citrus

Subtropical fruit

Vegetables

Deciduous fruit

Tea

Coffee

Flower

Game

Ostriches

Pigs

Goats

Sheep

Cattle

Poultry

Beans

Nuts

Field crops Horticulture Livestock

Agriculture

Evergreen

Fishing

Aquaculture

Fishing

Meat processing

Dairy products

Fruit & vegetableproducts

Fish products

Oils & fats

Grain mill products

Bakery products

Sugar & related

Confectionary products

Other food

Animal feed

Agro -processing

Distilleries

Malt Beverages

Soft drinks

Beverages

Wineries

Other non -food

Essential oils

Fibres

Starch

Bio -fuels

Medicinal / Biotech

HouseholdExpenditure

Fragrance

Textiles

Fuel

Pharmaceutical

Feeding into other value chains

Foodservices(hotel; restaurant; caterers)

WholesaleRetailLogisticsTourism

ExportsAgentsLogistics

Automotive

Government Expenditure

Chemicals

Other …

PRIM

ARY S

ECTO

R

SECO

NDARY S

ECTO

R

Sector map

Biotechnology

Intermediate inputsEnergy; WaterIrrigation equipmentFertilizer; ImplementsPackaging; FencingStructures; ToolsPumps & generators; Medicine

Maize

Wheat

Hay

Grain sorghum

Sugar cane

Ground nuts

Tobacco

Sunflower seed

Cotton

Viticulture

Citrus

Subtropical fruit

Vegetables

Deciduous fruit

Tea

Coffee

Flower

Game

Ostriches

Pigs

Goats

Sheep

Cattle

Poultry

Beans

Nuts

Field crops Horticulture Livestock

Agriculture

Evergreen

Fishing

Aquaculture

Fishing

Meat processing

Dairy products

Fruit & vegetableproducts

Fish products

Oils & fats

Grain mill products

Bakery products

Sugar & related

Confectionary products

Other food

Animal feed

Agro -processing

Distilleries

Malt Beverages

Soft drinks

Beverages

Wineries

Other non -food

Essential oils

Fibres

Starch

Bio -fuels

Medicinal / Biotech

HouseholdExpenditure

Fragrance

Textiles

Fuel

Pharmaceutical

Feeding into other value chains

Foodservices(hotel; restaurant; caterers)

WholesaleRetailLogisticsTourism

ExportsAgentsLogistics

Automotive

Government Expenditure

Chemicals

Other …

PRIM

ARY S

ECTO

R

SECO

NDARY S

ECTO

R

Sector focus

Primary Agriculture Secondary Agriculture

Fishing & aquaculture

Field crops **

Horticulture

Livestock **

Food

Beverage

Agro-industrial

* Rest of Africa focus on Secondary or backward integrated projects

** Exceptions

• integrated projects

• Special government initiatives

IDC Agri-business portfolio

100.000.000 200.000.000 300.000.000 400.000.000 500.000.000 600.000.000

Other

VegetablesMeat processing

Fruit - CherryAcquaculture

BiotechProcessing - food

BeveragesFruit - Persimmon

StarchProcessing - Fish

Processing - SnacksFlowers

Fruit - SubtropicalFibre

Fruit - BerriesWholesale

Processing - MeatFruit - CitrusFruit - ApplesFruit - Grapes

NutsBio-ethanol

Sugar milling

Oils

Tea

ZAR

• Total exposure & commitment = ZAR3bn

• 20% (of value) outside South Africa

• 80% (of value) in equity investments

Opportunity drivers

Environmentalism

Sustain & growcompetitiveness

Indigenousresources

Competitiveimport

replacementFood security

SADC & rest of Africa

Megaconsumer trends

Small farmer development

Small farmers

170 emerging cash crop farmers in North West & Free State

Agribusiness

Wholesale partnerships

Strategicpartner

16 citrus farmers in Alice/Kat River area, Eastern Cape

“Hub” partnerships

Broad-based black economic empowerment

Community empowerment - Amajuba Berries

Description - 60ha raspberry farm in Volksrust, KZN

IDC investment – R14m equity; R11m debt

IDC role – project identification & facilitation; equity investment; partner identification; business support

Development outcomes – 440 jobs; community ownership; new industry; R30m/a exports; rural development

Worker empowerment - Keboes Fruit farms

Description – 500ha table grape development in Northern Cape, producing 1,91 million cartons of table grapes p/a

IDC investment – R60m equity & quasi-equity

IDC role – share warehousing for BEE group & workers

Development outcomes – 1,000 jobs, worker empowerment; rural development

BMFI

Pro-active project development

Biofuels - Arengo

Description – The production of 90 million liters of fuel grade bio-ethanol p/a from sugar beet in the Eastern Cape.

IDC investment – R414m equity & debt

IDC role – pre-feasibility & feasibility funding; sponsor role; equity & debt underwriting

Development outcomes – new sector; small scale farmer development; empowerment; rural development

Kenaf - Sustainable Fiber Solutions

Description – Plant based in Winterton, KZN, involved in the de-corticating of kenaf stalk and produces base fiber, core and fines used in the manufacture of bio-composites in the for automotive use – now also used for construction material & oil spillage

IDC investment – R85m in equity

IDC role – feasibility funding (trials);

Development outcomes – new industry; massive job creation through the agricultural development; rural development

Foreign direct investment in the rest of Africa

Matanuska, Mozambique

Description – 3,000ha of banana plantation, Nampula, Mozambique

IDC investment – USD10m quasi equity; USD10m debt

IDC role – co-investment & partner selection

Development outcomes – 5,000 jobs; infrastructure development; rural development

Casquip Starch, Swaziland

Description – Cultivates cassava and produces starch in Swaziland

IDC investment – R37m in quasi-equity

IDC role – co-investment & partner selection

Development outcomes – 1,500 jobs; rural development; SADC import replacement

Day Month Year

The Industrial Development Corporation19 Fredman Drive, SandownPO Box 784055, Sandton, 2146South AfricaTelephone (011) 269 3000Facsimile (011) 269 2116E-mail callcentre@idc.co.za

Passion, Partnerships & Professionalism