Possibilities in Eastern and Southern Africa

1. Possibilities in Eastern and Southern Africa Thokoane TsoloHead: Africa Unit ABC Meeting (Woodmead), 9 March 2011

2. IDC IDC South Africa South Africa Aaa Aaa Aaa Aaa Aa2 Aa2 Aa2 Aa2 grade A1 A1 A1 A1 grade ‘ 06 A2 A2 A2 A2 A3 A3 A3 A3 ‘09 ‘09 Baa1 Baa1 Baa1 Baa1 ‘ 05 Investment Investment Baa2 Baa2 Baa2 Baa2 ‘ 03 decreasing decreasing ‘ 95 Baa3 Baa3 Baa3 Baa3 Ba1 Ba1 Ba1 Ba1 risk Ba2 Ba2 Ba2 Ba2 risk Ba3 Ba3 Ba3 Ba3 B1 B1 B1 B1 B2 B2 B2 B2 B3 B3 B3 B3 Caa1 Caa1 Caa1 Caa1 Caa2 Caa2 Caa2 Caa2 Introducing the IDC • Established in 1940, the IDC is a self -financing, State-owned development finance institution • The vision of the IDC is to be the primary driving force of commercially sustainable industrial development and innovation to the benefit of South Africa and the rest of the continent • Provides financing to entrepreneurs engaged in competitive industries and enterprises based on sound business principles • Desired outcomes: • Sustainable employment • Regional equity (incl. development of the rest of Africa) • Growing SME sector • Broad-based black economic empowerment • Environmentally sustainable growth • New entrepreneurs entering the economy • Increased localisation • Credit strengths of IDC: • Sound financials • Fast-growing assets provide sizeable capital cushion • Credit rating is A3 (on par with sovereign)

3. Introducing the IDC (cont.) Greater importance on social and developmental objectives Greater importance on financial objectives Government / NGOs DFIs Commercial Financiers • Non-commercial focus • Fiscal transfers and grants • Development objectives (social) • Commercial and development focus • Sharing risk • Internally generated funds, government funds, loans • High commercial focus • Private sector capital • Financial objectives • Known risks • ABSA/Barclays • Standard Bank • etc. • Industrial Development Corporation (IDC) • Development Bank of Southern Africa (DBSA) • African Development Bank • etc. IDC does not directly compete with any of these institutions, but encourages cooperation with them in order to achieve its own mandate and goals

4. IDC’s strategic intent wrt regional development • Pursue a more pro-active approach encompassing: • Dynamic involvement in large project-based investments with a long-term strategic potential; • Catalytic leveraging of private sector investment, both locally/ regionally and beyond Africa, so as to: • expand and diversify regional productive capacity; • improve the competitiveness and innovativeness of industrial, mining, agricultural and other productive activities; • integrate value chains on a regional basis; • unlock latent potential through spatial initiatives; • enhance global participation by growing and diversifying trade capabilities; • Co-financing infrastructure development, rehabilitation and logistic improvements, so as to: • lower production costs and barriers to trade (incl. transportation, energy and telecommunication costs) and improve returns; • improve access to abundant natural resources and unleash the potential of hinterland communities; • permit cost-effective access to intra- and extra-regional markets; • encourage resource-seeking, market-seeking and efficiency-seeking investment; • deepen integration through the sharing of production, management and operations of infrastructure facilities, hubs and SDIs; • enable the development of competitive, globally integrated regional value chains;

5. Eastern & Southern Africa (excl RSA) … Indicative statistics: • Market perspective: • COMESA (Common market for Eastern and Southern Africa) • ECA (East African Community) • IOC (Indian Ocean Commission) • SADC (Southern African Development Community) • SACU (Southern African Customs Union)

6. SADC development – the integrated value chain approach • Tourism • Hotels • Food and Bev • Catering • Laundry • Curios • Food (all countries) • Agricultural inputs • Farmers/Producers • Processing • Distribution • Wholesalers • Retailers • Consumers • Petrochemicals • Oil • Paints • Plastics • Industrial textiles • Chemicals • Textiles • Cotton farming • Spinning • Manufacturing • Design • Mineral extraction • Mineral beneficiation (e.g. • Diamond cutting & polishing • Jewellery design • Jewellery manufacture

7. PRIMARY PRODUCTS 1 LPG, petrol, diesel, lubricants, tars, waxes BULK FORMUALTION Fertilizers Explosives Paints etc. RAW MATERIALS Petroleum Gas SADC development – the integrated value chain approach (cont.) Refining Primary chemical processing SECONDARY PRODUCTS Polythene, PVC, Nylon, Polyesters, Rayon etc. PRIMARY PRODUCTS 2 (FEEDSTOCKS) Ethylene, Propylene cellulose, fats, oils, rubber, ammonia, sulphuric acid etc. Tertiary chemical processing FINE FORMULATION Adhesives, Cosmetics, Mining & Agro-chemicals, pharmaceuticals Example: SADC integrated petrochemicals value chain potential Secondary chemical processing CONVERSION Plastics: bags, pipes Rubber: tyres, hoses Textiles: industrial clothing Cracking/naphtha • Refineries • - South Africa • Angola • Namibia • - Mozambique • Chemicals processing • South Africa • Namibia • Mozambique • Zimbabwe Oil and gas - Angola - Mozambique - Namibia - DRC

8. SADC development – the spatial development initiative approach Source: Department of Transport

9. EGYPT • Agriculture/Bio-fuels • SUDAN • Infrastructure • (Water) • Building S. Sudan • KENYA • Sugar • Wind energy • Housing construction • Port • Tanzania-Kenya-Sudan Corridor Road • Commuter rail • TANZANIA • Sugar • Rice • Mining • Port • Tanzania-Kenya-Sudan Corridor Road • Dar es Salaam-Isaka-Kigali-Bujumbura rail • UGANDA • Hotels & accommodation • Mining • MAURITIUS • Air transport • SEYCHELLES • Hotels & Accommodation • NAMIBIA • Agric. / agro-processing • Mining • Gas development • D.R. CONGO • Energy • Mining • ICT • Infrastructure • Hotel/ accommodation • MOZAMBIQUE • Mining • Hotels • Manufacturing (Textiles) • Agro-processing • Wood processing • Energy • Transport infra. • Storage/ warehousing • Rail • BOTSWANA • Mining • Hotels & Accommodation • Restaurant • Mineral beneficiation • MALAWI • Food and Agriculture • Retail infrastructure • Rice • SWAZILAND • Basic chemicals • Mining • Power generation • LESOTHO • Telecoms • Mining • Clothing • ZAMBIA • Storage and warehousing Current and potential IDC involvement … • Eritrea • Mining • Ethiopia • Agro-processing • Power generation • Cement • Leather processing • Zimbabwe • Mining • Agro-industries • Hotels • Infrastructure (power and transport) • Comoros • Air Transport • Zambia • Storage/ warehousing, • Mining, • Healthcare

10. Thank you The Industrial Development Corporation 19 Fredman Drive, Sandown PO Box 784055, Sandton, 2146 South Africa Telephone (011) 269 3000 Facsimile (011) 269 3116 E-mail callcentre@idc.co.za