The Industrial Development Corporation (IDC), a state-owned development finance institution, has decided to shift its strategic focus from being a lender to a mobiliser of capital so it can become a catalyst for industrial development.
The institution’s 2027/29 corporate plan to drive industrialisation takes place in the context of South Africa’s deindustrialisation and the diminishing share that manufacturing has in the country’s GDP.
The aim is to leverage the IDC’s balance sheet by crowding in external finance to achieve its developmental objectives.
The organisation plans to focus its financing on new economic growth frontiers such as green industries, including critical minerals, battery manufacturing and green hydrogen; digital and blue economies; services and tourism and agriculture, agro-processing and beneficiation.
The change in strategic direction comes at a time of complaints by black business that the IDC has lost its focus on transformation, takes an inordinately long time to respond to applications for finance and is too impatient about the repayment of its loans.
A complaint expressed by the National African Federated Chamber of Commerce and Industry (Nafcoc) is that the IDC is hostile to black businesses and, unlike its preferential treatment for other firms, does not support them when they are struggling, thereby contributing to their failure.
IDC executives have met with Nafcoc representatives and are planning roadshows around the country to engage with their clients.
IDC CEO Mmakgoshi Lekhethe insisted on the sidelines of a parliamentary engagement between IDC executives and members of the trade, industry & competition committee on Wednesday that the change in strategy would not entail compromising its commitment to transformation. She noted that 60% of the IDC’s book is invested in black businesses.
IDC board member Tanya Reeva Cohen told MPs the board had decided to establish a panel independent of management to deal with the complaints. It would report directly to the board and be in addition to existing complaint-handling mechanisms.
A consideration in planning the new strategy was to maintain the financial sustainability of the institution, which had impairments of about 31.4% of its book in the 2025/26 financial year. Together with non-performing loans this was putting extreme pressure on the balance sheet, trade industry & competition deputy minister Zuko Godlimpi noted in the meeting.
Cohen warned if this level of impairments and non-performing loans were not brought under control the IDC would no longer exist in a few years’ time. “We have to get it under control,” she said.
In terms of the IDC’s strategic plan, impairments would be reduced to 29.7% of the portfolio in 2026/27, reaching 26.1% in three years’ time.
The IDC plans to apply to the National Treasury to be exempt from tax so it can unlock foreign grants and plough more capital into economic development. It also plans to issue green/transition bonds.
For the 2026/27 financial year it plans to invest R38.5bn in the economy, provide R6bn in support for black industrialists and women and youth-owned enterprises, crowd-in R6.9bn in funds for SMEs and R30bn for spatial and rural development and increase South Africa’s exports by R15.7bn. Another objective is to accelerate regional value chains that strengthen South Africa’s competitiveness.
Emphasis would be placed on labour-absorbing sectors such as agro-processing, tourism and global business services with 16,000 jobs targeted for creation and saving in 2026/27.
Over the next three years, between the 2026/27 and 2028/29 financial years, the IDC envisages investing just more than R100bn into the economy, divisional executive for strategy and corporate affairs Phiwe Marumo said. CFO Isaac Malevu noted that R51.5bn of this would be disbursed from the organisation’s own balance sheet.
The support for black industrialists would shift from first-time funding to scaling up existing black-owned businesses.
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