DEVELOPMENT financier, the Eastern Cape Development Corporation (ECDC) has disbursed R98,3 million to 163 businesses in the 2017/18 financial year.
Announcing the Corporation’s annual results, ECDC chief executive Ndzondelelo Dlulane said loan repayments amounted to R120 million in the period under review. In terms of the quality of the development finance portfolio, ECDC continued to improve its due diligence and monitoring capabilities which has resulted in the maintenance of a decent repayment rate of just over 80%.
The loan disbursements helped create 1070 jobs in 2017/18.
“Construction loans accounted for the bulk of the loan disbursements at R43,7 million or 44%. The bias of these loan disbursements toward the construction sector is informed by demand and the significant infrastructural backlogs which government is addressing through construction and related activities,” Dlulane said.
“This was followed by support to the services sector which accounted for R34 million or 35% of the loan disbursements.”
A major component of the disbursements in this segment went to businesses who secured supply and delivery contracts with government.
“This support bridges the gap for SMMEs who do not possess adequate cash flow and personal balance sheet to service their supply contracts. It is an important relief mechanism which is inclusive and designed to ensure that emerging entrepreneurs are not locked out of business opportunities due to a lack of capital.”
The manufacturing sector accounted for R14,5 million or 15% of the disbursements, while R2,4 million or 3% went to agriculture, R2,9 million or 3% to retail and R486 000 or 1% to the hospitality sector.
In terms of the geographic spread, the majority of disbursements went to the Nelson Mandela Bay Metropolitan Municipality (R27,5 million), OR Tambo district (R20,5 million), Buffalo City Metropolitan Municipality (R15,4 million), Alfred Nzo district (R13,2 million), Amathole district (R9 million), Chris Hani district (R6,1 million), Sarah Baartman district (R4 million) and R2,2 million to the Joe Gqabi district.
Dlulane said the ECDC obtained an unqualified audit report in 2017/18 and the ECDC financial position remains strong in that its total group assets exceed total group liabilities by R1.5 billion (Company: R1.4 billion). He added that the driver for this positive book value was mainly an increase in the value of investment properties. The balance sheet reflects investment properties valued at R1.3 billion compared to only R65 million for loans and zero debt financing.
However, said Dlulane, loans and investments should ideally make up a bigger proportion of the balance sheet. Generally, development financiers should have a combination of an investment earning book and a loan book. This has necessitated the entity to formally request the shareholder to continue conversations of recapitalising the loan book to augment the strategy of disposing non-core investment properties in order to improve cash availability for the developmental mandate.
Dlulane said the Imvaba Cooperative Fund approved R7 million to 20 co-operatives. These co-operatives support a total of 123 members. Of this figure, 76 are women and 31 are youth. Furthermore, the Eastern Cape Jobs Stimulus Fund disbursed R9,8 million to 11 enterprises which led to 987 jobs being saved. These enterprises operate in the agro-processing, manufacturing, engineering and automotive sectors. This fund is critical in alleviating distressed enterprises in a quest of saving jobs.
ECDC also provides non-financial support which is aimed at improving the quality of the small business sector in the Eastern Cape. These support packages are designed to bolster competitiveness and to allow the entrepreneur to focus on core business. In 2017/18 a total of 278 enterprises were provided with integrated business support services. Of this number, 125 were women-owned business while 116 were youth-owned enterprises.
He said that in 2017/18, the ECDC also facilitated the creation of 425 jobs through its trade, investment and innovation activities. Of this number, 208 were youth jobs. Furthermore, 135 people received sector development critical skills development.
The ECDC facilitated investments into the province to the value of R349 million. In 2017/18, ECDC successfully organised 15 investment and trade missions which were aimed at boosting trade and investment.
As a result, the ECDC secured R14 million from the Department of Trade and Industry (thedti) over three years to establish a One-Stop-Shop (Investor Centre) in the Eastern Cape as part of the Investment Promotion Strategy of the national government. ECDC also secured an additional R50 million from the DTI to implement the first phase of the revitalisation of the Dimbaza Industrial Park. This should mark the start of the long-awaited implementation of the Dimbaza Eco-industrialisation project.
“During the review period ECDC persisted with the implementation of its property turnaround strategy premised on improving operational and functional performance. The strategy is premised on the improvement on financial performance, the optimisation of the value of the investment portfolio, the capitalisation of the investment portfolio through leveraging from the private sector as well as the positioning of the business to take advantage of growth opportunities. In this regard, ECDC collected R81 million in its property portfolio because of improved occupancy rates driven by commercial and industrial stock.
“In addition, the Corporation has commenced with the refurbishment of its residential portfolio. Already, R100 million has been committed to the programme and completion is expected in the next four years. Furthermore, the remodelling and expansion of the existing commercial and office portfolio is being planned for commencement in the 2018/19 financial year with an estimated R1 billion commitment to the program,” Dlulane said.