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Speaker 1: Turning momentum into measurable economic outcomes. The sixth South Africa

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Speaker 1: Investment Conference live on seven oh two.

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Speaker 2: Back with you. It's nine minutes after ten o'clock. Ah,

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Speaker 2: the beauty of live radio. You see what happens. We

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Speaker 2: are really live. It's not an AI operation. That's why

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Speaker 2: there was that bit of a hiccup. We come into

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Speaker 2: you live from Centeren Convention Center. Great heaving you with us,

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Speaker 2: and earlier on some of you are saying that you

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Speaker 2: want to ask our guests and various questions about the

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Speaker 2: investment conference. So I'm happy for you to do that.

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Speaker 2: Marc Goliath, divisional executive for Manufacturing at IDC, is sitting

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Speaker 2: in front of me and Mark welcome. I hope you're good.

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Speaker 1: Good morning, I'm very good this morning.

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Speaker 2: Yeah. I want us first. I know people know it

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Speaker 2: and we all think that we know it. Tell us

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Speaker 2: about IDC just on the main, just a brief background.

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Speaker 2: What is it that you do for someone who is

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Speaker 2: a bit hazy. We understand that your I development cooperation,

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Speaker 2: we understand that you're involved in funding. But give us

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Speaker 2: a bit of a brief insight into ADC before we

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Speaker 2: kick off.

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Speaker 1: No, thank you. So the IDC is a development finance institution,

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Speaker 1: probably the largest development finance institution in South Africa, and

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Speaker 1: our main mandate is to foster industrialization within South Africa

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Speaker 1: and within subs are in Africa. The subs are An

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Speaker 1: Africa component has become more apparent as the African Continental

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Speaker 1: Free Trade Area starts being implemented. So our main role

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Speaker 1: is industrialization across the manufacturing, mining, chemical spaces. And then

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Speaker 1: the one exception is in services where we have a

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Speaker 1: you on tourism and enabling the growth in the tourism sector.

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Speaker 2: From one million range. You fund too, how much.

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Speaker 1: The cap? I can't say. The cap is unlimited, but

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Speaker 1: our sweet spot is probably a max of about one

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Speaker 1: and a half billion.

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Speaker 2: Okay, And your role here what is it exactly? At

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Speaker 2: the investment conference, one would have thought that you are

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Speaker 2: here and you I state owned entity, and so your

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Speaker 2: role here is it also to pump some funding into

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Speaker 2: various government projects or what is it exactly?

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Speaker 1: Not necessarily various government projects. I mean, the IDC is

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Speaker 1: one of governments enablers and we partner with government in

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Speaker 1: trying to attract either foreign direct investment or enable projects

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Speaker 1: to get off the ground. So it's not necessarily just

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Speaker 1: specific government projects, but the commitments that are being made

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Speaker 1: by some of the person is today does require additional

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Speaker 1: funding and that's where we play a role in supporting

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Speaker 1: those initiatives.

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Speaker 2: Can I go to IDC and request money for establishing

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Speaker 2: a factory that's going to hire about five hundred to

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Speaker 2: eight hundred individuals and it will be involved in manufacturing,

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Speaker 2: taking raw materials and turning them into the ultimate and

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Speaker 2: usable product.

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Speaker 1: You could? You could? The issue is always that we

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Speaker 1: fund on the basis that businesses will be sustainable. Yeah,

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Speaker 1: So it is informed by the business proposals that are

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Speaker 1: put to us and whether there is what we deem

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Speaker 1: sustainability in that business going forward. I cannot say that

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Speaker 1: everybody walking through the door will be approved for funding,

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Speaker 1: but what we do seek to do is also to

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Speaker 1: try and support entrepreneurs that come through the door but

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Speaker 1: doesn't necessarily have a fully fledged business proposal, but have

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Speaker 1: a sound business concept.

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Speaker 2: Yeah. You that divisional executive for Manufacturing at IDC, what

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Speaker 2: are your insights on the state of manufacturing in South Africa?

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Speaker 2: Because we are always told either through platitudes or factual

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Speaker 2: anecdotal accessions that we consume, we are more of consumers

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Speaker 2: than producers. The state of manufacturing in South.

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Speaker 1: Africa, it has been it has seen some tough times

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Speaker 1: post COVID. I think we have seen decline in certain

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Speaker 1: subsectors of manufacturing. Manufacturing is still a keen contributor to

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Speaker 1: South African GDP and I think what we've seen in

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Speaker 1: the past eighteen months is a growth in manufacturing stature

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Speaker 1: again once again they are keen enablers which support manufacturing

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Speaker 1: and those as infrastructure through roads, railway and electricity as examples.

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Speaker 1: And where we've been put on the back foot over

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Speaker 1: the last few years is access to electricity was a problem,

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Speaker 1: continuous access. Now we've overcome that and you would have

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Speaker 1: seen in the media that the cost of electricity is

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Speaker 1: the next third or to overcome. The logistics. Transport logistics

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Speaker 1: for manufacturers are an important element and that's where transmits.

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Speaker 1: Almost improvement over the last twelve months has really supported

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Speaker 1: the manufacturing sector. Yes, and we're looking keenly to see

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Speaker 1: the growth in that transport logistics area which will really

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Speaker 1: drive improved improved manufacturing capacity locally.

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Speaker 2: Earlier on we had a call from one of the

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Speaker 2: individuals who is involved in black Entrepreneurs Association. Forgot the

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Speaker 2: actual name of that, but he said he'll call back again.

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Speaker 2: It was Refiller from Ramser. And this prompts the question

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Speaker 2: where the opportunities for aspiring entrepreneurs because entrepreneurs at times

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Speaker 2: feel as though entities such as IDC are far away

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Speaker 2: from where they are and perhaps it could be only

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Speaker 2: select few that get to benefit where they low hanging

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Speaker 2: opportunities for entrepreneurs.

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Speaker 1: They across multiple value chains, and I think it depends

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Speaker 1: on the area and sphere of influence that you, as

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Speaker 1: an entrepreneur have. I was just speaking to a gentleman

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Speaker 1: earlier who is operating in the chrome space and converting

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Speaker 1: chrome to chrome concentrate small business that has an opportunity,

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Speaker 1: and it's very difficult to put it down because they

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Speaker 1: are niche opportunities in every value chain. And I think

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Speaker 1: when entrepreneurs look at those opportunities or look at a

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Speaker 1: value chain, they need to identify not what the bull

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Speaker 1: commodity and what everybody else is doing, but what are

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Speaker 1: the niches that create linkages that are important to that

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Speaker 1: value chain and see how we expand on that, because

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Speaker 1: quite often it's difficult for entrepreneurs to come into an

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Speaker 1: environment where you're competing with big bulk commodity products, and

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Speaker 1: hence you need to try and see how you play

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Speaker 1: in a niche space that actually enables the manufacturing. So

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Speaker 1: your manufacturing is an enabler. And the auto space is

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Speaker 1: an example of that, where there's so a multitude of

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Speaker 1: Component three that goes into automotive and things like logistics

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Speaker 1: in automotives are important. So it's difficult to say where

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Speaker 1: are the low hanging fruit. They are everywhere, sure.

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Speaker 2: And another difficult question the funding process. You know, the

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Speaker 2: funding becomes a little bit problematic if you don't understand

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Speaker 2: what is required and if you feel that the requirements

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Speaker 2: are tedious and apparance and you could easily decide not

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Speaker 2: even to apply. Share a bit about the funding process

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Speaker 2: in Layman's TEMs as if you're talking to a high

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Speaker 2: school child. Where does it start and where does it

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Speaker 2: hopefully eventually end with IDC saying check your bank account.

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Speaker 1: Yeah, so we I suppose the starting point for most

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Speaker 1: people is our website, where we have a detailed list

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Speaker 1: of criteria and requirements that is put forward. And I

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Speaker 1: think the difficulty that many of our potential clients have

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Speaker 1: is that it is a significant list and we acknowledge that.

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Speaker 1: And I think the one area that our CE and

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Speaker 1: XCO and Border working very hard on its how do

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Speaker 1: we simplify our processes. So we are moving into an

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Speaker 1: environment where we would like to embrace a I as

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Speaker 1: part of our application process. It's coming sure, So that

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Speaker 1: would be the first stumbling. First port of care is

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Speaker 1: actually developing a business proposal because we don't work on

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Speaker 1: application forms. We work on business proposals that you put

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Speaker 1: to us, and that is a key point of difference

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Speaker 1: with many other commercial banks or other dfires. Once you

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Speaker 1: submitted the business proposal to us, which you can do

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Speaker 1: physically through either our regional officers which we have in

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Speaker 1: each province, or via the internet through our portal on

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Speaker 1: our website, there is a process where that application is

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Speaker 1: initially desktop possessed and nine out of ten times there

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Speaker 1: will be additional information required, which is then back and

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Speaker 1: forth between the potential client and the individuals who's dealing

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Speaker 1: with the application. Once it goes through that gait, there's

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Speaker 1: a team assigned to do a due diligence to unpack

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Speaker 1: that application. Once a due diligence concluded and it's found

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Speaker 1: that there is merit in the application, then goes to

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Speaker 1: an approval body which considers the application, and at that

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Speaker 1: point you will know whether you've been successful in the

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Speaker 1: application for funding or not. Money in your account flows

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Speaker 1: after that, I see, because obviously there's a legal process

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Speaker 1: with agreements, and once that is concluded and the conditions

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Speaker 1: are me we can then disperse funding.

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Speaker 2: Notwithstanding that back and forth, perhaps I forgot to cross

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Speaker 2: my t's and dot my eyes. Notwithstanding that, on average,

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Speaker 2: how long does it take from myself for submitting my

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Speaker 2: proposal not the application forms, and to ultimately being asked

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Speaker 2: to come through true, and then we're talking about the

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Speaker 2: contract because my proposal was favorably deemed.

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Speaker 1: I think I'm working on the principle that there's no

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Speaker 1: back and forth. Yeah, so first time everything's right? Yes,

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Speaker 1: I would say approximately three months too money from that

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Speaker 1: initial proposal to money in your account three months. I

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Speaker 1: think what we found though, is what SKUs that timeline

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Speaker 1: is the back and forth?

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Speaker 2: Yeah, okay, can I can I put a proposal for

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Speaker 2: equity acquisitions and all of those PEPs I want to

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Speaker 2: buy shares at macro and make a very stripid example

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Speaker 2: because I know nothing about the retail space. So I

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Speaker 2: don't want to say a radio station because that'll be conflicted.

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Speaker 2: So it's assuming I'm interested in buying macro shares or

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Speaker 2: massmut or whoever. Are you willing to say, great Tabo

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Speaker 2: wants to buy forty percent of this entity's equity? Would

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Speaker 2: be able to fund that? And how much do I

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Speaker 2: need upfront as part of the process.

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Speaker 1: So no, we focus on industrial capacity, so retail would

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Speaker 1: not form part of that as an example, so that

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Speaker 1: would be one of the gates that we would check

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Speaker 1: whether it's within our mandate or not. But we do

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Speaker 1: fund acquisitions. I'll use an example of a manufacturing facility

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Speaker 1: making widgets. Yes, if you then want to purchase that

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Speaker 1: or acquire that facility, we do finance that. We would

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Speaker 1: at a minimum request a contribution from the entrepreneur, and

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Speaker 1: that could range anywhere. I suppose the general monumum we

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Speaker 1: look at is ten percent for the acquisition value. But

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Speaker 1: it is something that we have found to be burdensome,

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Speaker 1: right because depending on the size of the acquisition, yes,

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Speaker 1: not everybody has a few million years. So we're all

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Speaker 1: looking at mechanisms at how we can support entrepreneurs to that, yeah, and.

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Speaker 2: A bit of skin in the game from myself is

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Speaker 2: necessary and that can be negotiable.

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Speaker 1: It can be negotiable depending on the situation for each transaction,

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Speaker 1: because skin in the game keeps us both honest.

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Speaker 2: Yes and committed Yes yeah. Marc Goliath is a divisional

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Speaker 2: executive for manufacturing at IDC, and he's my guess right now,

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Speaker 2: if there's anything that you need to know about IDC,

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Speaker 2: and this is on the backdrop of the South Africa

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Speaker 2: Investment Conference taking place, we're alive at the Center Convention Center.

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Speaker 2: They're here as well, and they might want to hear

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Speaker 2: what your thoughts are. And perhaps you've approached IDC before,

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Speaker 2: especially in the manufacturing space, specifically not generally, specifically in

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Speaker 2: their manufacturing space, so that Mark is able to respond

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Speaker 2: to to to to that, feel free to give us

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Speaker 2: a calumn oh one one eight eight three oh seven

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Speaker 2: O two oh one one eight eighty three oh seven.

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Speaker 2: Alternatively send a voice note too, oh seven two seven

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Speaker 2: O two one seven O two. Mark, I am concerned

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Speaker 2: a little bit about perhaps business outside the country. Are

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Speaker 2: you are you able to fund those perhaps in the

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Speaker 2: Sadak region. I approach you and I say listen, there

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Speaker 2: is there's a bit of action in Namibia. I want

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Speaker 2: a little bit of it and I want to set

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Speaker 2: up a manufacturing plant. I'll be taking things from South

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Speaker 2: Africa and into Namibia and it's viable and due diligence allowing.

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Speaker 2: Are you are you open to that?

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Speaker 1: Yes, we are. We are taking a regional approach. One

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Speaker 1: of our strategic objectives is the creation and facilitation of

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Speaker 1: regional value chains so as it results in beneficiation. Yeah,

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Speaker 1: I'll use a simple example. The Sadek region grows a

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Speaker 1: lot of cotton, but we only beneficiate about one point

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Speaker 1: five percent of that and the rest is exported raw exactly.

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Speaker 1: So the objective that we're working on was the African

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Speaker 1: Continental Free Trade Commission, is to see how we grow

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Speaker 1: the local beneficiation of cotton into fabrics and garments for

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Speaker 1: either consumption locally or for potential export markets. That is

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Speaker 1: a typical example of why we now are taking a

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Speaker 1: keen interest in looking at supporting investments outside of South

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Speaker 1: Africa in the region.

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Speaker 2: I want to ask you about your impressions of the

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Speaker 2: conference thus far, but prior to that, it would be

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Speaker 2: a mess of me not to ask about businesses that

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Speaker 2: are concentrated in the township's rural areas, perry even entities

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Speaker 2: where they feel marginalized, not geographically only, but economy. I

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Speaker 2: could be wanting to set up perhaps a small manufacturing

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Speaker 2: entity in Tembisa in Bautu Township, in Bloemfontein, in Guaza

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Speaker 2: Cale in is London, or perhaps right here in Deep

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Speaker 2: Groof in Soweto, where I could be needing about ten

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Speaker 2: million rants and I wanted specifically in the townships. Perhaps

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Speaker 2: it would be a tire manufacturing entity because there's so

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Speaker 2: many taxis and I see an opportunity there those. I

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Speaker 2: just want us to be practical because at times I

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Speaker 2: think we're speaking above pragmatic issues. Are those the kind

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Speaker 2: of things that you would be keen to look into.

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Speaker 2: I'm not saying invest in that, but would those fit

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Speaker 2: their criteria?

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Speaker 1: They would? And I think we, as I see, need

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Speaker 1: to acknowledge that we have not been great at investing

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Speaker 1: in small business.

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Speaker 2: Yeah.

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Speaker 1: I think we have been over the last seventy years

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Speaker 1: fairly committed in investing in bigger businesses.

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Speaker 2: Yeah.

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Speaker 1: So our systems and processes are set up for bigger

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Speaker 1: businesses and we've acknowledged that, and one of the things

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Speaker 1: we are now doing in fact as we speak, is

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Speaker 1: really looking at how we can better support small and

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Speaker 1: medium enterprises because they cannot go through the rigor of

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Speaker 1: process that we expect. So, yes, we are looking to

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Speaker 1: do more, be more active in the space that you've

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Speaker 1: just highlighted, now acknowledging that we have not been successful

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Speaker 1: in really advancing money and it is really a process

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Speaker 1: and expectation thing from an IDC perspective, where we were

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Speaker 1: almost using a one size fits all approach and it doesn't.

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Speaker 1: So we've just conducted a study by a third party

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Speaker 1: who told us in no uncertain terms that your process

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Speaker 1: is not get to funding small businesses.

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Speaker 2: We need you to do that. And I'm not going

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Speaker 2: to press you on the ten around time because I'm

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Speaker 2: sure it also depends on other facets of your leadership

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Speaker 2: up there, the board, the executives and everything else. But

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Speaker 2: I think it's very important to do that and support

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Speaker 2: township based businesses because the economy is there. I mean,

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Speaker 2: that's where the economy is. The money is exchanging hands

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Speaker 2: every single day. Lastly, then your impressions about the conference

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Speaker 2: is is it going well? And I'm sure this is

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Speaker 2: not the first that you attended based on the previous experience.

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Speaker 2: How's this one going?

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Speaker 1: No, I think it's an exciting one, especially that we

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Speaker 1: didn't really have one last year, so there's renewed support

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Speaker 1: and Viga upstairs. We've managed to support quite a few

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Speaker 1: operational businesses over the last few years as an outcome

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Speaker 1: of the confidence, and I think this year is going

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Speaker 1: to be exceptional. From just a limited one hour chats

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Speaker 1: I've had, there seems to be some very interesting proposals

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Speaker 1: that are going to be put forward that will really

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Speaker 1: benefit the country. Yeah.

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Speaker 2: Yeah, no, we look forward to speak speaking to you again.

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Speaker 1: Mark.

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Speaker 2: We are neighbors. Uh, you are literally our next door

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Speaker 2: neighbor at the Prime Media. I was there yesterday in

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Speaker 2: your office to pick up my accreditation. But my biggest

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Speaker 2: concern is that let's prioritize it and once you have

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Speaker 2: sorted out your systems, and once you have found a

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Speaker 2: way of speaking to entrepreneurs in the townships and you

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Speaker 2: have eased uh you know, the passage of business, please

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Speaker 2: let us know. We just literally next door, knock on

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Speaker 2: our door. We'll be happy to speak to you about it.

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Speaker 1: Thank you. That will be perfect.

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Speaker 2: Mac Goliath is my guest and he is with I

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Speaker 2: d C and the Mark was speaking specifically on issues

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Speaker 2: that have to do with manufacturing. Feel free to send

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Speaker 2: your questions to one one eighty three oh seven oh

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Speaker 2: two and he's a divisional executive for manufacturing at IDC.

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Speaker 2: It is almost half past ten and on the other

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Speaker 2: end of us we so giving us eyewitness news. We

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Speaker 2: will continue with various other guests from the South Africa

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Speaker 2: Investment Conference. What is it that you want to know?

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Speaker 2: I mean they are looking for two trillion rands. That's

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Speaker 2: what South Africa is looking for from this event. So

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Speaker 2: do share your views a little bit later on. For now,