IDC COVID-19
Support29 October 2020

Mr Hilton Lazarus, Head: Chemicals, Medical andIndustrial Mineral Products

CONTENTS
1. Policies and institutions for COVID-19 of theRSA
2. Projects/programmes IDC is planning toimplement during COVID-19

1.Policies andinstitutions for COVID-19of the RSAContext•

South Africa and World in a crisis due to Covid 19•

Measures to combat are evolving on an ongoing basis•

Measures to also stimulate economy even though the pandemic are ongoing andthrough govt, the following institutes were involved:• The Department of Small Business Development• Small Enterprise Finance Agency• National Empowerment Fund
• The Industrial Development Corporation• DTI Financial Schemes• Solidarity Response Fund
• South African Future Trust (SAFT) (Oppenheimer)• Sukuma Relief Fund – Business Partners• Sector Relief Funding• Unemployment Insurance Fund and Skill Development Fund• Tax System Relief

Policies and Institutions in South Africa
SARS: Revised disaster management tax bill; COVID19 Tax relief including time concessions and defermentof payments for individuals and businesses

SA banks
provide overR45bn in Covid19 financial
relief tobusinesses infinancial distress

R500 billion stimulus package for:tax relief; jobs protection andcreation; business loans

Social Relief ofDistress is paid
to South African
citizens orpermanent
residents

Temporary
Employment
relief via UIF

DFI support ofdistressbusinesses andessential
products

Solidarity Fundfor relief of thepeople2. Projects/programmes IDC isplanning to implement
during the COVID-19

Context of IDC assistance•

Governments and private healthcare preparation for nature andspread were strained•

South African, and in fact Global, shortages of critical items tocombat Covid 19•

Examples of critical items include face masks, sanitisers, testkits, ventilators, etc.

•

Businesses suffered through the lockdown period and needurgent stimulus and distress relief•

IDC is participating in initiatives to play its role to assist

IDC COVID-19 SUPPORT FORESSENTIAL PRODUCTS

IDC vs a Commercial Bank

Problem statement for COVID-19 EssentialProducts•

Governments and businesses around the world scrambling tosecure critical items•

Massively growing demand•

Situation worsened by panic buying•

Shortage of manufacturing capacity•

Existing manufacturing capacity impacted by lockdowns andimpacted employees•

Various countries introduced restrictions on exports•

Products time criticalLocal Manufacture of Essential Items toCombat Covid•

The country is facing a crisis and shortage of critical supplies may have major
implications•

IDC considered a “business unusual” given the crisis•

Local manufacturers have an upsurge in demand and are facing working capitalconstraints•

Raw material was in short supply and international suppliers often require cash
up-front to secure product•

IDC traditionally focuses on medium to long term finance•

There was a need for a rapid and large-scale response•

IDC has introduced a short-term funding initiative to support the current needs•

Over time, this could transition to a medium-term intervention to further build
local capacity where there is expected to be sustained demand

Approach and Funding Criteria•

IDC cross-functional team was established to develop approach•

MCEP and IDC balance sheet funding utilized•

Pricing at P+1% (IDC) and 2.5% (MCEP)•

Specific product list and criteria established•Accelerated assessment process – dedicated email, rapid assessments,agreements, disbursements•

Criteria/approach includes:•Company track record and profitability history•

Accredited supplier•Should not be profiteering•

Imports should not displace local manufacturing•

Short term risk mitigation

IDC FUNDING OF DISTRESSEDBUSINESSESOverview of the FundingCriteria for Funding Businesses inDistress
Businesses might be experiencing problems due
to a variety of reasons:• Loss of sales due to decreasing demand.
• Increasing input costs as suppliers increaseprices to compensate for decreasing salesvolumes.
• Non-payment or late payment from debtors
affected by the crisis.
• Lack of access to credit.
• Existing shareholders unable to inject more
capital into a business.
Business can experience cash-flow problems,declines in profitability, or even a trading loss.
Businesses in distress should be able todemonstrate sustainability – only companies in
distress as a result of the crisis considered.
• The strategic nature of companies (capacity,industry, location, employment) will beconsidered in cases where the firm has notbeen profitable.
The company must have a clear turnaround plan
which contributes to the sustainable recovery of
the business – return to acceptable levels ofsustainability within 18 months.

FUNDINDING INSTRUMENTS:• Structured depending on businessneed and capacity.
• Short or medium/long term facilities.
• Working capital facilities - finance theworking capital requirements (stock,debtors and creditors) as well as
operational expenses of the business.
• Guarantees - to guarantee outsidefacilities.
• Suspensive sale facility or loan facility- finance capital expenditure whichcould improve a company’s viability.
• Equity - could be considered where thecompany is under-capitalised.
• Capital deferments and debt
conversion (existing clients).
• Capital moratoriums and interest
capitalisation.

IDC FUNDING OF SOCIALRELIEF

Social Relief
Funding by
IDC CSIA Social Relief project wasimplemented
thatincluded
supporting vulnerable groups(orphaned & vulnerable children,victims of gender-based violence,elderly, poor households, andrefugees) with necessities, mainly
food. To date we have supported
more than 5000 families with foodparcels across the country. The
total amount approved to date for
Covid-19 related initiatives is R4.9
million.

THANK YOU