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IDC cancels R5bn distress funding

Oct 26 2010 10:49 Sikonathi Mantshantsha

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Johannesburg – Half of the R10.7bn total funding the Industrial Development Corporation (IDC) committed towards assisting companies during last year's recession was cancelled without being disbursed to the applicants.

The IDC's annual report to March 2010 shows that "undrawn commitments" of R5.1bn of the previous year's funding approvals was cancelled during the financial year.

The figure was a 76% increase from the R2.9bn of cancellations in the year ended March 2009.

Coming off the IDC's "record high approvals of R10.7bn", the R5.1bn would have gone to 40 of the 253 companies whose funding applications were approved.

That amounts to an average R128m for each application, compared to an average R93m in the prior year's failures.

That means only R5.6bn of the R10.7bn that was approved reached its intended beneficiaries and played a role in the saving of or creation of 35 000 jobs as claimed by the IDC during the financial year.

The annual report is silent on what caused the companies not to claim their funds and on Tuesday morning the IDC was still formulating a response to Fin24's questions.

Considering that the corporation had budgeted an additional R6.1bn for companies distressed by the economic slowdown during 2007 and 2008, it would not be unreasonable to assume that not many of those companies were still in existence by the time the money became available.

SA lost close to 1 million jobs last year during the recession.

In January 2010, a businessman who accused the IDC of sending him "back and forth for far too long" before deciding on his funding application, lost his cool and destroyed property at the corporation's headquarters in Sandton.

He was arrested on vandalism charges.

In July the corporation reported that it had approved R1.4bn in funding to distressed companies last year.

- Fin24
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