IDC cancels R5bn distress funding
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.
I wouldn't be surprised if they simply took too long. I mean, most company failures happened in 2008 and early 2009, while the funding was only approved much later. By that time, the companies had already closed and the people involved found new jobs or gave up looking for new jobs.
- If the truth be known,the IDC probably realised they nad no funds for their year end bonuses and Christmas party.
I am not surprised. IDC kept on sending my company back and forth as well for 2 years without ever declining our application. They kept on making promises and ended up asking us to withdraw our funding so that they can do "research", that was 4 months ago and we are still waiting on the outcome of the "research"!
They must have taken note when I mentioned about all those living it up in luxury off IDC funds and have no business running.
Well I am not suprised you are the only person who commented on this article coz it seems you take too long to think!!! IDC is one of the best run parastatals out there and its palying its part in the economic development of this country! So if I were you I will keep mum and be assumed a fool than open my mouth and erase all doubt!!!
Another useless government department! This money should have been dispersed as it would have had a beneficial effect on the overall economy. What's the piont of having the money to spend and not using it? Guess it would have been spent if there was a tender........
-@ Johny - And your point being ?
The IDC are useless, worse than banks if one can believe it ! Close them down. They were putting bucks up for ANOTHER SMELTER at Coega after the electricity crisis. They funded all the others. Close them down
IDC does not perform at all. the applications are rushed so that there are approvals when it is known close to bonus time! Disbursement rate is very slow - for bonuses approvals serve the purpose! I hear they know the conditions will not be met.
Bok Van Blerk
....''cancelled distress funding ...without explaining why''... Well, well, well thats what happens when you use all the money for shonky BEE deals for your mates and the politicla elite .... theres nothing left for real needy businesses. Just like politicians buying Mercs and BMW'S , useless Grippen fighter planes, etc , there's nothing left for building Hospitals , and houses for the sick and needy