IDC gave R1.4bn to struggling firms

Johannesburg - The Industrial Development Corporation (IDC) said on Thursday it had approved R1.4bn in loans to distressed companies during last year's recession.

The IDC is a state-owned development finance institution that lends to the private sector at more favourable rates and terms than commercial banks, with the aim of increasing the number of medium-sized enterprises and creating jobs.

The government asked the IDC to support struggling firms as the country experienced its first recession since 1992, especially in the manufacturing sector which was hit hard by the downturn.

"The take-up for the distressed funding was lower than anticipated. Plans are in place to address this with industry workshops and other forums that will be implemented in the current year," CEO Geoffrey Qhena said in a statement.

Total loan approvals for the financial year ended March 2010 fell to R9.4bn compared with R10.8bn the previous year.

"The IDC intensified its lending activities and continued its focus on economic expansion with 65% of new funding approved allocated to start-up companies or expansionary activities," the company said.

"Importantly, in the midst of the crisis, we were still able to focus on intensifying our longer term activities of preserving and growing labour absorptive manufacturing capacity and prioritising the foundation for a competitive greener industrial base," he said.

In a difficult year that saw South Africa enter its first recession in 17 years, the IDC claimed its lending activities created or saved 25 000 jobs.

The group's revenue was down 48% and profit declined by 60% to R2.2bn. 

- Reuters & I-Net Bridge