Patel: No timeframe yet for IDC/NEF marriage

Cape Town – There is no timeline yet for the proposed amalgamation of the Industrial Development Corporation (IDC) and the National Empowerment Fund (NEF) – both of which have the responsibility of promoting black economic empowerment, said Economic Development Minister Ebrahim Patel.
 
Responding to a parliamentary question by the Democratic Alliance’s Michael Cardo, Patel said the “consolidation” was agreed upon in principle between Minister of Trade and Industry (Rob Davies) and himself, as well as the IDC and NEF. 

"[But] the timeframe for (the) conclusion thereof is not yet available," Patel said. 

He maintained it is government’s goal to consolidate the number of public entities to avoid duplication of mandates and reduce overhead costs.

As the NEF has funding challenges for new loan approvals, the goal of agency consolidation will enable the fund to benefit from the IDC balance sheet and experience. 

READ: New IDC deal continues Zuma's radical transformation vision

City Press reported in February this year that the NEF and IDC could amalgamate but that the essentials still needed to be ironed out.

According to City Press, the NEF projects it will have close to R208m in cash by the end of March, compared with R1.4bn in 2016. 

It expected to receive repayments of R460m in the previous financial year, but is budgeting to spend R1.24bn.

The NEF will not be the first state-owned funding entity to get absorbed into the IDC. The Small Enterprise Finance Agency became an IDC subsidiary in 2012.

IDC's dwindling profits 

The IDC controversially last year restructured a loan with the Gupta-owned Oakbay, charging the company a reduced interest rate of prime plus 2%. The deal raised suspicions that the transaction was due to political considerations, as the Gupta family has strong connections with President Jacob Zuma. 

The IDC, however, insisted that the restructured deal was done because it made commercial sense. 

The corporation told Parliament at the time of presenting its annual report in October 2016 that it had not “lost any money as a result of the loan restructuring”. 

READ: IDC didn't lose any money with Oakbay loan - CEO 

The IDC’s profits for the 2015/16 financial year fell by 87% - from R1.65bn in the previous year to R223m. 

The loss was attributed to the IDC’s significant interest in two subsidiaries – steel producer Scaw Metals, in which it has a 74% stake, and Foskor, a phosphates and phosphoric acid producer, which is 59% owned. 

The two companies made a combined loss in excess of R1.6bn in the 2015/16 financial year.