Development financier Eastern Cape Development Corporation (ECDC) on Tuesday reported a stable balance sheet for the 2013/14 financial year, boasting a net asset value of R1-billion at year-end.

Speaking at the financier’s performance results at ECDC headquarters in East London, acting CEO Reggie Naidoo said ECDC had disbursed loans valued at R122.7-million to 265 businesses in the last year. ECDC also approved R102.8-million to 313 enterprises in the same period.

“The higher disbursement figure is a result of disbursements against loans approved in the previous financial year. Of this amount, ECDC collected R152-million in loan repayments, which ensured that its finance support reached a broader base of deserving entrepreneurs.

“These financial instruments facilitated the creation and saving of 1 320 jobs. Further, 85 youth-owned businesses received disbursements of R21-million, while R13-million went to 78 women-owned enterprises. ECDC intends to grow its development finance contribution to previously marginalised groups, particularly women and people with disabilities,” Naidoo pointed out.

He noted that the balance sheet reflected a healthy cash balance with the net asset value being mainly driven by the high value of investment property. The operating loss for the period under review improved, from R57-million in the previous year, to R34.1-million this year.

In addition, ECDC continued to advocate for increased domestic and foreign direct investment into the Eastern Cape economy. During the review period, ECDC facilitated investments into the province valued at R487-million and facilitated exports valued at R1.53-billion.

“In essence, the corporation’s sustainability will be realised by a balance sheet that reflects a healthy loan book for an improved development impact. As such, ECDC continues to advocate for improved shareholder capitalisation, which should lead to a loan book significant enough to effectively respond to the needs of its customers, while accruing the desired socioeconomic dividend for the province.

“However, for the first time since 2007, ECDC has received a qualified audit opinion. This is attributable to the Auditor-General’s finding that there were irregularities in payments on invoices related to the former State president’s funeral in December 2013. ECDC also draws emphasis to the fact that it has not been qualified on the basis of its operations and core business,” Naidoo explained.

PROPERTY SIDE
The property business remained ECDC’s biggest asset during the year, accounting for R725-million of its balance sheet, while loans accounted for R120-million.

As such, focus has shifted toward putting in place strategies that would improve overall financial performance with the aim of growing revenue, as well as ensuring sufficient revenue streams.

ECDC owns and manages a large residential and commercial property portfolio. Rental revenue of R59.8-million was collected during 2013/14; 8% more than in the previous financial year.

Following the decision to offload nonperforming and nonrevenue-generating properties, a total of 42 standalone residential properties valued at R44.6-million were disposed of.

ASSISTING ENTERPRISES
In the review period, 100 new enterprises were assisted with business planning services, while 80 existing businesses were supported with marketing and branding services. A total of 272 small businesses in priority sectors were assisted with pre- and post-finance support.

In addition, the provincial Department of Economic Development, Environmental Affairs and Tourism (Dedeat) entrusted ECDC to manage a portfolio of special funds. Dedeat is the ECDC’s main shareholder.

These funds include Imvaba Cooperative Fund and the Eastern Cape Jobs Stimulus Fund. While the Imvaba Cooperative Fund supports the establishment of cooperatives as business vehicles driving the rural economy, the Jobs Stimulus Fund supports the creation, saving and retention of jobs in the more formal business sectors, particularly manufacturing, green economy, tourism, manufacturing, petrochemicals, capital goods, information and communications technology and electronics, business process outsourcing and services, as well as agroprocessing.

A total of R10.6-million was approved for 24 new cooperatives. In the same period, R11.9-million was disbursed to these 24 cooperatives as well as others approved for funding in the previous year. In 2013/14, the Imvaba Cooperative Fund spent a further R5.6-million on nonfinancial support for approved cooperatives.

Similarly, the Eastern Cape Jobs Stimulus Fund disbursed R26.7-million to 50 businesses, which in turn supported the creation, saving and/or retention of 2 670 jobs in the period under review.

Naidoo said the ECDC had increased support for projects that have the potential to unlock tangible economic benefits. Through its risk capital facility, ECDC invested R8.7-million to support the preparation of projects for further development and research into market-ready products. It also attracted R104-million in third-party funding.