Economic development agency the Eastern Cape Development Corporation (ECDC) on Tuesday reported that it had facilitated the creation of 18 314 jobs and job opportunities through the disbursement of R650-million in loans to more than 2 300 small, medium-sized and microenterprises (SMMEs), over the last five years.

ECDC CE Sitembele Mase said: “It is gratifying that the ECDC has been able to achieve this type of economic development impact on the Eastern Cape even though it does not receive money from government for loan disbursements. It also had no initial shareholder capitalisation. The ECDC uses proceeds from loan collections for further disbursement to other deserving entrepreneurs.”

From December 2009 to December 2013, the development financier collected R725.3-million in loan repayments from assisted SMMEs.

“The ECDC is delighted that our clients are starting to appreciate that loans must be repaid and are more diligent in this regard.  This positive client behaviour has allowed us to collect more, which improves our cash liquidity to increase financial business support,” Mase noted, adding that the ECDC was equally pleased that loan impairments had significantly reduced, thus, turning around loans that were not performing during prior years.

“This has improved ECDC solvency and financial sustainability within the context of a tough business lending environment,” he added.

The ECDC further provided nonfinancial support to 3 750 SMMEs during the same period, comprising business advisory support services, due diligence and feasibility studies, business planning, marketing support, mentorship and coaching, quality management support and intellectual property management, among others.


Mase noted that the ECDC had also supported 176 exporters over the past five years. Combined, it had generated R6.2-billion worth of export value. The organisation had also attracted and facilitated investments into the Eastern Cape in different economic sectors, such as the automotive, agroprocessing and renewable energy, among others, totalling some R2.8-billion.

The financier had spent about R32.8-million to further stimulate new industries in agroprocessing, natural fibre, pharmaceuticals and the green economy through its risk capital facility.

“The long-term aim of this facility is to develop a high-quality pipeline of loans and take equity investments to further diversify the Eastern Cape. The ECDC’s approach is to provide loan funding and take equity in long-term high-risk, high return projects,” Mase said, adding that the ECDC had further leveraged a total of R332.5-million in third-party funding for this purpose.

“Third-party funding is crucial, as it allows the ECDC to share risks with other State-owned entities,” he added.

Similarly, the ECDC reported that it had researched a pipeline of projects worth more than R752-million in new growth industries earmarked to drive the Eastern Cape economy. These industries included bamboo, pineapples, freshwater fish, mohair, natural fibre and honey processing.

Meanwhile, the ECDC had made disbursements worth R53.6-million in the cooperative sector. This included training and occupational health and safety, among many interventions. This was made possible through high-value partnerships with institutions such as Fort Cox Agricultural College and the South African Bureau of Standards.

In the same vein, R39.1-million incentives were advanced to distressed companies to save and protect jobs through the Eastern Cape Jobs Stimulus Fund, launched in 2011.


INDUSTRIAL DEVELOPMENT ZONE

ECDC subsidiary East London industrial development zone will be offloaded following a resolution of shareholders and the board, as its strategic posture will change to that of a special economic zone (SEZ) during the next five years, Mase explained.

He added that during the next year, the ECDC would continue converting its current pipeline of researched projects into real business proposals, with the benefits of this work to be felt in the medium to long term.

The financier would also seek to build its capacity to deliver social infrastructure for improved access to schools, hospitals and other social amenities in areas with a significant backlog. This decision was recently made by the Cabinet to improve living conditions in rural and semirural areas, and R300-million had been allocated to the ECDC to carry this out, as it falls within the broad mandate of the ECDC Act.

The programme would also benefit the Eastern Cape in terms of job creation, skills development for women and the youth, and, in turn, the ECDC would benefit through some form of alternative revenue generation, making it an economically viable entity.  The allocated amount could rise to over R2-billion over the next five years.

“To the ECDC, this is an indication of public confidence in the corporation as a trusted steward for public funds. Since 2008, [the corportation] has turned around its historical adverse audit outcomes, strengthened financial controls and improved its public image. These improvements have now been widely recognised.  The programme will change the lives of people especially in rural communities. It will improve services, create jobs, develop skills, improve the quality of life and that of public assets,” Mase concluded.