THE government’s bid to use the Industrial Development Corporation (IDC) to boost the economy and jobs by supplying cheap finance to the private sector has gotten off to a slow start, with only 15% of the allocated funds taken up so far.
In February last year, President Jacob Zuma announced in his state of the nation speech that the IDC would make R10bn in “concessional financing” — 3% below the prime interest rate — available to companies as part of an effort to boost jobs. As at the end of December, only R1,5bn of this had been loaned.
However, IDC CE Geoffrey Qhena said that, in the context of global economic uncertainty following the 2008 recession, the scheme was “on track” and there had been “a fairly good take-up”.
“It has been a bit tricky coming out of the recession. So, as much as this is a measure that should help companies that might want to export, for example, (they) might not be ready to do so. People are not sure where the economy is going, not just in SA but globally,” Mr Qhena said.
Conditions for loans under what is known as the Gro-E Scheme, include that the enterprise must be in one of the priority sectors the IDC supports and create at least one job for every R500000 invested.