14 May 2009
South Africa’s Industrial Development Corporation (IDC) has secured a €60-million (about R690.9-million) credit line from the European Investment Bank (EIB) to finance viable projects by small and medium enterprises (SMEs) in the industrial, resources and services sectors.
EIB vice president Plutarchos Sakellaris said the loan was a strong signal of the bank’s commitment to supporting the private sector and encouraging job creation in South Africa.
“Moreover, the bank is confident that by working in partnership with the Industrial Development Corporation we can help to stimulate the South African financial markets by diversifying IDC’s funding base and enhancing the provision of finance to SMEs,” Sakellaris said in a statement this week.
IDC chief executive Geoffrey Qhena said the credit line could not have come at a more opportune time, when the cost of raising funds was extremely high given market volatility and the liquidity crisis, and would improve access to funding SMEs in the country.
“We are particularly pleased that this loan will further enhance our commitment to development finance and addressing market failures,” Qhena said at the signing of the agreement in Johannesburg.
“[The Industrial Development Corporation’s] expertise in project evaluation ensures that the EIB funds are directed towards projects which promote economic growth and job creation, as well as being environmentally and socially sustainable.”
The IDC’s relationship with the EIB dates back to the mid-1990s. The EIB has over the years provided the IDC with four credit lines totalling about €165-million for small business development in South Africa.
In October 2007, the EIB signed an agreement with the South African government, pledging financial support of up to €900-million the country until 2013.
The bank cooperates with the South African authorities, public agencies, private enterprises and the financial sector to focus investment on infrastructure projects of public interest (including municipal infrastructure, power and water supply) and support for the private sector, including small and medium-sized businesses.
In 2008, the EIB supported sustainable economic development in South Africa by investing in three projects to the tune of €202.5-million, almost doubling its financing activity compared with €113-million in 2007.
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