Tshokolo Nchocho on how the IDC is responding to COVID-19 crisis

The Industrial Development Corporation (IDC) and its financing subsidiaries faced a challenging year, recording a loss of R3 billion for the year ended March, a stark contrast to the profit of R226 million in the previous financial year. The major setback came from the drop in the value of IDC's listed share portfolio, with Sasol alone accounting for a substantial loss of R22 billion due to challenges faced by the Lake Charles Project and the oil price war. Tshokolo Nchocho, CEO of the Industrial Development Corporation, elaborated on the impact of these events in a recent interview with CNBC Africa. Nchocho highlighted that investments in the tourism and steel sectors were also significantly affected, with supply chains being disrupted and mining companies operating at reduced capacity during the lockdown. The IDC's balance sheet, heavily reliant on mining and resources stocks, had to endure significant downward revisions on investments across various sectors. The implementation of the IFRS 9 standard led to increased provisioning levels, reflecting the unpredictable nature of the economic landscape amid the pandemic. Despite a marginal increase in revenue and operating income, impairment losses and fair value adjustments weighed down the financial performance of the IDC. Nchocho acknowledged the need for active management and diversification of IDC's portfolio, particularly in the face of heightened market volatility. The CEO stated that ongoing evaluation of strategies and events at Sasol will inform future decisions regarding the IDC's investments in the listed space. With the energy and tourism sectors among the hardest hit globally, Nchocho emphasized the importance of staying abreast of developments and maintaining a flexible approach. In response to challenges faced by non-listed entities, particularly small, medium, and micro enterprises (SMMEs), Nchocho outlined the IDC's efforts to provide support through deferred obligations and strategic capital allocation. Despite an expected revenue shortfall of 25-30% in the current financial year, the IDC remains resilient and prepared to deploy capital to facilitate economic recovery. Nchocho reiterated the IDC's commitment to funding growth-oriented projects, focusing on industrialization, energy investments, infrastructure development, and agriculture in collaboration with the Land Bank. As South Africa navigates its economic recovery, the IDC plans to allocate funds strategically, with a keen eye on sectors with growth potential and long-term economic impact. Looking ahead, Nchocho projected a capital deployment of around 12-15 billion rand for the 2021 financial year, sourced from internal revenue, asset disposals, and borrowing programs. The IDC aims to play a vital role in revitalizing key sectors and fostering sustainable economic development in the post-pandemic landscape.