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REAL PARTNERS.REAL STRENGTH.REAL RESULTS.

HEAD OFFICEOcean Terrace ParkMoore Street, Quigney, East LondonPO Box 11197, Southernwood, 5213Tel: +27 (0) 43 704 5600Fax: +27 (0) 43 704 5700

KING WILLIAM’S TOWN75 Alexander RoadPO Box 498, King William’s Town, 5600Tel: +27 (0) 43 604 8800Fax: +27 (0) 43 642 4199

BUTTERWORTH24 High StreetPO Box 117, Butterworth, 4960Tel: +27 (0) 47 401 2700Fax: +27 (0) 47 491 0443

MTHATHA7 Sisson Street,Fort GalePrivate Bag X5028, Mthatha, 5099Tel: +27 (0) 47 501 2200Fax: +27 (0) 47 532 3548

QUEENSTOWN22 Cathcart RoadPrivate Bag X7180, Queenstown, 5320Tel: +27 (0) 45 838 1910Fax: +27 (0) 45 838 2176

PORT ELIZABETH68 Cape Road, Mill ParkPO Box 1331, Port Elizabeth, 6000Tel: +27 (0) 41 373 8260Fax: +27 (0) 41 374 4447

Satellite offices

MOUNT AYLIFFSEDA BuildingNolangeni Street, Mount Ayliff, 4735Tel: +27 (0) 39 254 6501Fax: +27 (0) 39 254 0599

ALIWAL NORTH97 Somerset StreetP O Box 198, Aliwal North, 9750Tel: +27 (0) 51 633 3007

info@ecdc.co.zawww.ecdc.co.za

Copyright ECDC 2012

ECONOMIC DEVELOPMENT COLLABORATIONS GROWThe Eastern Cape Development Corporation (ECDC) Act requires the corporation to drive economic growth and development. It provides ECDC with the two-pronged objective of meeting developmental imperatives while considering economic demands.

The review of the ECDC strategy in 2010 enabled the corporation to approach the review period with renewed vigour to achieve sustainable economic growth and development. The process has brought certainty to the corporation, which is on course to clarify its mandate.

True to its desire to evolve into a high-performing development finance institution (DFI), ECDC has continued to strengthen its core business of providing financial and non-financial support to small businesses.

During the period under review, ECDC approved R139 million in loans, an R18 million increase from the previous year; R83 million was disbursed to small businesses in 2011/12 and R112 million on loans previously disbursed was collected. The disbursement performance, while somewhat off last year’s performance, was achieved with a clear focus on improving the quality of the loan book.

Ukutshintshwa kwesicwangciso se-ECDC ngo-2010 kuye kwabangela ukuba le arhente ivuseleleke ekuqhubeni umsebenzi wayo wokhuliso loqoqosho nophuhliso.

SitEmbElE maSE, ECDC CEO

Increased co-operation levels haveresulted in ECDC SEcuRiNg R79 million inthe review period from third-party funders

to finance development projects.

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ECDC has further revised its performance by maintaining a balance between funds disbursed and the ability of businesses to honour their credit agreements with the DFI.

This approach has paid dividends, with the corporation collecting R112 million from monies lent during the year under review. Impairments on the loan portfolio have also been reduced from 64% in the previous year to 54% this year as a result of tighter controls, tighter lending criteria and robust account management.

The corporation also took a decision, with the approval of the Premier, to move non-core assets, including its property portfolio, out of its balance sheet. However, ECDC remains committed to carrying out this process in a manner that is socially responsible, equitable, cost efficient, legally compliant, fair and transparent. The proceeds of the sales from non-core assets will be used to strengthen the balance sheet and allow ECDC to focus on its core business – to support small

businesses in order to stimulate economic development in the Eastern Cape province.

ECDC is excited to announce that it has strengthened its ties with fellow public entities in discharging its developmental mandate.

Increased co-operation levels have resulted in ECDC securing R79 million in the review period from third-party funders to finance development projects. The leading financier, the Industrial Development Corporation (IDC), has come on board to strengthen ECDC’s skills in its lending processes. ECDC has also been able to implement key strategic projects in the review period with the solid support of its partners.

Through robust partnerships, ECDC has been able to achieve its developmental mandate

by tapping into the resources and expertise of public and private sector organisations.

Partnerships with other DFIs, such as the IDC, have exposed ECDC and its staff to best practice and international trends in the development finance business. This has also led to improvements in account management and has increased the ability of small, medium and micro enterprises to repay loans.

HIGHLIGHTS OF 2011/12

• ECDC developed a business case to set up a province-wide agro-processing industrial initiative.• The Eastern Cape’s Department of Economic Development, Environmental Affairs and

Tourism has ringfenced R39 million in order to stimulate job creation in the province. This fund is being administered by ECDC. The Eastern Cape Jobs Stimulus Fund and vetting the first batch of applications. Of the 102 applications received in the first window, 57 applications were credible. Twenty-four applications, which will create 1,280 new jobs in the manufacturing, business process outsourcing (BPO) and information and communication technology (ICT) sectors, were approved to the tune of R12.8 million.

• ECDC has received R102 million from the Eastern Cape Department of Economic Development, Environmental Affairs and Tourism (DEDEAT) for the Imvaba Co-operatives Fund: R72.6 million was allocated to co-operative loans; R30 million was used for co-operatives’ development. Approvals amounted to R44 million (loans) and R7 million (development).

• ECDC received R36 million from DEDEAT to perform limited processing for disbursement of local and regional economic development funds. Fourteen of the 18 pre-approved projects have been processed to date.

• ECDC has set aside R7 million for scoping 23 identified projects that have the potential to stimulate economic growth.

PARTNERSHIPS DRIvE BETTER

results

le ntsebenziswano iye yaqinisekisa ukufumaneka kwemali engange zigidi ezingamashumi asixhenxe anesithoba (R79 million) kubatyali-mali babucala, ilungiselela iinkqubo zophuhliso.

ECDC’s East london offices at Ocean terrace Park, moore Street, Quigney

intsebenziswano nezinye ii-arhente zophuhliso yenze ukuba i-ECDC nabasebenzi bayo bakwazi ukufumana ulwazi lwendlela eyiyo yokusebenza, indlela amanye amazwe aqhuba ngayo kwicandelo lwenkqubo ezibandakanya imali yophuhliso lwamashishini.

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Investment strides made

• R612.6 million in investments were realised.• 20 investments were attracted.• 2,027 jobs were saved and/or created.• 112 leads were generated through investment promotion

activities.• Four projects were researched and packaged.• Five successful wind farm applications were made in

the first round of the National Energy Regulator of South Africa’s assessments.

• The 1,000 hectare Royalston residential estate and private game reserve in the Nelson Mandela Bay Metropole was rolled out.

• 100% of marine finfish production in South Africa, in particular the dusky kob and yellowtail species, now comes from the Eastern Cape.

• A joint application with AsgiSA Eastern Cape* to the Development Bank of Southern Africa’s (DBSA’s) Jobs Fund resulted in conditional approval of R175 million for forestry and timber development.

• R91 million was approved from the Jobs Fund for grain and horticulture development.

• ((*AsgiSAEasternCapehasbeenamalgamatedintothe

newlyestablishedEasternCapeRuralDevelopmentAgency.)

Trade Promotion grows exports by R1.7 billion

• R1.7 billion in exports.• The value of referrals to Development Finance was

R52 million.• 11 new exporters were supported.• 5 partnerships were established.• The bamboo symposium, which advocates for the

plant’s inclusion in Industrial Policy Action Plan and its development as a crop in South Africa, was initiated and facilitated.

• ECDC led a mission where 10 SMMEs participated in the South African International Trade Exhibition, which provides businesses in Africa with a platform to form trade relations with their counterparts from the region and players from other parts of the world.

• A quarterly trade bulletin is published and distributed to SMMEs throughout the province.

• More than 36% of approved finance was for long-term loans.

• 65% of long-term loans went to East London and 27% to Port Elizabeth.

• 86% of approved construction loans went to the OR Tambo region, which is aligned to government’s infrastructure drive.

• 51% of loans went to the Amathole District and 28% to the OR Tambo District.

• 70% of NEXUS trade (invoice based) loans were disbursed to women and youth.

• 12% of loans went to youth and 20% to women.• 2,007 jobs were created.

• Loans above R1 million granted – 51.2%• Below R500,000 – 42.2%• Above R500,000 but below R1 million – 6.6%

• R79 million secured from third-party funders for development projects

in funding was

approvedR139

R83m DISBURSED

330 SMMEs WEREFUNDED

miLLioN

QUALITY BUSINESSES HELP CREATE JOBS, IMPROVE ECDC’S SUSTAINABILITY

DIVERSIFICATION OF EASTERN CAPE ECONOMY CONTINUES

LOAN PROFILE THIRD-PARTY FUNDERS

LOANS SPREAD

miLLioN TURNOvER OF CREATIvE & ICT INDUSTRY

PARTNERSHIPS WITH OTHER AGENCIES THAT SUPPORTSMME DEvELOPMENT

BUSINESSES SUPPORTEDIN PRIORITY SECTORS

293BUSINESSREGISTRATIONS

5,541

R8.5

SMME TRAINING & CAPACITY BUILDING SESSIONS

1,183

7,017NON-FINANCIALSUPPORT

5% MANUFACTURING

9% RETAIL

13% AGRICULTURE

24% CONSTRUCTION

45% SERvICE

imali engange zigidi ezingamashumi asixhenxe anesithoba (R79 million) iye yafumaneka kubatyali-mali babucala, ilungiselela iinkqubo zophuhliso.

4% TOURISM

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1,280 new jobs for manufacturing, BPO and ICT sectors

ECDC is managing the Eastern Cape Jobs Stimulus Fund on behalf of DEDEAT. The fund aims to drive job creation by incentivising businesses across targeted sectors to create new jobs. Of the 102 applications received in the first window, 57 applications were credible and 24 were completed. Twenty-four applications, which will create 1,280 new jobs in the manufacturing, BPO and ICT sectors, were approved to the tune of R12.8 million.

R130 million to stimulate agro-processing

As tasked by DEDEAT, ECDC developed a business case for setting up a province-wide agro-processing industrial initiative. The business case helped the corporation reflect on the most appropriate structural and institutional arrangements. ECDC also assisted AsgiSA Eastern Cape* with its application to the DBSA to access the Jobs Fund. A conditional approval of R100 million has been granted, and further conditional commitments from the private sector amount to R30 million.* asgiSa Eastern Cape has been amalgamated into the newly established Eastern Cape Rural Development agency.

Co-operatives to get R102 million

Since the launch of the fund, ECDC has received R102 million from DEDEAT: R72.6 million was allocated to co-operative loans; R30 million was used for co-operatives’ development. Approvals amounted to R44 million (loans) and R7 million (development).

PArtNersHIPs DRIvE BETTER

RESULTS

isivumelwano, sezigidi ezilikhulu zeerandi (R100 million), esinemiqathango siye safumaneka kwibhanki yoPhuhliso yomzantsi afrika (DbSa) kwakunye nezigidi ezingama shumi amathathu eerandi eyongezelelweyo esuka kumashishini abucala.

14 LRAD projects pre-approved

ECDC on behalf of DEDEAT, has managed Land Redistribution for Agricultural Development funds and disbursed these to selected projects. During the last quarter of the review period, ECDC received R36 million from DEDEAT and conducted the necessary evaluations, as a precursor to disbursement. A service-level agreement signed with the department is being reviewed by the Head of Department. About 14 of the 18 pre-approved projects have been processed to date.

First phase of provincial investment promotion strategy completed

During the review period, the department requested ECDC to review the investment promotion strategy to bring it in line with the Provincial Growth and Development Plan. As reported, the first phase of the review was completed at the end of the third quarter at a cost of R500,000. The next step is operationalising and resourcing the outcomes of the review.

isigaba sokuqala sesicwangciso sephondo sokukhuthaza utyalo-mali sigqityiwe. Esilandelayo kukuqhutywa nokujongwa kweziphumela zesi sicwangciso.

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ECDC has helped to diversify the economy through its loan portfolio; 13% of all loans went to agriculture.

23 communities, 23 new business opportunities

During the year, ECDC set aside R7 million for the scoping of 23 identified projects that have the potential to stimulate the economic growth of low-income areas. The implementation of these projects would create a number of jobs as well as show the projects’ long-term viability. ECDC also secured R79 million from third-party funders for initiatives that unlock economic potential, leading to the establishment and expansion of viable businesses, the creation and the saving of jobs, and sustainable economic growth in the province.

Pineapple project goes commercial

ECDC is helping revitalise the Eastern Cape pineapple industry through the establishment of the Eastern Cape fibre hub. The hub includes the dietary fibre extraction project. The project is in the process of being commercialised at Summerpride’s East London factory. Ndlambe and Peddie are the main suppliers of the pineapples that provide the ingredients for the production of dietary fibre. ECDC has taken a 33.5% equity stake in Ndlambe Natural Industrial Products. ECDC invested R1.67 million in the project for product development, research and business plan development, as well as for running the pilot. Two off-take agreements have been secured.

Starch pilot moves into operational phase

ECDC project managed and provided top-up funding for a trial run of a cassava-growing project with the aim of setting up a production of industrial starch in one of the ECDC factory buildings in Mthatha. The project has two trial sites of five hectares each in the OR Tambo district. The trials have been successful and products are already being produced and tested in the market. Commercialisation of the project is expected in the next financial year. Currently, 20 jobs have been created at the trial sites. ECDC, with partners as the National Empowerment Fund and the IDC, will provide the commercialisation loan of R49 million.

Let’s get growing bamboo, berries and cassava

ECDC and the IDC have partnered to offer R160,000 in bursaries to three honours students at the University of Fort Hare to specialise in research for bamboo, berries and cassava. Fort Cox College will provide technical support to the students. This was after ECDC realised that it was venturing into commercial crops that are not known to most farmers. The intention is to broaden the programme to the masters and doctorate levels. The students will be attached to existing projects that will assist with practical experience.

Kulo nyaka umiyo, i-ECDC iye yabeka bucala izigidi ezi sixhenxe zeerandi ukulungiselela iinkqubo ezingama-23 eziye zabonakalisa umdlanda wokuphuhlisa uqoqosho kwimimandla ehluphekayo.

MOREDelIVerY

THROUGHPARTNER

COOPERATION

ECDC’s berry project in molteno

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Credit to entrepreneurs and WSU courseThrough a partnership with WSU, ECDC has helped train entrepreneurs in accredited modules, such as basics of small business finance, measurement, budgeting, planning and controlling business finance. The training modules were developed after assessing the needs of SMMEs, in particular those financed by ECDC. As a result of the partnership programme, a publication, Seedsofopportunity:Aguidetomicro-financeintheEasternCape2009-2011. was produced that gives SMMEs information about institutions that provide finance and an overview of micro finance in the Eastern Cape.

Leading automotive manufacturer helps give entrepreneurs vooma for their businessECDC has collaborated with Daimler Fleet Management on a business plan competition that resulted in 90 entrepreneurs receiving business skills training. This initiative aimed to promote entrepreneurship and encourage innovation.

Eastern Cape fashion design get national platformECDC made it possible for fashion designers from Walter Sisulu University (WSU) and its alumni to showcase their talent at an exhibition and the vukani fashion show held at the Hemingways Mall in East London in 2011. The collaboration also included the South African Fashion Design Agency, dadfund, Xstrata, the Department of Trade and Industry, Curves, Bernina and Hemingways. This initiative served to enhance entrepreneurial skills of both established and upcoming designers. The Cala-born winner, Tozama Dyantyi, took the top prize for her “fearless and controversial” designs in depicting South Africa’s socio-political and colonial history. As part of her prize, Tozama won a trip to Paris, the fashion capital of world. Sonwabile Ndamase, creator of the Madiba shirt and vukani Fashion Award chief executive says today’s designers have rediscovered the importance of textures.

Partnership with business chambers

During the year, ECDC partnered with chambers of business, including the National African Federated Chamber of Commerce (NAFCOC) and the Foundation for African Business and Consumer Services. This contributed to ECDC exceeding targets in such areas as business skills training and mentorship. The programme with NAFCOC focused mainly on the establishment of local business service centres within its offices throughout the districts. ECDC also partnered with the Eastern Cape Liquor Board, which provided access to enterprises within the industry to receive training on various aspects of business management.

Lusikisiki property investment bonanza

ECDC has pumped R1 million into financing a pre-feasibility study, environmental impact assessment and legal requirements for a seven hectare R2.4 billion mixed property development in Lusikisiki. DEDEAT is providing funding for the feasibility study. It consists of office space, a hotel, a light industrial area and middle-income housing. At commercialisation stage, the development is expected to create an estimated 800 jobs.

Confectionary giant remains sweet on hazelnut project

ECDC is partnering with the global confectionary giant, Ferrero Rocher, to build a processing factory in the Eastern Cape for the European market. ECDC has contributed R1 million to set up a hazelnut pilot site in Tarkastad. The 30 hectare pilot site is the largest in Africa. Based on the results of this and other pilots, it will be decided which area is ideal for the commercialisation of 10,000ha of hazelnut and a processing factory. Twenty jobs have been created in the pilot phase.

Kwa kulo nyaka, i-ECDC iye yaziqabanisa namacandelo oshishino afana ne-NaFCOC kwakunye ne Foundation for african business and Consumer Services, nto leyo iye yanegalelo ekonyuseni nasekuphuculeni ingeniso ye-ECDC kwiinkqubo ezenzelwe ukuphuhlisa amakhono nezifundo zezoshishino.

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Noni mfiki of Salino Coutureis one of the creative industry entrepreneurs being supportedby ECDC.

Partnership with IDC

ECDC has partnered with the IDC to train its staff in vetting loans. This partnership has already borne fruits for ECDC’s account management. This has resulted in ECDC’s balance sheet stabilising as long-term loans form a sizeable portion of the loan portfolio. The IDC also co-funds projects with ECDC.

Bamboo crop begins to put down roots

ECDC initiated and facilitated the bamboo symposium, which was a “launch pad” for the province’s bamboo project. The symposium attracted local and international delegates. It was addressed by international experts in the field, as well as the South African Consul General in Hong Kong and the Eastern Cape MEC of Economic Development, Environmental Affairs and Tourism. This resulted in three bamboo growing pilot sites (Uitenhage, Ndakana and Centane) and two value-addition projects (Chintsa and Ndakana) being established. It has received significant interest from parties in other parts of South Africa. ECDC is also coordinating an event for the South Africa leg of World Bamboo Day on 18 September 2012. Further, ECDC is assisting in establishing South Africa’s national bamboo body.

SABS agreement helps small businesses access the market

In 2011, ECDC signed an agreement with the South African Bureau of Standards (SABS) to help small business sustainability by ensuring that their businesses are “market-ready”. In order to assist with certification and training in quality management, the SABS is to open an office in East London.

Ndakana is one of five bamboo projects which is helping to pilot bamboo growing and value addition initiatives in the province.

ECDC financed the mthatha Gym’s R4 million facelift. Owners Somthunzi Gazi and Nomonde Gazi aim to breed Olympic pedigree swimmers

among local youth.

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