Information and Communications Industry is a key sector within the global market.
We play a crucial role in growing the economy and creating jobs.
With this in mind, the IDC is investing R10-billion over the next five years through its Gro-E Scheme.
Under the scheme we offer financial support to start-up businesses, including funding for buildings, equipment and working capital.
We also fund companies wanting to expand. The proviso here is that they must show an ability to create jobs.
Businesses should also operate in sectors supported by the IDC. These include:
- green industries, which includes renewable energy, energy efficiency, pollution mitigation, waste management and recycling, and biofuels;
- agricultural value chain, including agro-processing;
- manufacturing, focusing on advanced manufacturing; automotive, components, medium and heavy commercial vehicles manufacturing; clothing textiles, footwear and leather; forestry, paper and pulp, and furniture; metals fabrication, capital and transport equipment; pharmaceuticals; plastics and chemicals;
- mining value chain, including downstream mineral beneficiation, mining and mining technologies;
- tourism and high-level services, which includes business process services and tourism ;
- media and motion pictures, which has to do with media pictures production, the media value chain of broadcasting (radio and television), media expansion including new media, music value chain, and film production and animation; and
- the knowledge economy, to do with health care, information and communications technology and biotechnology.
Criteria set out for financial assistance includes:
- Start-up businesses, including funding for buildings, machinery and working capital;
- Existing businesses for expansionary purposes;
- Businesses that demonstrate economic merit and have prospects of acceptable profitability to be able to service their obligation;
- For the duration of the funding period, businesses whose maximum cost per job does not exceed R500 000 relative to the total funding required;
- Broad-based Black Economic Empowerment certification from an accredited verification agency, where applicable; and
- Businesses operating or expanding in South Africa.
Our scheme works by funding businesses at prime less 3% for loans and the Real After Tax Internal Rate of Return (RATIRR) of 5% for equity financing. A minimum of R1-million with a maximum of R1-billion per project will be allowed.
The funding is available over five years or until the scheme is exhausted.
The first draw must be within a year of approval for funding (if not, pricing reverts to normal IDC pricing). The reduced loan pricing is available for five years, after which normal IDC pricing applies, and finance required in excess of the scheme’s limit can be accessed through normal IDC funding.
Terms and conditions
The funding period is structured to meet the cash flow needs of the business. Appropriate capital and interest payment holidays will be applied, depending on the financial needs of the business. There is no prescribed minimum for owner contribution. This will be determined by the financial capacity of the entrepreneur and the cash flow profile of the business.
We will also assist businesses with capacity building, where needed. Businesses are encouraged to consider this support, which is partially grant funding.