ENTR

EPR

ENEU

RSH

IP

REAL RESOURCES.REAL SUPPORT.REAL BUSINESS.

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

PROvIDING FINANCE IS THE CORNERSTONE OF OUR BUSINESS, NOW AND INTO THE FUTUREI am pleased to report that after a thorough review of ECDC’s business in the previous year, the corporation has taken the first steps towards benefitting from its status as a true high-performing development finance institution (DFI) in the review period.

ECDC’s approach is to identify and provide financial and non-financial support to small businesses that show potential for growth. The corporation achieves this through focused provision of business finance to responsible emerging and existing small businesses to promote economic growth.

Testament to this goal is that ECDC has 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.

I-Arhente yoPhuhliso loQoqosho lweMpuma Koloni i-ECDC inikeza ngezibonelelo zemali kumashishini asakhasayo nalawo amileyo ngenjongo yokuphuhlisa uqoqosho. Kulo nyaka umiyo, i-ECDC inikezele ngezigidi ezingama-139 zeerandi kwimali-mboleko.

SItEMbElE MASE, ECDC CEO

...ECDC’s risk appetite, tighter financial controls and lending criteria, backed by a clear credit risk assessment, guide the

corporation in making the RightfinAnCing dECiSiOnS.

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ECDC has a responsibility to ensure that it invests public funds in businesses that are willing to honour their agreements. Impairments, have been reduced from 64% in the previous year to 54% this year. ECDC has a target of ultimately reducing current impairment levels to 15% by 2015.

This improved payment track record means that ECDC is able to reinvest in the growth of other businesses. The investment that ECDC has made in businesses this year has led to a total of 2,007 jobs being created.

Furthermore, it means that as this track record continues, so does ECDC’s continued existence.ECDC remains committed, through its financial and non-financial tools, to supporting emerging and existing businesses that promote economic growth and the socio-economic upliftment of communities within the Eastern Cape province.

In the coming year, the corporation will focus on effective and efficient lending and growing quality loans that are priced according to the risk it is taking.

ECDC has also decided to give more powers to the regions to make funding decisions. This phased approach should limit transport and opportunity costs for entrepreneurs. This is currently being piloted and will be rolled out on completion in the medium term.

This is encouraging on two accounts. First, small, medium and micro enterprises (SMMEs) have improved their payment track record. Second, ECDC is now becoming the first point of call for entrepreneurs with viable business ideas, which has improved their sustainability and hence their ability to service their loans. Unashamedly, ECDC has a higher risk appetite, and helps those entrepreneurs who would be turned away by most financial institutions. Notwithstanding ECDC’s risk appetite, tighter financial controls and lending criteria, backed by a clear credit risk assessment, guide the corporation in making the right financing decisions.

In a province that has some of the country’s richest natural resources and yet the second highest unemployment levels, ECDC’s role in helping business owners become more successful cannot be overstated.

During the year under review, ECDC has moved swiftly to fulfil its aspiration of becoming a meaningful development finance institution despite an economy that was in recession. In order to cement its future and demonstrate its responsibility, ECDC took steps to ensure that it recovers the public funds that it had lent so that it is able to continue to stimulate economic growth and development. The effect has been the collection of R112 million in repayments for loans previously disbursed, and R81 million worth of new loan disbursements to businesses in the review period.

In addition, ECDC ensured that its financial support is backed by solid non-financial programmes that improve the competitiveness of Eastern Cape small businesses. This helps businesses improve their general business management skills so that they can better manage their businesses. This way, ECDC helps Eastern Cape businesses to compete favourably with their national counterparts.

QUALITY BUSINESSES HELP

CREATE JOBS, IMPROvE ECDC’S

SUSTAINABILITY

I-ECDC isekelwe ukunikeza iinkozo ezibalulekileyo kubantu abohlukeneyo, abanye babo ngoosomashishini abasakhasayo nabatyali-mali abakhulu. Ezi nkonzo zijoliswe ekudaleni amathuba engqesho. Kunyaka-mali ogqithileyo kudalwe imisebenzi engaphezu kwamawaka amabini (+2,000).

I-ECDC ikwagqibe ekubeni inike ii-ofisi zayo zengingqi amagunya okuthatha izigqibo ngeze zimali. Nto leyo iza kuthi incede uluntu lwasemaphandleni lukwazi ukufikelela kwiinkonzo zale arhente.

Iinkqubo ze-ECDC ezingezizo ezeze zimali zinceda oosomashishini ngokubanika izakhono zoshishino ukuze baphucule indlela abaqhuba ngayo amashishini abo.

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• 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 through funding support.

• Loans above R1 million granted – 51%• Below R500,000 – 42%• Above R500,000 but below R1 million – 6%

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

in funding was

approvedR139

R83m DISBURSED

330 SMMEs WEREFUNDED

miLLiOn

SMMEs FUNDED

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

Uncedo lweze zimali lwe-ECDC luye lwabonakalisa ukuhambelana kakhulu neenkqubo ezingundoqo zikaRhulumente. Umzekelo woku kuhambelana ibe kukunikezelwa kwemali-mboleko engama-86% kumashishini okwakha akwingingqi i-OR tambo.

ECDC has provided financial support to lunga Sipayile of Holy

Hill bed and breakfast

5% MANUFACTURING

9% RETAIL

13% AGRICULTURE

24% CONSTRUCTION

45% SERvICE

4% TOURISM

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In 2012, ECDC marks 10 years as an institution that has helped finance small businesses within the province.

Its services include a strong finance bias, complemented by aftercare and other business support, including skills training.

ECDC’s finance performance for the year under review saw more than 36% of R81 million in loans paid to entrepreneurs who have projects with a long-term view. There was encouraging strong growth in the construction (24%) and agriculture (13%) sectors while the services sector remains strong.

ECDC’s financial support also showed strong alignment with government priorities. For example, during the year, 86% of construction loans went to businesses operating in the OR Tambo region. This is a result of government’s rapid school infrastructure programme in the eastern part of the province.

However, a large portion of long-term loans went to projects in the economic hubs of East London and Port Elizabeth. This is reflective of the starkly different two economies of the province. The focus on agro-processing should move the former Transkei a step closer towards industrialisation.

MORE ENTREPRENEURS

THINK “LONG TERM”, HELP

DIvERSIFY ECONOMY

Uncedo lweze zimali lwe-ECDC luye lwabonakalisa ukuhambelana kakhulu neenkqubo ezingundoqo zikaRhulumente. Umzekelo woku kuhambelana ibe kukunikezelwa kwemali-mboleko engama-86% kumashishini okwakha akwingingqi i-OR tambo.

Billion rand mixed property development for Lusikisiki

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. It consists of office space, a hotel, a light industrial area and middle-income housing. In the past year, the development has moved to the commercialisation stage, where 800 jobs are expected to be created.

Granite mine continues with its bold moves

ECDC has put up R1.3 million with entrepreneur Monde Tabata to operate a granite mine in Butterworth. ECDC has contributed capital for machinery and staff costs, as well as the feasibility study, business planning and pilot mining. The pilot mining phase has been completed. The company, Bold Moves, has already secured an off-take agreement.

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the Eastern Cape is home to the second largest number of co-operatives including the Masikhulale Women’s Primary

Co-operative in Grahamstown. From left are Xoliswa Mgopi, Dorah budaza, ECDC account manager, Wayne Mahoney

Zanele Kupiso & Nobetswana Patala.

NEW PLATFORMS, OPPORTUNITIES FORSMALL BUSINESSESECDC has ensured that SMMEs benefit from non-financial support initiatives, which have prepared many businesses for long-term growth and financial support. These initiatives have resulted in a steady increase in the turnover of the businesses supported and in their competitiveness.

While support is given to SMMEs in most sectors of the economy, four sectors are prioritised: tourism because of the province’s potential with its unparalleled natural resources, the creative industry with a strong SMME history and links with tourism, information and communication technology, and construction, a sector that continues to benefit from government’s need to improve infrastructure within the province.

One of the most critical challenges for entrepreneurs is having the right skills to manage their businesses in order to achieve long-term sustainability and market access.

During this year, ECDC provided ample platforms for entrepreneurs to access opportunities for growth in these areas.

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 Mitrock. 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.

Leading automotive manufacturer helps give entrepreneurs vooma for their business

ECDC 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.

Incubates’ incredible performance

During the year, 80 businesses benefitted from the business incubation programme. This includes 18 in the ICT sector, and the majority in the creative industry. The companies that have participated in this programme have generated more than R8 million in revenues. This figure only includes ICT incubates and incomes generated by the creative industry through exhibitions and expos.

viva vukani!

For the first time in almost two decades of its existence, the 17th vukani Fashion Awards was brought to the Eastern Cape by ECDC. Twenty local designers showcased their products. The overall winner was a Cala-born designer, Tozama Dyantyi, who 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.

Intsebenziswano kunye namanye amaqumrhu anjengeDFI, njenge-IDC, ibonise i-ECDC kunye nabasebenzi base ECDC ezona ndlela zingcono zokusebenza kunye nenkqubo kazwelonke kumsebenzi wophuhliso lwezemali.

Ngamashishini angamashumi asibhozo kunyaka mali odlulileyo athe axhamla kwinkqubo ejongene nokukhulisa amashishini asakhasayo. Oku kubandakanya amashishini alishumi elinesibhozo akwicandelo le-ICt, kunye nentlaninge yamashishini awemisebenzi yobuchule nobugcisa.

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Noni Mfiki of SalinoCouture is one of the

creative industryentrepreneurs beingsupported by ECDC.

Township leather crafter continues to grow

For the past three years, ECDC has provided valuable business support to Mdantsane El Elyon hand-made leather goods maker, Asekho Twaku. El Elyon produces various leather products, such as bags, sandals, wallets and shoes. ECDC has helped El Elyon with market exposure, supplying the business with exhibition space at the East London Home Expo for the past two years, as well as space at the National Arts Festival. El Elyon sells its bags to East London based outlets, such as Travelgear and Seagers.

Eastern Cape fashion design get national platform

ECDC made it possible for fashion designers from Walter Sisulu University and its alumni to showcase their talent at an exhibition and fashion show held at the Hemingways Mall in East London in 2011. The collaboration 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. Sonwabile Ndamase, creator of the Madiba shirt and vukani Fashion Award chief executive says today’s designers have rediscovered the importance of textures.

Credit to entrepreneurs and WSU course

Through a partnership with Walter Sisulu University (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, Seeds of opportunity: A guide to micro-finance in the Eastern Cape 2009 - 2011 was produced that gives SMMEs information about institutions that provide finance and an overview of micro finance in

the Eastern Cape.

ECITI graduates three ICT entrepreneurs

Established by ECDC, the Eastern Cape Information Technology Initiative (ECITI) has graduated its next tranche of candidates. Three graduates, Afrocentric IP, Zweni ICT and Khula Holdings, have benefited from an incubation programme that assists SMMEs in the ICT sector. In the case of Khula Holdings, it provided well-priced infrastructure, such as reasonable rent and all-day internet connectivity. ECITI also exposed Khula to industry forums, such as the Eastern Cape ICT Summit and the annual Govtech, which allowed the incubatee to clinch deals. As a result, Khula Holdings is the first N Computing sub-distributor in the Eastern Cape. It is also a Mecer agent for the State Information Technology Agency and it has a reseller agreement with the global IT company, Tarsus Technologies.

I-ECDC iyaqhubekeka ukunika oosomashishini amathuba okungena kwiindawo zentengiso. Uncedo lwale arhente luncede oosomashishini ekukukhuliseni amashishini abo ngokuthengisa imveliso yabo kwiindawo ze ntengo nemiboniso eziqhutywa unyaka nonyaka; i-Decorex, ifestivala yenkcubeko eqhutywa eRhini (Grahamstown Arts Festival), i-Design Indaba kwakunye ne-Home Expo yaseMonti.

Inkqubo ye-ECDC yokufukama amashishini i-ECItI inika inxaso kumashishini akhasayo obuchwepheshe bolwazi nonxibelelwano (ICt). le nxaso iquka intlawulo efikelelekayo yerente, i-internet yemini yonke kwakunye nethuba lokufikelela kwiindawo zentengiso.

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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 now fully-commercialised with a factory in East London through a Land Bank R15 million loan. Ndlambe and Peddie are the main suppliers of the material. ECDC has taken a 33.5% equity stake in the company, Ndlambe Natural Investment Products. ECDC invested R1.67 million into the dietary fibre project for research, product development, research and development, and the pilot run. Forty-two jobs have been created at the factory and two off-take agreements have been secured.

London fashion meets Xhosa traditional knitwear

Port Elizabeth-born Laduma Ngxokolo of Shugaz Fashion and Textile Creatives, who specialises in Xhosa traditional-inspired knitwear, was supported by ECDC to participate in the Ubuntu International Fashion Show in London. Laduma is the 2010 winner of the South African national leg of the South African Society of Dyers and Colourists Design Competition, which earned him a trip to London where he was awarded first prize internationally for the competition. Laduma’s garments were recently also chosen as one of the world’s iconic projects at an internationally renowned Swedish design conference.

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 factory to produce 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 following financial year. Currently, 20 jobs have been created at the trial sites. ECDC, with such partners as the National Empowerment Fund and the Industrial Development Corporation, will provide the commercialisation loan of R49 million.

I-ECDC isebenzisana kakhulu necandelo lezo limo apha ephondweni. Iinkqubo zibandakanya phakathi kwazo inkqubo yamapayina ese-bathurst neye cassava eseMthatha.

ECDC, together with other partners, is supporting research at the University of Fort Hare. the aim is to build capacity

and knowledge for farming with new crops such as bamboo, cassava and essential oils.

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REALSUPPORT

Craft programme continues to grow from strength to strength

ECDC continues to support craft enterprises by helping them access markets and improve the quality and designs of their products. During the year, craft enterprises have participated in the Design Indaba, Decorex Cape Town, Decorex Johannesburg, East London Home Expo, Grahamstown National Arts Festival and international trade and consumer exhibitions and expos that include L’artigiano in Italy, Portugal, Germany and India. Further benefits include

building networks and customer bases.

SABS agreement helps small businesses access the market

ECDC has 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 will open an office in East London soon.

Through its products, ECDC finances initiatives that bring about meaningful development impact to the Eastern Cape economy. It facilitates financial viability and sustainability of these initiatives by providing financial resources at highly competitive rates.

The Imvaba Co-operative Fund is a unique finance product aimed at enhancing the competitiveness of primary co-operatives in the manufacturing and services sectors. The fund is accessed through ECDC and has been structured as part loan finance and part developmental seed capital. It targets co-operatives in agribusiness (inclusive of agro-processing and marketing), forestry and timber processing, construction, automotives, metals processing, chemicals production, textiles and clothing, tourism, cultural industries, and business processing outsourcing and offshoring. The fund is only available to co-operatives as entities and not to the persons who are members.

Eligibility for finance

Finance applications that facilitate job creation and/or retention, economic empowerment, value addition to the economy, rural and/or township development and increased export income are the most suited to ECDC’s business finance products. Any project that is a greenfields initiative, where expansion and rehabilitation will be the resultant benefit, is also eligible for application for ECDC finance.

In addition, an applicant can only be considered for loan finance if:• They have a clean credit record, or provide ECDC with written proof of arrangements

made. • They are actively involved in the underlying business enterprise.

I-ECDC iyaqhubekeka ukunika inxaso kubachweli ngokubenzela lula ukufikelela kwiindawo zentengiso nokuphucula umgangatho nenkangeleko yemveliso yabo.

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the Mdantsane Ikhwezi Empowerment Centre, which ECDC has helped to access new markets, has developed a

following for its recycled bead products locally and abroad.

Aftercare service philosophy

ECDC offers an aftercare philosophy that aims to provide efficient client service for the duration of the contract term. This entails monthly account management and quarterly report-back visits to ascertain the health of a business. If the account manager raises concern about the viability of the business and the owner’s ability to sustain repayments on the loan, ECDC will provide business support to assist as far as possible to turn the operation around favourably where such prospects are evident from the aftercare report.

Turnaround on loan applications

As ECDC has a collateral policy and lending approach that differs from commercial banks, turnaround times depend on the availability of the information that ECDC requires to make the appropriate decisions. Approvals on loans may vary, but ECDC makes every effort to wrap up applications within 90 days for long-term loans, which require comprehensive due diligence efforts, and within 20 days for invoice-based and construction loans. This may, however, vary from application to application.

EXPORT OPPORTUNITIES FOR LOCAL MANUFACTURERS

Our trade and export promotion service focuses on the development of exports from Eastern Cape companies. This value is realised through:

• Our years of experience in trade finance that has assisted local enterprises to penetrate global markets

• The trade linkages created between local enterprises and our trade contacts in sub-Saharan Africa and the BRIC region (Brazil, Russia, India and China)

• Our partnerships with the European Union and United States that provide a platform for trade with developed markets.

NEW PRODUCT DEvELOPMENT

Together with Eastern Cape communities and municipalities, we help develop and implement projects that create new opportunities or markets. We are well-disposed to markets that:

• Unlock economic potential in low-income areas• Implement broad-based black economic empowerment through public-private partnerships• Create and save jobs in declining sectors and distressed enterprises.

For more information, contact our offices in East London, King William’s Town, Butterworth, Mthatha, Mount Ayliff and Aliwal North.

ECDC requires that clients display some expertise in the area of the proposed business idea, either on a technical level or business level. However, should the client not have the required skill level to drive the proposal forward, the client may be referred to the Business Support unit to undergo the necessary training courses to improve their skill levels, or be given access to an appropriate mentor within ECDC operations to glean expertise in the designated disciplines.

Iziphumezo zemali-mboleko ziyashiyana kodwa i-ECDC yenza konke okusemandleni ayo ukuzama ukuziqoshelisa ngaphambi kweenyanga ezintathu izicelo zethuba elide (long-term).

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