Of the three economic stimulus packages announced by President Jacob Zuma in Parliament on Thursday night, the most is known about the R10bn that the IDC has set aside. This money will be used mainly to make loans at very low interest rates available for labour-intensive projects, especially in green industries and advanced manufacturing projects.
It will be used for renewable energy resources, in particular solar and wind power, said IDC chief financial officer Gert Gouws.
Agricultural processing projects will also be considered for cheap loans. The loans will be financed from dividends from the IDC’s equity stakes, which will clearly be high over the next couple of years.
The equity portfolio contains only three blue-chip resource companies – Kumba Iron Ore [JSE:KIO],Sasol [JSE:SOL] and BHP Billiton [JSE:BIL] – and it is already worth more than R40bn. Kumba, for example, last week declared a closing dividend of R21, which brings the final dividend for the year to R34.50 per share – more than double that of last year.
The degree of labour intensity of each project concerned would be the absolute benchmark on which the interest rate for each loan will be determined, said Gouws.
Renewable energy projects, he said, were not in themselves exceptionally labour-intensive, but the supply channels – such as the manufacture of parts and the research to conduct an environmental impact study over one or two years – were certainly labour-intensive.
These types of study are, for instance, done to measure solar intensity and wind patterns.
Gouws said that the intention was to obtain overseas partners for green industries to map out the development of a local industry.
On Friday Cosatu welcomed the fact that Zuma had not introduced loan subsidies for young people.
It would be a subsidy for employers alone, by means of which older workers could be replaced with younger ones – which would aggravate the problem of a dual labour market.
The union trusted that Gordhan would not repeat the proposal in his budget, said Cosatu secretary general Zwelinzima Vavi.
Sake24 has however established that a youth subsidy has not been taken off the table, but that Cosatu will be consulted before Gordhan presents his budget later this month.