This development finance agency is among the largest property portfolio holders in the province, with a mandate to stimulate the local economy
Today the Ithala Development Finance Corporation, as the KwaZulu-Natal development finance agency is known, has more than 1 million m² of industrial and commercial property space under management, making it among the largest property portfolio holders in the province.
Focusing on the development and facilities management of industrial, commercial and small business infrastructure projects, Ithala’s property portfolio includes industrial estate, retail and commercial premises and light industry factories.
Ithala acting group chief executive Themba Mathe says it is a leading agent for stimulating economic development in the province. The corporation has a firm mandate for promoting provincial development, with a primary focus to increase the participation of black South Africans in every sector of the economy. Underpinning that philosophy is the positive impact that focus will have on job creation, skills development and training.
The roots of this provincial parastatal date to 1959 as an institution known as the Bantu Investment Corporation, established as an entity responsible for developing all South Africa’s black areas.
With the head office in Pretoria, the corporation established regional branches and later the regional development corporations for the various homelands. Ownership changes along with name changes saw an entity by the dawn of democracy called the KwaZulu Finance and Investment Corporation (KFC).
By 1994 the KFC had embarked on a transformation process aimed at more effectively satisfying the changing economic development needs within the province. Legislative changes promulgated the KwaZuluNatal Ithala Development Finance Corporation Act, and Ithala in its current name and structure was born.
In October this year, Ithala announced a multimillion-rand upgrade programme to its northern region retail centres, specifically in Nongoma, Ulundi and Eshowe. Mathe says the investment aims to revitalise township and rural economies with the corporation recognising the pivotal role infrastructural development plays in economic growth and development.
“Thousands of small, medium and microenterprise (SMME) businesses bear the brunt of economic uncertainty following reduced growth in household expenditure, rising unemployment, a decline in fixed investment activities and the continued contraction in government consumption. Addressing these challenges involves recapitalising and growing the property portfolio to stimulate economic growth,” he says.
The refurbishment will collectively enable around 125 local residents to earn a living by operating a small and medium-scale outlet from an established shopping centre.
However, in accommodating and embracing South Africa’s informal trading segment, the refurbishment incorporates building shelters for informal traders around the shopping centres.
Mathe says the government has set the organisation an ambitious target for increasing its expenditure into capital infrastructure from the current 16.5% of provincial gross domestic product to 25% by 2020.
“KwaZulu-Natal forms a critical part of the National Infrastructure Plan aimed at employment intensive investments in the province. We approach property developments and refurbishments in consultation with the relevant stakeholders and with full consideration for the impact these efforts will have on the broader community,” he says.
Louwrens Fourie, a principal agent overseeing the project across the three northern KwaZulu-Natal towns, says while large shopping mall developments have been detrimental to small business owners in the townships and rural areas, these developments ensure a tenant mix incorporating SMMEs.
The South African Council of Shopping Centres indicates that around 1.8 million m² of retail space has been constructed in the township and rural areas nationally since 2000, from only 405 000m² in the 1990s.
This pushes the combined space in this market to more than 2.6 million m². Mathe says since inception, Ithala has used its property assets to catalyse development in rural and township environments and other companies have subsequently followed suit.
The essence to the investment is that small-scale businesses are catalysts for job creation and the higher the investment in these businesses, the larger the multiplier effect will be in terms of jobs created.
Statistics South Africa reports the country is experiencing “unprecedented growth in urbanisation”, with 63% of the population now living in cities and urban spaces. By 2030 this figure is expected to rise to 68%, which Mathe says warrants up to 2 million m² of additional retail floor space in the next decade.
“The delay in infrastructure projects as a result of a decline in capital outlays impresses on the crucial role of development finance institutions to counteract this trend, as Ithala is doing with these initiatives,” Mathe says.