South Africa's low investment rate has been widely recognised as both a symptom and cause of relatively poor industrial performance in the past decade. Investment is particularly important as restructuring requires the rapid growth of new activities if potential gains are to be realised, especially with a view to increasing employment and a more diversified industrial base. The IDC played a crucial role in shaping the apartheid economy, and has an equally important role to play in addressing the apartheid industrial legacy and the fundamental transformation of the economy. This transformation includes both broad-based growth and employment generation, and black economic empowerment.
The paper reviews the rationale for development finance for industry in light of recent debates on the importance of investment. It then evaluates the role of the IDC over the past decade with specific reference to the patterns of financing and the changing structure of the South African economy. In addition, the appraisal addresses the role of the IDC in industrial policy formulation and implementation with specific reference to recent developments.