Thabang Mokopanele

Trade and Industry Correspondent

THE Eastern Cape Development Corporation (ECDC), which has had qualified audit reports nearly every year since its inception in 2001, has for the second year running been given a clean audit report, but remains far from achieving its mandate of funding viable start-up businesses.

Releasing the corporation’s results yesterday, CE Mxolisi Matshamba said the appointment of qualified financial executives was beginning to pay off after years of mismanagement and corruption.

Due-diligence investigations on businesses seeking funding used to be outsourced, but now the ECDC did these in-house, said Matshamba.

The corporation had inherited practices that made no business sense.

The ECDC, which facilitates Eastern Cape’s infrastructure development and is a funding institution for small and medium-size businesses there, had

Matshamba, who has been CE for only two years, said the main challenge was disposing of the residential market portfolio valued at R226m, and investing the money in funding viable commercial and industrial businesses.

“We have been trying to get rid of our residential portfolio for a long time, but we are held up by complexities of selling these properties. The provincial government also has a moratorium on evicting people from the houses we own, but have promised to address the issue soon,” he said.

The ECDC has a property portfolio worth R481m split between residential, commercial and industrial.

The corporation more than doubled profit to R38m for the 2007-08 financial year from R15m previously. But it had an operating loss of R42m, and hoped to break even in 2010.

It made R7m in micro loans to rural businesses in agroprocessing, business processing outsourcing, tourism and the automotive sector, in line with the provincial government’s strategy. The ECDC also helped 1907 start-up businesses set up shop while the provincial government transferred R151m to it to project manage infrastructure roll-out in the Ugie and Maclear area for the R1,3bn chipboard plant for PG Bison. The infrastructure roll-out included the construction of roads, the upgrading of a power substation and the provision of water and sanitation. The plant is expected to create 3000 jobs excluding temporary employment.

ECDC chairman Wiseman Nkuhlu said a lot still needed to be done to address management issues.

“We have managed to recruit a new chief financial officer and executive manager for development finance and we are making progress. We are addressing reputation issues because quite frankly the ECDC is not seen by entrepreneurs and business people as the number one solution to their problems in the province,” Nkuhlu said.

Source: Business Day