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Some of the new high-tech ventures the Industrial Development Corporation (IDC) is engaged in include a new machine that more accurately diagnoses breast cancer and a company that cleans raw natural gas more cheaply.
Lizeka Matshekga is the executive responsible for the new industries strategic business unit at the IDC, as well as industrial infrastructure, agroprocessing and agriculture.
She is now using the skills she honed by working on South Africa’s world-renowned renewable energy independent power producer programme – which is part of the IDC’s industrial infrastructure portfolio – to encourage local entrepreneurs to participate in the new global industrial revolution.
“As the IDC, we took a new approach in 2015 when we established the new industries strategic business unit. The primary objective of this unit is to identify and support the most promising new and emerging industry value chains and enabling technologies,” she says.
“It means that, as the IDC, we have identified eight sector candidates that have the potential to be the next game-changing industries in South Africa. In that regard, we are playing a proactive role in developing these industries.”
These hot new sectors include energy storage and fuel cells, in which platinum – of which there is plenty in South Africa – is used in up-to-date technology batteries that can store more energy more efficiently.
Also included are medical devices, such as the Lodox X-ray machine, which performs a full-body scan on critically injured patients in just 13 seconds. Added to the list of new sectors is gas beneficiation, an example of which is Klydon Gas, which aims to export its globally unique and competitive technology.
In addition, there is the new nanotechnology, 3-D printing, as well as the Natural Products sector which involves the use of indigenous plants in pharmaceuticals, supplements and cosmetics.
A new industry that is being developed to tag on to the independent power producer programme involves stimulating a home-grown industry to supply parts and components for renewable energy power plants.
“We played a key role in the development of this industry in South Africa and we still believe we have to play a key role in the localisation of the industry, creating industries around the renewable energy sector to build products such as photovoltaic panels,” Matshekga says.
“It is slow, but I think there is huge potential. We engage the relevant government departments – the departments of energy, trade and industry – to influence policy that will encourage the renewable energy participants to source goods locally.
“For funding applicants to qualify for support – whether it be in photovoltaic or wind farm development – we require that you source the solar panels, mounting structures and cabling locally to stimulate the long-term demand.”
The opportunities, Matshekga says, arise not just from government and power utility Eskom, but from the private sector as well.
“Most large energy users, such as companies in the mining sector, are trying to diversify their energy source and, as a result, renewable energy is now part and parcel of their mix,” she says.
Matshekga says the IDC believes that these new industries have the potential to create a large number of jobs.
So what advice does Matshekga have for South Africa’s hot new technopreneurs?
“In new industries, the capital requirements are quite high and it’s
most often risk capital, because we are still trying to prove a concept. But when you have partners like the IDC, together with strategic partners, we can collectively develop those projects and make them bankable,”
she says.
“Normally, the commercial funders are looking for projects that are bankable. As the IDC, we have a high-risk appetite and we come in early; we want partners who want to show the same commitment, and develop these projects and unlock all these opportunities.”
Matshekga cautions that new industries are expected to have a high risk of failure – but there is a solution for that.
“I think the most important thing is about partnerships. It’s important, especially when you are trying to prove a concept that has worked somewhere else and you are trying to domesticate that in terms of the South African environment. It’s important that you identify partners that have done so and that you seek to form those partnerships,” she says.
Big jobs potential in agroprocessing
With a prevailing drought, a shortage of available arable land and
sometimes low returns, the agroprocessing sector may not be the sexiest career.
But for Lizeka Matshekga, it’s a golden opportunity to create jobs and tap into
the potential the rest of Africa presents.
“With our land-availability and water-scarcity constraints, we need to look at neighbouring countries. There are opportunities for us to integrate the region. Agroprocessing and agriculture is long term and has low returns sometimes, but the socioeconomic benefits far outweigh that,” she says.
That said, there is a lot of dominance and competition.
“The retail sector is usually dominated by larger companies, so the barrier to entry could be high, but there are partnership opportunities. The supplier-development opportunities of the retailers present huge opportunities for black industrialists. The IDC created the first black female industrialist in this sector, so it can be done.”
Matshekga has some advice for those wishing to apply for funding from the IDC to get involved in this sector.
“There is huge opportunity, but for us it’s about inclusivity and transforming the sector. We want the communities on the land these projects are on to have opportunities to be part of the entire value chain,” she says.
“Other opportunities concern import replacements. There are some food products that we import, and South Africa has the capacity to produce these.”
The downsides of agroprocessing include high energy costs and usage. “Energy is one of the constraints of the poultry industry, for example, and we need to be the enabler to unlock these constraints. So, we are looking at putting up alternative energy generation for these industries.”
And, of course, the drought is a huge constraint, and Matshekga and her team are looking at water as a sector on its own, including the development of desalination plants, which turn salt water into drinking water.
“If we thought electricity was a huge constraint for growth in South Africa, water is an even bigger one,” says Matshekga.
“Since we repositioned ourselves, the IDC took on water as one of those sectors that we have proactively striven to develop. We are exploring innovative funding products to look at ways in which we can unlock the capacity of existing water production.”
If you want to obtain funding from the IDC, here are a few tips from Matshekga:
