The Ithala Development Finance Corporation Limited is a Provincial development finance corporation established in terms of the KwaZulu-NataI Ithala Development Finance Corporation Act, Act 2 of 1999, promulgated on 2 March 1999.
Development Dividend refers to the measurable, non-financial return development finance corporations, such as Ithala, provide by way of the delivery of sustainable development.
Development as a concept and process in South Africa has taken on a variety of meanings. Some would argue that development is primarily occupied wth addressing the problem of persistent poverty in our country. Others emphasise different goals such as economic growth, expanding markets and providing access to services and access to the majority of the people.
However, it has become quite clear that economic and social progress in this country may only be advanced if all facets of development are addressed in a co-ordinated way by a wide range of institutions. This notion is echoed in the combined approaches followed in the country and in our Province. A strong macro-economic policy, fostering economic growth, is combined with policies focusing on support to the poor.
How can we measure the development dividends of our efforts?
Measurement methods to measure both the number of clients being reached and the quality and impact of the services provided are quite new and still inadequate. As Development Finance Institutions (DFls) use public funds and have development objectives, they must report on their performance in using both public funds and in reaching their development objectives. DFls are considered successful if they further development through expanding incomes of poor people and reducing poverty.
The performance of DPls may be measured by the extent of their outreach and self-sustainability. Outreach is a hybrid measure that assesses the extent to which a DPI has succeeded in reaching its target clientele and the degree to which a DPI has met that clientele's demand for financial services.
Self-sustainability indicates the ability of the DPI to exist, based on its own efforts, and is assessed by a composite measure of the DPI's financial performance, taking into account the subsidies received by the DPI. These two primary assessment criteria may be represented on two axes, seen in the diagram. The objective of successful DPIs should be to reach high sustainability and high outreach simultaneously.
Reaching high sustainability and outreach simultaneously is indeed a challenge and something that most DPls strive to achieve. Those that do achieve high sustainability and outreach offer significant retums on development investments to society.
In the case of Ithala, it may be asked if the correct investments are being made and whether those investments pay adequate development dividends in terms of aspects of development deemed important to the people of KwaZulu-Natal. Ithala reports annually on its financial performance and provides a qualititative assessment of development performance.
Ithala has started the ground-breaking work of measuring development dividends in quantitative form. This is the beginning of an important process with regard to the role of Ithala and the measurement of its performance, which is embodied in the Act that created it.