The Lending Division of Ithala, within its Business Finance Department is further divided into 5 lending sub-sectors.

 

This was done and implemented in September 2009 in order to align the division/ organisation with the Provincial Spatial Economic Development Strategy (PSEDS) of KwaZulu-Natal, which places emphasis on certain economic sectors of the KZN economy which are being seen as the drivers of KZN economy.

 

Each of the lending sub-sector units are underpinned by industry specific plans which have largely been encapsulated in Business Finance business plan.

 

The lending sectors within Business Finance Department are therefore as follows:

 

This business unit offers agriculture and agricultural related loans.  These include the acquisition of agricultural land, acquisition of livestock, acquisition of agric equipment, fixed improvement loans, and working capital for agric inputs and labour.

 

Despite the fact that KwaZulu- Natal covers such a small portion of South Africa's land area, a significant percentage of the country's small-scale farmers are based here. Agriculture in KwaZulu-Natal is extremely diverse and is reflected in the patterns of its topography. Most of the world's agricultural activities can be practiced here. Due to the good reliable rainfall and fertile soils, the region's agricultural sector has become very productive, and is known for its specialist capability in several types of farming. 

 

The Province has a total of 6.5 million hectares of land for farming purposes of which 82% is suitable for extensive livestock production and 18% is arable land. Agriculture contributes to about 3-5% of the gross domestic product excluding backward and forward linkages, these being the sectors which drive the industries growth for example, seed manufacturing, fertilizers, agriculture contractors and even as far as equipment manufacturers, forward linkages being the value-add products such as packaging, processing, distribution and marketing.

 

All these separate industries make agriculture a large contributor to the success of the KZN economy and have a huge impact on the total number of jobs in the province. It is the intent of the Agriculture and Agro-processing unit to exploit all fields of the industry and the development stream will play an important role in the development of up and coming farmers seeking to enter into the different sectors.

 

Agro-processing is driven largely by the Ilembe municipality - which stretches from Tongaat to Gingindlovu on the KwaZulu-Natal north coast. The Province's Department of Economic Development and Tourism plans for a R150 million agro processing hub, which project is already under-way.

The hub is intended to provide demand for chillies, macadamia nuts, essential oils and bananas from black subsistence farmers.  Here the Development stream will play a role in forming partnerships with the other relevant government departments to ensure the involvement of new and willing agriculture entrepreneurs in forming Co-ops and involving the surrounding communities in these projects, so to benefit and create jobs for as many people as possible. Ithala ought to play an important role to facilitate participation and growth in this sector of the economy.

At least 25% of Ithala’s loan book consists of agriculture and agro-processes.  Invariably, the failure of this large exposure would lend serious risks to the entire loan book of Ithala. The majority of the farmers that are financed by Ithala would not necessarily be intensely mechanised therefore lending themselves to larger volumes of people being employed in those farms.  If for any reasons these would go out of production it is large numbers of people that would lose jobs.

 

The Province has experienced increased construction activities, in the form of new infrastructure development or upgrades and renovations due to, amongst other things, the FIFA soccer world cup event and the related tourism infrastructure development. 

 

This sector has been structured to respond to the needs of small contractors in the construction industry as well as the needs of entrepreneurs in the tourism industry. Products offered by this sector range from Land and Fixed Improvements; Equipment finance and Working Capital loans.

 

• Construction

Looking forward, Government ‘s three year budget for infrastructural spending indicates that the current high level of infrastructural spending will continue after 2010 and the Soccer World Cup.  The 2011/12 budget for public sector infrastructural activity reflects an increase of over 11% year on year (almost over R300billion).

 

• Tourism

We have already seen a consistent increase in the number of international tourist visiting South Africa. The figures released by Tourism South Africa shows that the international visitors grew by 13.4% during the 2007 year. There is also an increase in the number of South Africans traveling domestically. Government also expects the sector to contribute 12% to the annual growth domestic product by year 2014.

We have already seen previously disadvantaged South Africans trying to break into the tourism sector. These individuals are more interested in Bed and Breakfast, Hotels, Shuttle Services, conference centres, etc. The reason for this interest is due to the expectation caused by the sporting activities as well as the demand in business tourism.

 

The current performance of the tourism sector remains strong especially against the priority sectors identified by government. The expectations related to the sector’s activity levels’ contribution to the economy appear to be realistic. The sector will also contribute positively towards the creation of employment opportunities for unskilled and semi-skilled workers. 

 

Favourable climatic conditions and the depreciation of the rand will also make South Africa to be the ideal tourist destination given the economic downturn when people are battling to visit their popular and more expensive destinations.

 

Manufacturing

South Africa has developed an established, diversified manufacturing which albeit having suffered heavily as a result of recession has shown resilience and potential to compete in the global economy over the years.

 

The manufacturing sector provides a locus for stimulating the growth of other activities, such as services, and achieving specific outcomes, such as employment creation and economic empowerment. This platform of manufacturing presents an opportunity to significantly accelerate the country's growth and development.

 

The KZN’s manufacturing base is strong and nearly a third of South Africa's manufactured exports originate in this province. The KZN had 16.4% of GDP second to Gauteng Province in 2008. The KZN manufacturing sector has contributed 24%, the highest to the KZN GDP. Significant sub-sectors include aluminium, mineral processing, motor vehicle manufacturing, pulp and paper products, the chemicals and petrochemical sub-sector and food and beverages. Food procession generates subcontractors and there are allied industries such as printing, publishing, packaging and plastic supplies.

 

Whilst the mix of manufacturing may change in the future, the pool of industrial skills in the Province, its infrastructure and locational advantages will ensure that manufacturing remains the economic centre-piece. There is a good skills base for the metal products sector and this has been built up around the sugar, aluminium, pulp and paper industries, motor components and motor assembly, chemicals and pharmaceuticals industries.

 

Major players in the region include international giants Unilever, Alusaf, Bell Equipment, Smith & Nephew, and car manufacturer, Toyota South Africa.
Approximately 20% of provincial employment is created in the manufacturing sector. This SBU is expected to make meaningful contribution in this sector and sub-sectors.

 

Commercial Properties

Trade and Services

This sector encapsulates all business activities that are outside manufacturing, agriculture, construction and tourism. Amongst other activities/ business being financed by this unit are for service offering, trading/ retailing, etc.

 

The business unit provides various facilities which include order finance, Land and Fixed Improvements; Equipment and Working Capital loans. A vast range of economic activity falls within the tertiary sector.  Given the vast scope and differentiated nature of the services sector, it is essential that specific sectors are prioritized in terms of their potential for delivering on specific government policy objectives such as employment, black economic empowerment and enhancing the economy’s overall international competitiveness.

 

These sectors are inputs into the broader economy, and creating efficiencies in these sectors will create efficiencies in the broader economy. The sub-sectors identified by the South African Government that have competitive advantage are as follows: