In 1959, an institution known as the Bantu Investment Corporation Limited
(BIC) was established by the state, to be responsible for the development of all
black areas in the Republic of South Africa. With its Head Office in Pretoria,
this corporation duly established branches in the various regions and commenced
work on various development activities and projects, under centralised control
from its Pretoria-based management.
In 1968, the legislation governing the BIC was amended, to enable the
establishment of regional development corporations for each of the various
"homelands" and in due course the KwaZulu Development Corporation Limited (KDC)
was established for the development of the black areas in KwaZulu/Natal, by
means of Proclamation R73 of 1978. Similar development corporations were
established for the other regions, although not all simultaneously.
In 1977, the BIC’s name was amended to the Corporation for Economic
Development Limited (CED).
Upon its establishment, the KDC took over
most of the CED's functions and assets in this region, although the CED reserved
a number of functions for itself, including the very important and lucrative
industrial development function. The CED thus continued to operate in
KwaZulu-Natal after the establishment of the KDC, in relation to these reserved
Initially, the KDC fell under the effective control of the
CED. The majority of the KDC’s shares were held by the CED, with the remainder
being held by the South African Development Trust (SADT). The CED provided all
funding required by the KDC, whether in the form of the KDC’s annual allocation
of share capital, or in the form of loans; and the KDC was prohibited from
raising loans on the open market.
In the early 1980's, a policy decision
was taken by the central government to establish the Development Bank of
Southern Africa (DBSA); to phase out the CED; and to transfer control in the
various regional development corporations to the self-governing territories.
Consequently, after appropriate provision had been made in the (then)
National States Constitution Act, 1971 (now known as the Self-Governing
Territories Constitution Act, 1971), the KwaZulu government assumed
responsibility for and control of the KDC, amending its governing legislation by
means of the KwaZulu Corporations Act, 1984 (KwaZulu Act 14 of 1984).
This Act provided for the KDC's name to be changed to the KwaZulu Finance and
Investment Corporation Limited (KFC) and for its share holding to be transferred
to the KwaZulu government. The restriction against raising finance on the
capital market was lifted.
At the same time, the central government took
steps to abolish the CED, and, in 1984, its remaining functions and assets in
the KFC's area of operations were formally transferred to the KFC, including the
industrial development function.
However, since the CED had a limited
number of projects and activities which were not in areas in which the KFC was
authorised to operate (see below), a new body, the South African Development
Trust Corporation (STK), was established to take over these residual projects
The KFC embarked on a process of transformation from
1994, with the objective of more effectively satisfying the changing economic
development needs of the people of KwaZulu-Natal. The transformation activities
culminated in the promulgation of the KwaZulu-Natal Ithala Development Finance
Corporation Act, No.2 of 1999, on 2 March 1999, from which date the corporation
became known as the Ithala Development Finance Corporation Limited, which was in
turn abbreviated to "Ithala".