More than 800 Small Medium and Micro Enterprises (SMMEs) received financial support from the Eastern Cape Development Corporation (ECDC) in the 2008/2009 financial year compared to 130 in the previous year due to a successful turnaround strategy.

Announcing the corporation's financial results on Tuesday, ECDC chief executive officer Mxolisi Matshamba says the corporation disbursed R312 million to business initiatives last year exceeding its annual target of R147 million. Of this amount, R214 million was collected.

 "ECDC launched a set of new financial products last year which ensured that we improved our developmental impact in the province. The corporation extended its reach in the Eastern Cape providing loans to 53 locations across the province.

"The corporation's 630% growth in short-term loans not only ensured the effective delivery of short-term poverty alleviation projects such as the Department of Education's school nutrition scheme and the Department of Health's food parcel distribution to poor areas, it also enabled economic growth in line with the Provincial Growth and Developmental Plan's (PGDP) objectives to develop the province," says Matshamba.

ECDC disbursed R203 million in loans to SMMEs who are service providers to the education department's school nutrition programme.

Matshamba says these projects resulted in ECDC facilitating the construction of new roads, the completion of government construction projects and the development of new businesses. Government's infrastructure development programme resulted in the Workflow Construction Contractor's loan exceeding its targets by 253%, disbursing R40 million in construction loans. ECDC collected R33 million of this amount.

"The global credit crunch resulted in commercial lenders closing down which allowed ECDC to play a significant role of supporting businesses that were vulnerable. Most of these businesses are located in the former homelands. The impact of that work cannot be totally quantified now, but it will be felt through jobs created and by families that were indirectly supported," says Matshamba.

ECDC disbursed R77 million in long term loans last year, 17% more than the targeted R66 million while R62 million of short-term loans were disbursed. Matshamba says more than 60% of all loans were disbursed in rural areas. This has led to ECDC opening up two new offices in the former Transkei in Mount Ayliff and Aliwal North.

Matshamba says 85% of loans were amounts less than R500 000 indicating the significant role played by ECDC in providing financial assistance to SMMEs. ECDC is also directly involved in the creation and retention of more than 6 000 jobs in the Eastern Cape.

Matshamba says the corporation's R71 million net profit reflects an 86% increase from the previous year's R38 million. The operating costs of the corporation still exceed the income generated which led to a R44 million operating loss and "this will change when critical mass is reached with respect to income generating activities by the corporation."

He says ECDC's properties unit embarked on a drive to recover money owed by debtors and the efficient collection of outstanding rentals. This resulted in the recovery of R15,4 million at the end of 2007/2008 financial year and R13million at the end of 2008/2009 financial year and an updated database of tenants who are servicing their lease agreements.

"Properties make up 40% of our total assets and the plan is to dispose of the entire residential portfolio worth R240 million and all other non-revenue generating properties. The proceeds of such disposals will then be reinvested in a strategically aligned portfolio comprised of commercial and industrial properties.

"This is to ensure maximum returns and support of development initiatives in the province. Going forward the aim is to retain a property portfolio of about 25% of the ECDC balance sheet," explains Matshamba.

He says ECDC also embarked on a number of development projects in the year under review such as the revitalisation of the province's pineapple industry in Port Alfred, Peddie and Bathurst. This reflects an overhaul of an industry that has suffered losses for nearly a decade. This intervention has resulted in the preservation of existing jobs and the creation of new jobs through processing and downstream opportunities to alleviate poverty in Ndlambe and Ngqushwa Local Municipalities.

The corporation supported crafters with access to markets and assisted companies to exhibit their products in national and international platforms. These exhibitions included the Department of Trade and Industry's South African Handmade Collection in Johannesburg, The Ambiente in Germany, Atlanta in the United States and the National Arts Festival in Grahamstown. Some companies have managed to secure export orders because of the exposure.

"ECDC trained 59 entrepreneurs on business skills mainly focusing on costing and pricing while 17 accommodation establishments were trained in the International Standards Organisation's (ISO 9001) Quality Management systems. Another 20 companies were trained on Hazard Analysis and Critical Control Points (HACCP). These quality management programmes are critical for businesses who wish to be compliant with international standards particularly those who intend to embark on international trade," explains Matshamba.

Matshamba says the recent review of the PGDP key strategic goals reiterate the role of ECDC in supporting the diversification and growth of the provincial economy "and ECDC intends to champion these objectives with the province."

Matshamba, whose contract with ECDC expires at the end of October, will be replaced by an acting CEO until a successor is found.