He says the first phase of its turnaround strategy was focused on filling critical vacancies at executive management level with people who have the right skills and to have a fully–functional board.  The latter is led by Prof Wiseman Nkuhlu, a former Mbeki economic adviser.

Both goals have been achieved with the latest executive management appointments which include Luyanda Tsipa (Properties) and Noludwe Ncokazi (Development Services). Other members of the team are Development Investments Chris Bierman, Chief Financial Officer Msulwa Daca, Company Secretary Advocate Mziwoxolo Mavuso, Internal Audit head Kiran Bhika, and Legal head Advocate Justin Uren.

Mxolisi believes the filling of these posts was critical because “one of the barometers with which to measure the success of the corporation is its impact on the local economy”.

“However, if we are not properly organized internally, we cannot be in a position to make a significant impact, and hence the need for a strong and skilled management team.”

Key outstanding appointments are those of head of marketing and planning and reporting which should be filled by June.

A former Trade and Investment SA CEO Mxolisi, who joined the ECDC in 2006, says the focus of its turnaround strategy this year, is performance against its strategic objectives and rebuilding the image of the corporation.

“All the reviews that were done on ECDC’s earlier plans suggested that the organization was actually planning to fail.

“However, I can confidently say that the corporation is going up because we know the levers that we need to pull in order for ECDC to meet its current objectives,” says Mxolisi.

Mxolisi says his organisation should break even at operating profit level by 2010, although he expects an operating loss this year. However, the organisation should make a net profit after including revenues from other activities like interest on cash invested.

Mxolisi explains the success of the corporation’s strategy is largely focused on putting in place interventions that will address the challenges inherent within the institution.

He says that close to R500 million of its balance sheet is made up of properties rather than loans which is not desirable for a DFI (Development Finance Institution). In response, the corporation is implementing an Asset Conversion Strategy, which is looking at offloading its residential properties and using revenues generated from those disposals to provide development finance to emerging entrepreneurs of the province.

“A desirable situation should be one where 80 percent of the balance sheet is made up of loans but we need to offload our properties in a responsible manner because 50 percent of our revenues currently come from properties.

“Hence while we are reducing our properties, we need to grow our loan book profitably for us to continue operating on a sustainable basis,” Mxolisi explains.

However, he is mindful that ECDC will not be able to offload all its residential properties by 2010, largely because of the current challenges that have beset the residential property market such as high interest rates, the implementation of the National Credit Act coupled with a tenant base with a bad credit record.

Notwithstanding these challenges, ECDC is building a skilled loans division team which will bring in quality loans.

“Quality checks and balances are needed to ensure we grant loans to viable business proposals to minimize write-offs. This would result in quality loans, which in turn means reliable repayment patterns and lower write offs at the end of the financial year.

“We do not want to be the lender of last resort because we will get all the bad loans when people cannot get loans from other lending institutions and that is why we need to offer quality products with short turnaround times to be able to attract quality loans,” he explains. This entails offering loans at competitive interest rates and providing “smart” advice in structuring deals for our clients.

According to Mxolisi, ECDC was prone to badly structured agreements which adversely affected the corporation’s profitability, naming two examples of deals which were turned around by ECDC’s legal prudence, saving it at least R30 million and has a potential to generate close to R100m return on investment in 2008/09 financial year, “without letting the cat out.”

He also outlined plans for ECDC to invest in retail complexes as investors and not as owners in order to generate additional revenue. It will also assist the government in the facilitation of some projects in return for a project management fee.

“We are also in the process of disposing residential properties by developing our vacant residential plots and sell off-plan. We don’t want be a landlord anymore,” he says.

He explains that two of the key costs drivers of the corporation have been staff costs and municipal rates and taxes.

In order to address these costs, ECDC introduced a performance management system in April this year, where staff members are given targets and their performance will now be measured against those targets to reward productive employees.

“Previously no one suffered any consequences, positive or negative, if they performed well or under performed,” he says.

ECDC is also to give regional managers more powers to make decisions at regional office level in order to attend to clients’ needs regarding the granting of loans, micro-loans and non financial enterprise support.

He adds that he believed the economy was not going into a recession, but that it was experiencing a downturn which is informed by imported inflation.

“It’s a result of high crude oil prices which the government has little control of, a lack of a savings culture in our country and high food prices such as imported food stuffs like wheat.

He adds that the country has unacceptable high levels of oil consumption and it is using petrol at levels that are equivalent of developed economies. This is due to high use of private vehicle when people go to work because we don’t have an efficient and sophisticated public transport system. It doesn’t matter how many toll roads we introduce if there is no sophisticated alternative transport system, the use of private vehicles to work will still continue and our crude oil imports will continue increasing.

Possible solutions to reduce food prices, Mxolisi says, are additional investment in commercial farming, encouraging subsistence farming or support of emerging farmers.