Matthew Jordaan/Independent Media The decision comes after Parliament’s portfolio committee on trade and industry was drawn into an escalating dispute between the IDC and the National African Federated Chamber of Commerce and Industry (Nafcoc) on Tuesday.
Image: Matthew Jordaan/Independent Media
Parliament will establish a formal inquiry into the affairs of the Industrial Development Corporation (IDC) following allegations that the state development financier discriminated against black-owned enterprises and deviated from its transformation mandate.
The decision comes after Parliament’s portfolio committee on trade and industry was drawn into an escalating dispute between the IDC and the National African Federated Chamber of Commerce and Industry (Nafcoc) on Tuesday.
Nafcoc petitioned Parliament in October 2025, prompting Speaker of the National Assembly Thoko Didiza to formally refer the matter to the committee for investigation and report back.
Nafcoc, which describes itself as the historic voice of black business representing approximately 2.3 million affiliated and associated enterprises, is accusing the IDC of undermining black industrialists through aggressive recovery actions, premature legal enforcement and liquidation processes.
Addressing MPs, Nafcoc president Gilbert Mosena argued that development finance institutions are not commercial banks and should not shield themselves behind international norms when implementing their mandates.
“They exist to catalyse inclusive industrialisation and unapologetically advance rapid economic transformation,” Mosena said. “So the mandates of these developmental institutions in character and sequencing must be deliberate effort to ensure that black Africans actually advance in the space of economy.”
Mosena stressed that Nafcoc was not alleging criminal wrongdoing nor seeking blanket debt relief, but was calling for robust parliamentary oversight to determine whether the IDC’s funding and recovery practices align with transformation policies and constitutional obligations.
Nafcoc presented five case studies of black-owned firms it claimed were subjected to harsh treatment without meaningful restructuring support. These included MM Engineering, Makhamisa Foods, BT Industrial Group, Brewsters Craft and Galvano Africa.
MM Engineering, an LPG cylinder manufacturer, secured IDC funding approval but was later placed under business rescue and now faces liquidation before commencing operations.
Makhamisa Foods, a contract manufacturer in the food sector, sought restructuring support after losing a key client. However, the IDC declined relief despite potential new contracts, with 39 permanent workers and nine temporary workers losing their jobs.
BT Industrial Group, a medical manufacturing exporter, alleged it faced liquidation despite securing alternative funding after experiencing liquidity strain linked to grant components that failed to materialise.
Collectively, Nafcoc estimated capital losses of more than R679m and said over 1 300 direct jobs had been affected, with thousands of dependants indirectly impacted.
The organisation recommended that Parliament institute a formal inquiry into IDC recovery and liquidation practices affecting black-owned enterprises.
It further proposed a temporary moratorium on aggressive asset seizures for distressed but viable firms, the development of a recovery charter prioritising restructuring over closure, and the establishment of an independent appeals and mediation mechanism.
The IDC delegation, led by CEO Mmakgoshi Lekhethe, undertook to provide detailed written responses to the cases raised and indicated openness to strengthening stakeholder engagement mechanisms.
Lekhethe emphasised that the IDC operates under a dual mandate of development effectiveness and financial sustainability.
As a Schedule II state-owned entity funded largely through internally generated resources and capital market borrowings, she said the IDC must maintain financial discipline, manage risk prudently and keep impairments and non-performing loans within acceptable levels to preserve long-term developmental capacity.
Lekhethe said that in 2025, the IDC facilitated R26.6 billion in transformation funding, including R23.4bn for black industrialists. However, its current distress portfolio stands at R30bn, with black-empowered entities accounting for 34% (R9bn). She said this reflects both the IDC’s strong transformation focus and the serious challenge of business distress.
Portfolio committee chairperson Mzwandile Masina said MPs were deeply concerned by the allegations and the case studies presented.
“It appears that the IDC has not effectively embedded issues of transformation in its business processes and may need to reform how it provides financial and non-financial support, especially to black businesses,” Masina said.
He confirmed that the committee would invoke the Powers and Privileges Act to summon witnesses if necessary, as well as rely on parliamentary Rule 227(1)(c), which empowers committees to monitor, investigate and make recommendations.
“We are persuaded and broadly agree that there is a need to initiate an inquiry regarding the IDC business practices in relation to economic transformation, as there may be a wider problem within the IDC,” Masina said.
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