The corporation pulled funding for his project
The iWipe project, the first 100% biodegradable smart toilet paper in the world, is the brainchild of Zithande Mbala who is currently engaged in the legal fight of his life with the IDC (Industrial Development Corporation). The IDC informed Mbala in July 2018 that it had approved R 3 million in funding for Phase 1 of his iWipe project.
A state-owned, self-financing development finance institution is the Industrial Development Corporation (IDC). Its main goal is to contribute to the development of balanced, sustainable economic growth in Africa and to the economic empowerment of the South African community. The organization was founded in 1940 and operates in both Africa and South Africa. In carrying out this duty, the IDC strikes a balance between the need to invest in businesses built on sound business principles and a strong developmental focus.
According to this article, a feasibility study costing R 500.000 determined that the product was viable. The product (wet and 100% biodegradable toilet paper) went into production on October 24, 2018. For the initial stage of the production phase, the manufacturers received R 1.2 million from the IDC.
The first installment or payment to the IDC was due on March 1st, 2019 according to the agreement between the IDC and Mbala. But when Mbala heard from the IDC that his account was past due, his year got off to the worst start ever. According to Mbala, the IDC acknowledged that the payment date was incorrect.
Mbala was informed that the “error” would be fixed in 10 days and that Thuthuka Ngubane, an IDC post-investment person, had been assigned to do so. As it is currently being heard by the Johannesburg-based Gauteng South High Court, that “error” has not yet been rectified.
Although Mbala had received notification from the IDC that it was canceling the deal and demanded payback for funds paid out, the manufacture of his smart toilet paper was already well underway when his legal troubles began in 2019. From Mbala, R1.6 million (plus interest) is being requested.
“It is my understanding that Mr. Ngubane presented a report to the IDC Exco that my business was not viable and this was why the deal was canceled. The product is already available in shops and I have managed to keep my business afloat and employ staff, despite the IDC’s decision to pull the plug on the deal. They are also trying to recover a bakkie worth R 150K. It is my understanding that R 500K has been spent in legal fees to recover said bakkie”, said Mbala.
The IDC reserves the right to react to Mbala’s account of the events that followed on the appropriate platform and at the appropriate time, according to IDC spokesperson Tshepo Ramodibe. The IDC stated that the case was still pending and declined to comment on the reasons for closing down the now-thriving company. 50 employees work for Mbala at his iWipe locations.
“The parties can agree to terminate, or the IDC may elect to terminate if the client is in breach of the contract. Such a decision will be made in accordance with IDC processes and policies. The IDC’s position and reasoning in this regard will be ventilated in court proceedings”, he said.
However, the IDC refuted Mbala’s assertions that his contract was terminated as a result of “a concocted/fraudulent report”.
“The IDC strongly rejects this allegation. The IDC would typically demand payment when there is a breach of the contract. The exact details in this matter are before the courts for determination”, said Ramodibe.
Ramodibe claimed he was unable to respond when he was urged to explain the circumstances surrounding the dismissal.
“The IDC normally approves funding that is disbursed in tranches informed by performance milestones. Each of the tranches has different draw-down conditions. The details of this case are before the court for determination. All decisions taken by the IDC follow standard internal processes and escalation through relevant committees. The IDC always strives to resolve all disputes with our clients amicably, failing which, the Corporation resorts to the legal process agreed with the client”, he said.
Mbala also accused the IDC of fraud, blaming the CEO in particular for allowing the “fraud” to continue while under his supervision.
“All allegations of fraud or misconduct are referred to the IDC’s internal audit department for investigation. The IDC CEO does not act on allegations that have not been investigated by the internal audit department and approved by IDC structures for appropriate action. For the record, the IDC has zero tolerance for fraud”, Ramodibe said.
The Department of Trade and Industry (DTI) is responsible for monitoring the IDC, but neither organization could be specific about what that monitoring comprises.
DTI spokesperson, Bongani Lukhele said: “Whenever we have a response, we provide it. But I think we also cannot comment. Unfortunately, as I indicated last week, please continue without our response”, Lukhele concluded.
The shutdown of Market Stores in Gauteng and the Western Cape was covered by Independent Newspapers in 2022. The Spaza Express Shops were a joint project of Pick n Pay, the Gauteng Department of Economic Development, the IDC, and black business owners that lacked the funding to open or own a conventional retail outlet. Six business owners who all ended up in court with the IDC were interviewed by Independent Newspapers.
