The Enterprise Investment Programme was launched by the government in July 2008, to provide sector-specific financing in order to encourage growth in key areas.
The scheme currently operates under two sub-programmes – the Manufacturing Investment Programme (MIP) and the Tourism Support Programme (TSP – though further sub-programmes are expected to be added in the future to address the needs of other specific sectors.
The EIP works through an investment grant of between 15% and 30% towards qualifying investment in plant, machinery and equipment and customised vehicles required for establishing new or expanding existing production facilities or upgrading production capability in existing clothing and textiles operations.
Manufacturing Investment Programme (MIP)
The MIP is designed to stimulate investment into the manufacturing and related services sectors as part of the government’s efforts to create further employment and ensure sustained growth within the industry.
The programme aims to encourage further investment into the industry by providing a grant of up to 30% towards qualifying investment below R200m in plant, machinery and equipment and commercial vehicles required for establishing new and expansions of existing operations.
Although the MIP can be accessed by a range of sectors in the manufacturing industry, the government is focusing on four key sectors that it has identified as having the most potential for achieving its growth objectives: Metal fabrication, Capital and Transport equipment; Automotive and components; Chemicals, plastic fabrication and pharmaceuticals; and Furniture sectors.
Tourism Support Programme (TSP)
The aim of the TSP is to specifically promote sustainable job creation outside of the traditional tourism destinations of Durban, Cape Town and Johannesburg, as well as encouraging greater transformation in the sector.
The government has chosen to support the tourism sector as it remains vital to the South African economy, contributing close to R100bn to GDP, and has relatively low entry barriers providing real potential to grow the SMME segment.
Whilst many SMMEs have entered the tourism sector, most remain small and do not expand into medium sized businesses, thereby limiting their job creation capacity.
The TSP offers a grant of up to 30% of qualifying capital investment by enterprises investing below R200m, provided the enterprises are located outside the three established tourism areas.
The grant can be used by applicants as part of their equity contribution when approaching third party partners and may also be used to access further loans from banks.
Non-refundable tax free grants from the Department of Trade and Industry (DTI)
The EIP is divided into two programmes, namely:
- Manufacturing Investment Programme (MIP), to promote manufacturing with priorities in metal fabrication, chemicals, plastic fabrication and pharmaceuticals, furniture, automotive and components.
- Tourism Support Programme (TSP) to accelerate growth in tourism.
Some of the salient points of the Enterprise Investment Programme are:
- Government incentives will apply to new projects, as well as to expansions. However, only one expansion per applicant will be allowed.
- The incentives will be capped on an investment of R200m per application.
- The incentives will be as follows:
- Less than R5m investment – up to 30% benefit payable over three years
- Between R5m and R200m – up to 15% benefit payable over two years subject to a maximum of R30m benefit per application.
- Qualifying expenditure will consist of:
- New machinery and equipment
- Newly acquired land and buildings as part of the investment project
- Commercial vehicles
It is important that you apply at least three (3) months prior to you starting your project.