MCEP for existing manufacturers
The Manufacturing Competitiveness Enhancement Programme (MCEP) offers a new suite of incentives for existing manufacturers which are not only designed to promote competitiveness in the manufacturing arena but to ensure job retention in this sector.
MCEP consists of:
- Industrial financing loan facilities managed by the IDC; and,
- Production incentive grants administered by the Department of Trade and Industry.
Who should apply for Manufacturing Industry Finance?
The application is open to South African-registered entities with existing manufacturing operations in this country engaged in:
- Manufacturing (Standard Industrial Classification code 3);
- Engineering services that support manufacturing; and
- Conformity assessment services (SIC 88220) that service the manufacturing sector.
Certain manufacturing sectors that already have the support of Trade and Industry, for example, clothing and textile manufacturers have the Clothing and Textiles Competitiveness Programme, will not qualify for MCEP assistance.
Working capital criteria
Manufacturers who qualify for MCEP may apply to the IDC for a working capital facility of R50-million, over a term of up to four years, at 4% interest. This facility is available on condition that:
- The applicant has a confirmed contract or purchasing order; or,
- The applicant has an order that forms part of the state-owned Competitiveness Suppliers Programme; or,
- The manufacturer’s product is part of a designated products value chain, as determined by the Department of Trade and Industry.
Pre-dispatch finance covers working capital from receipt of order to dispatching to customers; and can, therefore, include production, packaging, raw material and transportation costs.
Post-dispatch finance covers working capital requirements from the point of dispatch to the point of the seller realising the proceeds of the sale. This may include performance bonds and performance guarantees.
While each proposal is carefully considered, the IDC gives preference to projects that demonstrate economic merit and show profitability and sustainability within a reasonable time frame, and that fall within the parameters set out in the information above.
Production incentive grants
Production incentive grants, administered by the Department of Trade and Industry, comprise:
Capital Investment: this is a cost-sharing grant to support capital investment in equipment upgrading and expansions that will lead to increased productivity and competitiveness.
Green Technology and Resource Efficiency Improvement: this is a cost-sharing grant to support enterprises with green technology upgrades that lead to cleaner production and energy efficiency.
Enterprise-Level Competitiveness Improvement: this is a cost-sharing grant to improve the competitiveness of enterprises by enhancing conformity assessments and improving processes, products and energy; and producing cleaner production audits and related skills advancement through the use of business development services.
Feasibility Studies: this grant facilitates feasibility studies that are likely to lead to bankable business or project plans that may result in initiatives that will create a market for locally manufactured goods.
Cluster Competitiveness Improvement: this grant provides support for cluster studies by a group of firms in sectors or sub-sectors that focus on common challenges.
The intervention that they seek is at the discretion of the applicants, based on an assessment of their own requirements. Grant amounts depend on the size of the company and the amount of manufacturing value addition (MVA) it generates. Go to the dti website >>