The Department of Trade and Industry (the dti) initiated the Incubation Support Programme (ISP) to develop incubators and create successful enterprises with the potential to revitalise communities and strengthen local and national economies.
In continuing to strengthen economic development through broadening participation in the economy, the ISP aims to ensure that small, micro and medium enterprises (SMMEs) graduate into the mainstream economy through the support provided by the incubators. The ISP is one of the support measures to encourage partnerships in which big business assists SMMEs with skills transfer, enterprise development, supplier development and marketing opportunities.
- The objective of the ISP is to encourage private sector partnerships with Government to support incubators in order to develop SMMEs and nurture them into sustainable enterprises that can provide employment and contribute to economic growth.
- The intention of the programme is to provide funding for incubators that over time can generate revenue through the provision of services and initiatives that can be self-sustainable.
- The incubation support will be available on a cost-sharing basis between the Government and private sector partner(s). It is available for infrastructure and business development services necessary to mentor and grow enterprises to ensure that within 2 to 3 years the enterprises will graduate to a level of self-sustainability by providing products and services to the market.
The following costs are eligible for support:
- Business development services (e.g. business advisory services, coaching and mentoring, training, facilitation of funding, production efficiency and improvement, quality and standards acquisition)
- Market access
- Machinery, equipment and tools
- Infrastructure linked to incubator (buildings, furniture)
- Feasibility studies for establishing and expanding incubators
- Product or service development
- Information and Communication Technology (ICT)
- Operational costs
The Adjudication Panel may consider for support, any other costs related to the activities of the incubator.
- The grant approval will be based on projections for the first year at application stage whereas the approval for subsequent year(s) will be dependent on the review of actual performance of the preceding year against agreed milestones.
- All payments will be made directly to the incubator’s primary account.
- The grant approval is capped at a maximum of R10 million (VAT inclusive) per financial year over a three (3) year period and is subject to the availability of funds.
- The ISP offers a cost-sharing support of 50:50 for large businesses and a cost-sharing of 40:60 for SMMEs.
- After the three year period, applicants may apply for assistance for an additional three years and must comply with the guidelines of the ISP.
- The applicant must either be:
- A registered legal entity in South Africa in terms of the Companies Act, 1973 (as amended) or the Companies Act, 2008 (as amended); the Close Corporations Act, 1984 (as amended) or the Co-operatives Act, 2005 (as amended); or
- Be a registered higher or further education institution; or
- Be a licensed and/or registered science council.
- The programme is available to applicants that want to establish new incubators or wish to grow and expand existing ones.
- The supported incubator may either offer physical and/or virtual incubation support services.
- The incubator to be supported may be a corporate incubator; a private investor’s incubator; an academic or research institution incubator in partnership with industry, and must be focused on establishing and/or growing enterprises that will graduate to sustainable enterprises.