16 May 2012
The Department of Trade and Industry (DTI) will offer incentives worth R5.75-billion over the next six years to help South Africa’s manufacturing sector become more competitive in an increasingly difficult global environment.
Speaking at the launch of the Manufacturing Competitiveness Enhancement Programme in Cape Town on Tuesday, Trade and Industry Minister Rob Davies said the world was going through a second wave of the recession brought on by the 2008-09 global financial crisis, with manufacturing coming under particular pressure.
Manufacturing under global pressure
Davies said the sector had been struggling with increasing input costs as well as the monetary policy response of advanced countries – whose ultra-low interest rates had led to money flooding into emerging countries where interest rates were higher, pushing up currencies such as the rand and making exports uncompetitive.
The manufacturing sector contributed 14.6% to South Africa’s GDP in 2011, compared to 21% in 1977, while in fast-growing Asian countries manufacturing had been growing – in Korea from 23.6% in 1977 to 30.6% in 2010, in Malaysia from 19% to 26.1% over the same period.
If South Africa wanted to be a leader in Africa, it had to raise its competitiveness, Davies said, adding that those manufacturers that had not boosted their competitiveness around the onset of the global financial crisis were the ones that were hardest hit.
The new programme, which takes lessons from the successful Clothing and Textile Competitiveness Improvement Programme, will complement the state’s Industrial Policy Action Plan (IPAP), which was launched in April.
Of the R5.75-billion available to manufacturing firms over the next six years, R1.25-billion had been allocated for this financial year. The programme will be complemented by a loan facility from the Industrial Development Corporation (IDC).
Jobs commitment, BEE rating
Firms that apply for support from the programme are required not to reduce employment during the duration of their participation in the programme. Applicants must also be at level 4 on the BEE scorecard, or have a credible plan on how they plan to do get to level 4 within the next four years.
Davies thanked industry role players, particularly the Manufacturing Circle, for their contributions in compiling the programme, saying he was pleased that the organisation had become more prominent in the manufacturing sector.
Tumelo Chipfupa, deputy director-general of The Enterprise Organisation, said the incentives would be calculated according to manufacturing value added and credits awarded – smaller firms, for example, as well as black-owned and managed firms, would be given a higher weighting when points were calculated.
Grants would be based on a cost-sharing principle, with smaller firms being able to allocate a higher percentage of grants to cover funding for their competitiveness-enhancing projects than bigger firms.
Range of incentives
The coverage offered by each incentives differs, as follows:
- The Capital Investment Grant to upgrade capital equipment and expand productive capacity will cover between 30% and 50% of the investment.
- The Green Technology Upgrading Grant for investment in technology and processes that will make the production process greener will cover between 30% and 50% of the investment.
- The Enterprise-Level Competitiveness Improvement Grant for investment in the adoption of improved manufacturing practices will cover between 50% and 70% of project costs.
- The Feasibility Studies Grant, a cost-sharing grant towards developing a bankable feasibility study for new manufacturing projects, will cover between 50% and 70% of project costs.
- The Cluster Initiatives Grant to help fund shared infrastructure such as a sector technology development centre, market research, international advertising and publicity costs, will cover 80% of qualifying project costs. The grant aims to encourage smaller firms to band together in joint marketing or buying.
- The Working Capital facility will include a revolving 180-day, 6% fixed interest rate facility, while the Distressed Fund consists of a concessionary 6% fixed interest rate loan for applicants that are accessing the IDC’s Distress Fund.
IDC to cover for small business applicants
Because most of the grants are in the form of reimbursements paid out only later – often after a firm has had to spend the money it requested coverage for – many small business applicants were likely to experience cashflow shortages.
To counter this, Chipfupa said the IDC would be able to provide upfront to small enterprises while their grants were being processed.
Double dipping in funding, and enterprises that charged import parity pricing, would be excluded from the programme, he added.
Chipfupa said the DTI’s current target for addressing applications was 60 days, but said the Enterprise Organisation was aiming to reduce this to 45 days.
DTI director-general Lionel October said applications for the incentives were now available, with the programme due to go live on 1 June.
Source: BuaNews
Good day, we are a a SMME Busines in the Manufacuring segment and would like to know more about how to get assistance from the DTI. We are based in Durban and is one of 2 BEE Companies supplying, manufacturing,servicing and installing Backup Power, Diesel Generators and Solar Inverters.
Your Urgent assistance would be much appreciated,
My contact no is 0844863627
Thanking you in advance.
Yours sincerely
I welcome this decision and hope that my company that employs over a 100
people will still be standing by June 2013. We have been succesfully producing furniture for the Ellerines Group for the past four years and
with the current economic crisis, we find ourselves running at a quarter
of our capacity. We are more interested in finding outlets for our production, and if you could assist, please do not hesitate to contact me. Thanks Nadeema
I started my business in 2008 but due lact of funds i nerver be succeded
Recycling bottles to Consol the problem i don’t have funs for startup.
recyling of Waste tyres interms of Regulation 7(3) Waste Tyres Management
where 100 job can be created
I need na assistant with funding to run the business which can employe 100 or more employees
we run a non profit company and helping the old people in need of care which were found to be staying alone at home.we need help as we dont have any assistance from any company.we can be glad if we can find any assistance.
this can be of great assistance to this organisation as we are not yet funded we help trhe old people 24hrs.I want to know how can we be assisted
Hi my name is teishi martin mashego .my company is Teisho tranport services.company reg 2005/139785/23. I did apply for grand last year november 2012 with the company called MDI owner OR FACILITATOR is jabu mahlangu. i just need to find out if everything is in order becouse everytime when we call him he says his busy and he will call after 15 minutes and he doesnt come back.i would like to get more information becouse
i have submited almost everything via his company.i will apreciate your urgent respond on this matter.
regards
martin
tell 011 915 2140
cell 076 978 2499
email martin@teisho.co.za
help
hi ,the above company made application for grand last year december 2012
with the help of MDI in benoni owner and facilitador jabu mahlangu.i got him from the list of your facilitators.i would like to know if everything is still going in progress becouse everytime we contact him he give us excuse saying he will come back within 15 minutes and he will not call .were and how can we get help.
regards
martin
Hi Teisho, its best to speak to the DTI directly about these matters. you can contact them here: http://www.thedti.gov.za/
I have registered my Transport business last month(April 2013)And I do not know exactly how to proceed from there.Whether to apply for funding or to draw a comprehensive Business Plan,or to get a tender first,I really dont know.
Really need urgent assistance regarding the above,as I would like to start operating ASAP.