The Department of Trade and Industry (DTI) on Thursday unveiled the long awaited Enterprise Incentive Programme (EIP), which focuses on the sectors of manufacturing and tourism, and succeeds the Small and Medium Enterprise Development Programme (SMEDP) that came to an end in 2006.
DTI Enterprise Organisation DDG Tumelo Chipfuma explained that the EIP had a budget of R750-million over the next year, and indicated that as the programme advanced, the budget would likely grow, and be adjusted to reflect the demand.
Trade and Industry Minister Mandisi Mpahlwa added that “the base at which we [the DTI] are addressing industrial financing, we think is a lot better. We have a coherent industrial policy framework, and we have a clear idea of the things that need to be done. We have benefited from a review of the entire incentive dispensation.”
He stated that the lessons learned from the SMEDP and other incentive schemes, made it easier for conversations between the DTI and the National Treasury, concerning how and when incentives were provided.
“It is an ongoing conversation and I am confident it is going to assist us in ways that make it possible to put at disposal appropriate instruments to support industry,” he added.
The EIP grant scale offer had doubled since the SMEDP, and the DTI was offering incentives for new enterprises, or expanding enterprises making investments of up to R200-million. The DTI was offering up to 30% funding.
The grant ceiling for investments under R5-million, was 30% or R1,5-million, the grant ceiling for investments between R5-million and R30-million was between 30% and 15%, or R4,5-million, and the grant ceiling for investments up to R200-million was 15%, or up to R30-million.
In the Manufacturing Investment Programme (MIP), investment projects within priority sectors would also score higher and get preference, and these priority sectors were capital or transport equipment and metals fabrication, chemicals, plastic fabrication and pharmaceuticals, furniture, and automotive and components.
It would hope that investments in these areas could benefit from procurement from government following its massive infrastructure spend over the next four years.
Grants would go towards 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 textile operations.
The Tourism Support Programme (TSP) would focus on job creation and a minimum requirement would be that a company seeking a grant created eight jobs, or for a black-owned business, a minimum of four jobs should be created. Tourism entities outside of the metropolitan areas would also have priority.
The DTI said it also took to heart feedback from various quarters and had tried to significantly simplify the application process. Applications would be submitted electronically, and the enterprise organisation had an IT intensive administration and management programme, which it hoped would simplify things. The organisation would also train people to assist enterprises with all information required.
Chipfuma said many processes had been simplified, which the department hoped would lower access barriers and reduce reliance on consultants, some of whom had abused the incentive schemes to their advantage.
Applications would available on the department's website and would be accepted from July 21, 2008, and the DTI said it aimed at implementing a turnaround time of six weeks, from receipt of application, to grant approval.
Importantly, the DTI hoped that the EIP would encourage the private sector financial institutions to grant loans and supply funding to small and medium-sized enterprises.
Consultation workshops on the EIP had been held to ensure policy coherence and alignment of activities of provincial economic development departments, and their investment agencies, the Industrial Development Corporation, the National Empowerment Fund, Khula, as well as commercial banks, entrepreneurs and industry associations and export councils.
Mpahlwa also indicated that the DTI was in ongoing discussions regarding the R5-billion tax incentives scheme previously mentioned in the budget, and said that a public announcement would likely be made in the second half of the year.