FINANCIAL SERVICES - GOVERNMENT GRANTS

The South African Departments of Trade and Industry and of Small Business Development offer a wide range of support programmes, of which most are on the basis of non-repayable cash grants and a few are in the form of repayable finance schemes. The department of Finance, through the tax act, and in collaboration with other departments, also offers some additional tax allowances in respect of investment cost. Following below are short descriptions of these programs.

Note: The descriptions below are either freehand definitions or extracts from official guidelines, and are intended to help the reader form a basic understanding of what the programs are about. These descriptions are neither complete nor are they intended to be used for interpretation of the rules of the programs. If you are interested to know more, please consult with Dectra or enquire at the authorities for more complete information.

GRANT PROGRAMS (Updated September 2017)

  • Agro-Processing Support Scheme (APSS)

    The APSS was launched The Department of Trade & Industry during May 2017 and is open for applications until 31 January 2018. It is hoped that the programme will be extended beyond that date, but it clearly that is dependent on the availability of budget.

    The program offers a 30% cash grant to small projects and a 20% cash grant to medium/large projects, with an overall maximum grant per applicant of R20 million.

    The following is an extract form the Scheme's guidelines.

    New and existing agro-processing/beneficiation projects. This can also involve a wide range of processing or beneficiation activities of post-harvest, that result in value addition and/or enhanced storage life, such as cleaning, sorting, grading, waxing, controlled ripening, labelling, packing & packaging, warehousing, canning, freezing, freeze drying, wood carving, extrusion, synthesizing, polymerisation, and various levels of processing that change agricultural product form. In the forestry value-chain may also include sawing, pulping, peeling and preservation.

    The APSS will be targeted at five (5) key identified sub-sectors (focus areas) as follows:

    (i) Food and beverage value addition and processing (including Black winemakers);

    (ii) Furniture manufacturing;

    (iii) Fibre processing;

    (iv) Feed production; and

    (v) Fertilizer production.

  • Aqua Culture Development Enhancement Program (ADEP)

    Revised during June 2016, this program offers a cash grant on investment cost in marine and fresh water activities. Qualifying activities include cultivation, processing and ancillary activities such as feed manufacturing, Research and Development and veterinary services.
    The grant is calculated as a percentage of your investment in fixed assets, infrastructure and in competitiveness improvement activities, to a maximum amount of R30 million. The percentage varies between 20% and 45%, with smaller projects receiving the highest percentage. In addition, in the case of emerging black farmers (more than 51%), the incentive is enhanced and varies between 40% and 80%.

    The program caters for new projects as well as for expansions and upgrading of existing projects.

  • Automotive Investment Scheme (AIS)

    Launched during 2014, the AIS has been extended during 2015 and 2016 and now also covers people carriers and medium to heavy duty commercial vehicles. The programs include original equipment component manufacturers.
    The AIS provides for a cash grant of twenty percent (20%) of the value of qualifying investment in productive assets in the case of vehicle manufacturers and twenty five percent (25%) of the value of qualifying investment in productive assets by component manufactures and tooling companies. These percentages are enhanced by up to 10% if certain requirements can be reached. The program has no maximum grant level.

  • Black Industrialists Policy (BIP)

    The DTI's Black Industrialist Policy aims to create opportunities for new and existing black industrialist champions. Champions are defined as persons who are able to lead as business- or technical experts, are involved and committed to the business and will take financial risk. Applicant companies must therefore be more than 50% owned and/or controlled by black shareholders.
    A BIS ("Black Industrialist Scheme") grant of between 30% and 50% is offered on investment in equipment, vehicles and buildings, and the minimum required investment is R30 million. The policy aims to ensure that the project's total financial needs are satisfied, not only to provide a matching grant. For this purpose, loan and equity finance is offered through one of the government's Development Finance Institutions.
    The policy applies to manufacturing and related activities (which normally includes the processing and packaging of fresh fruit and vegetables).

  • Business Process Services (BPS)

    Launched during 2011, the program was revised during 2015 and now runs until 2023. The primary objective is to create jobs and secondary, to enhance the country's export earnings through offshoring services.
    Companies offering business process services internationally may qualify.
    A 5yr base incentive on a reducing sliding scale is offered in respect of new jobs created, plus a bonus payment at the end.

  • Black Business Supplier Development Program (BBSDP)

    Now under the administration of the Department of Small Business Development, this program offers grants to any commercial business, existing for more than one year, that is more than 50% owned by persons from previously disadvantaged communities. Grants can be used to acquire assets or professional services and training, and vary from 50% to 80%, with a life time maximum amount per business of R1 million.

  • Capital Projects Feasibility Program (CPFP)

    The Capital Projects Feasibility Programme (CPFP) is a cost-sharing grant that contributes to the cost of feasibility studies likely to lead to projects that will increase local exports and stimulate the market for South African capital goods and services.
    The grant is offered to a maximum of 50% of the total costs of the feasibility study for projects outside Africa and 55% of the total costs of the feasibility study for projects in Africa and is capped at R8 million

  • Cluster Development Program (CDP)

    The Cluster Development Programme aims to promote industrialisation, sustainable economic growth and job creation needs of South Africa through cluster development and industrial parks. Its objective is to enhance competitiveness of enterprises within a cluster or Industrial Parks. Assistance will also be prioritised for Industrial Parks in former homeland areas and/or townships. Grants of up to 80% are offered.

    The first component, the shared infrastructure grant is towards investment in assets such as buildings, machinery, equipment, tools, jigs, dies and commercial vehicles. The grant is up to 80% of the qualifying investment to a maximum grant of R10 million per cluster.
    The second component, Business Development Services, supports business development services initiatives of the cluster such as conformity assessments (standards accreditation), financial management, Information Technology services, logistics management, professional services, Human Resource Management, benchmarking exercises, market research, feasibility studies, etc. A grant of up to 80% of the investment is offered, to a maximum grant of R5 million per cluster.
    The third component, Cluster Management Organisation Funding, is aimed at supporting strong dynamics amongst enterprises and other stakeholders in the cluster. The CMO purpose is to manage core operation and delivery by the cluster. A grant of up to 80% of the costs payable at the establishment of the CMO is offered, to a maximum grant of R5 million per Cluster.

  • Clusters from the following sectors will be prioritised:

    • Metal fabrication, capital and rail transport equipment
    • Plastics, chemicals, cosmetics and pharmaceuticals
    • Forestry, Timber, Pulp, Paper and Furniture
    • Agro-processing
    • Business Process Services
    • Cultural and creative industries, crafts, music and film
    • Boat building
    • Green and energy saving industries
    • Downstream mineral beneficiation
    • Upstream oil and gas services and equipment
    • Nuclear
    • Advanced manufacturing (including defence, aerospace, electro-technical and white goods)
  • Cooperative Incentive Scheme

    This program, now administered by the Department of Small Business Development, offers a grant to start-ups and existing businesses, owned by at least 5 persons from previously disadvantaged communities and organised as a primary cooperation. He grant of maximum R350,000 can be used for assets or working capital.

  • Critical Infrastructure Grant (CIP)

    The Critical Infrastructure Program (CIP) offers a grant at rates that vary between 15% and 50%.

    When you need to invest in infrastructure in order to make further productive investment possible, you are eligible for a grant in respect of that infrastructure cost. Infrastructure in this case refers to those installations without which the new project cannot be undertaken, such as paved roads and bulk water. Also, when you need to make an investment in order to sustain an existing operation, e.g. invest in Solar and Green Energy, you will be eligible for support in respect of such investment cost.
    Note that production equipment, vehicles and buildings do not qualify. It is a requirement that the public must benefit from the infrastructure in question. The BEE requirement was relaxed late in 2016 to a minimum Level 8.

  • The following industries are eligible for support

    • Manufacturers
    • IPAP priority sectors
    • Mineral beneficiation, agriculture and construction
    • Mining and other labour absorbing sectors
  • Clothing and Textile Competitiveness Improvement Program (CIP)

    The CIP is based on the belief that competitiveness improvement is best achieved through value chain networking and partnerships. The CIP is thus based on cluster formation of either similar manufacturing entities or a value chain cluster, comprising e.g. manufacturers, suppliers and retailers in order to engage in collective improvement activities which are more cost effective and could include benchmarking, supply chain interventions and value chain integration where competitive advantages are identified. Two types of clusters are proposed, ordinary and national clusters. Qualifying expenditure are categorised into, people; product; process; market development and technological innovation. Grants for Ordinary clusters are offered at 75%, with a maximum cumulative amount of R25 million. Grants for national clusters start at 100% in year one, then taper down to 70% in year 5, with no set maximum amount.

  • Export Marketing and Investment Assistance (EMIA)

    The program aims to improve export performance by subsidising the export promotion efforts of entrepreneurs dealing in goods. Services are generally, excluded. A cash grant based on the cost of travelling, accommodation and participation is paid into the bank account of the applicant. Applications have to be submitted well in advance.

  • The program consists of the following components:

    • Exhibition assistance. Participation as a private exhibitor or as part of a national pavilion is supported.
    • Primary Market Research. Travels abroad as well as international product registration, e.g. patents and trademarks, are subsidised.
    • Trade Missions. Private missions as well as missions by organised industry are subsidised, both outward and inward.
  • Enterprise Incubation Program (EIP)

    After closing the Incubation Support Program, two new programs were launched by the the DTI and DSBD respectively, that should better cater for the variety of needs in this sphere. EIP is administered by DSBD and SPP by the DTI (see below).

    The objective of the programme is to support the establishment of new incubators and for the growth and expansion of existing incubators. EIP is targeted at South African registered and tax compliant entities - Small, Medium an Micro Enterprises (SMMEs) and Cooperatives with vast experience in the development and mentoring of early stage enterprises and cooperatives with potential to supply goods and services to firms in the local economy on a sustainable basis. The registered entities will support incubatees who are early stage enterprises and cooperatives with a focus on township and rural areas with potential to create livelihoods, but need extensive targeted guidance in business improvement. Support for women, youth and people with disabilities will be prioritised in the incubator plans. Grants of 100%, maximum R10 million over three years, are offered.

  • Film and Television Production Incentives (FTP)

    This program aims to develop the film industry and attract filmmakers to the country. The grant is calculated as a percentage of the local production expenses and varies between 25% and 35%. Applications have to be submitted before the start of primary shooting. The following programmes are offered:
    Locational Film Production - This is aimed at foreign film producers making films in South Africa.
    SA film production and co-production - This is aimed at South African film producers.
    SA Emerging Black Filmmakers - A grant of up to 50%

  • Isivande Women's Fund

    The Fund is managed by the Industrial Development Corporation (IDC) on behalf of the DTI through a development fund manager. IDF Managers is an SME financier aimed at supporting the creation of self-sustaining black and women owned businesses in South Africa by providing primarily financial and non-financial support to our investee companies.

  • The women enterprises have to meet the following criteria:

    • At least 6 months in operation;
    • Requires early stage, expansions and growth capital;
    • 50% plus one share owned and managed by women;
    • Have potential for growth and commercial sustainability; and
    • Improved social impact in the form of job creation.

    Eligible business plans requiring funding of R30,000 to R2 million are invited to submit their applications for review by the IDF Managers.

  • JOBS Fund (Offered by Department of Finance)

    The program aims to create jobs by supporting innovative projects with the potential to create many jobs at low cost. A grant of 50% is usually offered. The fund works in rounds that run for about 3 to 6 months at a time. Applicants can only apply for projects that fall within the definition of a specific round.

  • MCEP Low Interest loans (MCEP loans)

    Although the MCEP grant program is closed, loans at 4% p.a. interest rate are offered to those manufacturing entities who are compliant with the MCEP guidelines. These loans are offered only in respect of proven additional production orders and cannot replace existing finance. Furthermore these loans are only for pre- and postproduction working capital requirements, except in the case of companies with majority black shareholding. Repayment period is 48 months. Loans are offered through IDC against their normal criteria.

  • Production incentive (PI)

    The program aims to assist the Textiles, Clothing and Leather Goods industries in their efforts to become more competitive. A cash grant is offered, calculated as a percentage, usually 7.5%, of the applicant's Value Added (similar to gross profit) in the previous financial year. The grant may be used in a variety of ways, e.g. upgrading of production equipment; developing people; improving processes, optimising materials usage and developing new products. Retrospective applications are allowed.

  • Strategic Partnership Program (SPP)

    This programme, together with the Enterprise Investment program (above), replaced the Incubator Support Programme during the course of 2016. The objective of the Strategic Partnership Programme (SPP), is to encourage large private sector enterprises in partnership with government to support, nurture and develop SMEs within the partner's supply chain or sector in order to be manufacturers of goods and suppliers of services in a sustainable manner. The programme is intended to support Broad-Based Black Economic Empowerment (BBBEE) policy through encouraging businesses to strengthen the element of Enterprise and Supplier Development (ESD) of the Codes of Good Practice.
    The supported strategic-partners are expected to develop and support programmes/interventions aimed at enhancing the manufacturing and services supply capacity of suppliers with linkages to strategic partner's supply chains, industries or sectors.
    The programme offers a cost-sharing grant to a maximum of R15 million towards the total qualifying costs, based on the number of suppliers to be supported. The grant support is available for machinery and equipment, infrastructure, commercial vehicles and business development services necessary to grow enterprises to ensure that within a period of three (3) years, the SME's will have developed to be self-sustainable by providing locally manufactured products and/or services relevant to the sector.

  • Sector Specific Assistance Scheme (SSAS)

    Organisations supported under SSAS include Export Councils, Joint Action Groups, Industry Associations and those involved in the development of emerging exporters.

  • The Objectives of the Sector Specific Assistance Scheme

    • Developing an industry sector as a whole
    • Developing new export markets
    • Stimulate job creation
    • Broadening the export base
    • Proposing solutions to factors inhibiting export growth
    • Promote broader participation of black owned and SMME's to the economy.

    Grants are divided into three categories: General funding; Project funding and Project funding for emerging exporters. Grants offered go as high as 80%

  • Support Programme for Industrial Innovation (SPII)

    Transferred from IDC to DTI administration during 2015, the Support Programme for Industrial Innovation is designed to promote technology development in South Africa's industry, through the provision of financial assistance for the development of innovative products and/or processes. SPII is focussed specifically on the development phase, which begins at the conclusion of basic research and ends at the point when a pre-production prototype has been produced.

  • The SPII offers two schemes namely,

    • SPII Product Process Development (PPD) Scheme. Grants of 50% are offered to a maximum of R2 million. However, black ownership can enhance the grant to as high as 85%.
    • SPII Matching Scheme. Grants of 50% are offered, but this can be enhanced through black shareholding to as high as 75%. Grant limit is R5 million.
  • Seda Technology Programme (STP)

    Seda Technology Programme (Stp) is a division of seda (Small Enterprise Development Agency) focusing on technology business incubation, quality & standards and technology transfer services & support to small enterprises.
    STP provides a range of services that assist small enterprises, particularly enterprises in the 2nd economy, to access and acquire technology.

  • The Technology Transfer Unit (TTU) of stp has two main objectives, namely:

    • To provide technology transfer services to small enterprises; and
    • To provide specific technology support to women-owned enterprises.

    A maximum grant of R600 000 is offered.

  • Technology and Human Resources for Industry Programme (THRIP)

    The program, revised January 2016, is intended to leverage collaborative partnerships between government and industry (working with academia) for research and development in science, engineering and technology on a cost-sharing basis, to produce highly skilled human resources and technology solutions, for improved industry competitiveness.

  • The programme is awarded for the following:

    • Applied research and innovation projects as defined.
    • Registration and litigation cost of patents of strategic importance to the South African economy by entities in the IPAP Sectors.

    Grants are offered per project, and project requirements include inter alia,

    • The project must be applied research in the fields of science, engineering and/or technology whose outputs could make a significant contribution towards improving the industry partner's competitive edge;
    • The project intention should be to innovate, i.e. should lead to the creation and transfer of new knowledge into a process or product (prototype), or the transfer of existing knowledge into a new process or product to benefit the industry partner.

TAX ALLOWANCES (Updated November 2016)

  • Section 12 (i) of the income tax act, generally referred to as Industrial Policy Projects (IPP), offers an income tax allowance for investment in manufacturing projects is offered, based on the cost of the project. The maximum available allowance is R600 million per project.
  • Section 11(d) offers a 150% deduction in respect of research and development cost.
  • Section 12 l offers a tax allowance of 95c per Kwh saved to industries who invest in initiatives to save energy.
LATEST NEWS

15 August 2016: Textiles PIP grant program now open

The Production incentive program for the textiles industry (PIP) has finally resumed its activities and eligible businesses can now submit their applications.
Dectra specialises in this grant program and has a proud record of successful applications and claims since the inception of the program.
Read more...

 
Level 4 BEE Certified 100% Recognition  

Dectra is rated once per year and provides a copy of our credentials on request.

ICA - Icentive Consultants Association Member  

The ICA is a voluntary association that aims to ensure good ethical and quality services in our industry and assist in liaising with the Department of Trade and Industry on behalf of all specialists in our field. Dectra has been a member since inception of the association in 2005.

www.incentiveconsultants.co.za

SABS - ISO 9001  

Trusting us with large cash grant and subsidy claims, our clients need to be assured that our skills and procedures are of the highest standards. The ISO 9001 quality management system provides that assurance and we are proud to be certified as compliant with it.

www.sabs.co.za