MCEP: A really generous proposal by DTI

The draft new MCEP grant and loan program.


Having read the draft guidelines of the new MCEP, I can only say, this is a big step forward for DTI and a break away from the restrictive requirements of previous grant programmes.

The Department of Trade and Industry last week released the draft guidelines of their new flagship grant and loan program, the Manufacturing Competitiveness Enhancement Program (MCEP), for comment. Its still in draft format, but I know DTI is keen to stick to their implementation deadline of 30 May 2012 and I do not expect that much will change.

Draft guidelines in a nutshell

This is for existing manufacturers, for engineering services supporting manufacturers and for conformity agencies servicing the manufacturing sector. Manufacturing of basic materials is excluded.

Tax free cash grants are offered for five different purposes: for investment in equipment and buildings to (1 )expand or upgrade or (2) to implement green technology; for the (3) improvement of competitiveness and quality through quality systems, training, product development, etc.; To (4) develop feasibility studies for new projects; To (5) support cluster initiatives to improve competitiveness.

There are also 6% loans available from the IDC for working capital and to relief distress.

The grant value is determined three-way: . A grant value of up to 50% on fixed assets and up to 70% on services. . A limitation of the grant value of up to 15% of the applicant's historic Manufacturing Value Added (MVA), In other words, pure gross profit. . A limitation of the grant value of up to R50 million.

The main requirements for entry would be (1) to have been in operation for at least 12 months; (2) to be Level 4 BEE/to convince DTI that you will get there within 2 years and (3) to maintain the present number of jobs.

Payment of the total grant amount can be claimed, in the case of investment in assets, as soon as commercial production starts. In the case of services, payment can be claimed as soon as the service activity has been completed. If the process takes too long an interim payment can be claimed after 12 months.

An open invitation

Call us if you need to know more. We would be happy to sit down and see if you could use this, or to do a presentation to your company, or to forward you a copy of the draft guidelines.

Here's to something new!

Theo Meintjes
Managing Director



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