Dectra Newsletter - December 2016

1 December 2016

Dear Clients, Colleagues and Associates

The current status of Government's incentive support programs

Over this past twelve months we have had very little to offer clients who were looking to DTI for support of their industrial investments.

Nothing came of DTI's promises that they would relaunch those popular EIP and MCEP incentive programs and that is probably where it is going to stay.

The poor administration of some programs causes us many headaches, but fortunately there are also those with prompt service.

So what is there to talk about?

It would be a mistake to think that there is nothing on offer from the DTI and other departments.

Firstly, there are a number existing programs still open for applications. Many of them are industry specific, e.g. for textiles & clothing manufacturers, but not all.

Examples of programs that are not specific to one industry are, Product Development (SPII), Critical Infrastructure (CIP), Export Marketing (EMIA) and Cluster development (CDP) (which offers a whopping 80% grant).

Also, there is the MCEP 4% loan scheme for those manufacturers that have landed fat new contracts.

Most of the above have small volumes, so applications and claims move faster.

In the pipeline there are, an agro-processing support program and a railways components support program, as mooted again by Minister Rob Davies, the Minister of Trade and Industry, at the Manufacturing Indaba in Cape Town on 8 November. We'll have to wait and see. However, the availability of budget is critical to the launch of any new program. It is clear that DTI is struggling to obtain budget approval from Treasury and this is the main reason why new programs are not launched and old programs closed prematurely.

In general it can be said that government at the moment tends to develop support mostly with the agro-processing industry in mind. That industry presents the so-called low hanging fruits of good growth potential due to its competitive position worldwide, and jobs potential due their labour intensity and the ability to employ low skilled labour.

Equally popular with government for obvious reasons, is support for black owned businesses, such as the Black Industrialists Policy (BIP). Also, most support programs nowadays incorporate transformation and empowerment. Either there is a qualifying requirement around ownership, or there is an enhancement of support based on the percentage of black ownership.

Also important, is an interesting development around the BEE scorecard requirements: All programs now require a BEE certificate with applications and claims, but, with the exception of one or two historic situations, the required BEE level is now much lower.

And finally, a statement by the Minister of Finance in his mini budget speech during October, that government is reviewing its incentive programs and that the results of their review are expected by October 2017. There is no way of knowing what will be revealed, but logically the administrative efficiency, bang for buck and affordability would be criteria that support programs would be measured against.

The most popular programs at the moment.

  • Textiles and Clothing incentive (PIP)
  • Automotive Investment Program (AIS)
  • Export Marketing and Investment Assistance (EMIA)
  • Critical Infrastructure program (CIP)
  • MCEP 4% working capital loans (MCEP loans)

The program with the greatest potential

The Cluster Development Program (CDP) with its 80% grant offer must be the program with the greatest potential at the moment.

To help you identify programs your firm might be able to benefit from, we have loaded short descriptions of all of the available programs on our website. Just click here and you'll be able to continue reading: http://www.dectra.co.za/financial-services-government-grants.html

Or call us and let us help you identify the appropriate program. We're experts!

We look forward to doing business with you in 2017!



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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