23 November 2012

South Africa: Helping Manufacturers Raise Their Game

The Manufacturing Competitiveness Enhancement Programme (MCEP) will be a major boon for South Africa's manufacturing sector, Trade and Industry Minister Rob Davies said in Pretoria on Wednesday.

"One hundred and eighty-seven projects with grant requests of R2.3-billion have been received, and 60 have been approved, with commitments of over R300-million since the launch of the MCEP in May," Davies said.

The programme is a package of incentives designed for established manufacturers, with the aim of promoting competitiveness and ensuring job retention as the country's manufacturing sector remains fragile.

The incentives have been designed to improve the general ability of the South African manufacturing industry to compete against imports and to compete globally in other export markets.

"We're taking a leaf out of the books of the fast-growing emerging economies of Asia, where countries have relied on the manufacturing sector to drive economic growth and introduced strategies to raise competitiveness in their manufacturing sectors," Davies said.

Improving competitiveness

The programme is being positioned towards upgrading the competitiveness of relatively labour-intensive and value-adding manufacturing sectors affected by the rand exchange rate, the global economic crisis and electricity cost escalations.

"We believe that now is the time for manufacturers to invest in order to emerge much more competitively out of the current period of significant economic uncertainty," Davies said.

MCEP cash grants and concessionary industrial financing facilities, managed by the Department of Trade and Industry (DTI) and the Industrial Development Corporation (IDC), are available to companies operating in certain key manufacturing industries.

The DTI administers five types of production incentive grants: capital investment, green technology and resource efficiency improvement, enterprise-level competitiveness improvement, feasibility studies, and cluster competitiveness improvement.

Industrial financing loan facilities, administered by the IDC, offer working capital facilities at a preferential fixed interest rate of 6%.

In addition, niche projects identified by the DTI and the IDC that focus on new areas with the potential for job creation, diversification of manufacturing output - which would otherwise not be candidates for commercial or IDC funding - may be eligible for MCEP grants.


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