Animated film, "Revolting Rhymes", will represent South Africa at the 90th edition of the Academy Awards in the United States next month.
The film will be vying for top honours at the prestigious awards that are also known as the Oscars.
The production was approved under the Department of Trade and Industry's (dti) Foreign Film and Television Production and Post-Production Incentive in September 2015.
The film received a R5.3 million incentive which led to an investment of R22 million, spent on local goods and services.
"The production was animated by our very own local studio Triggerfish Animation, in collaboration with Magic Light Pictures-based in the United Kingdom," said the dti on Thursday.
Triggerfish Animation studio is responsible for award winning animation productions which include Khumba, Zambezia and Stick Man, which were all assisted under the dti's film and TV incentive schemes.
The film is the adaptation of Roald Dahl's twisted fairy tales and has been nominated in the category of Best Animated Short - making it the first animation nomination from the African continent.
The film was also aired on BBC and has won several awards including Best Storytelling at the Shanghai International Film and Television Festival in China.
Driver of economic development
Government said the film industry has a great potential to be a key driver of economic development.
"The South African government has held to the notion that the film industry has great potential to be among South Africa's key drivers of economic development through the creation of jobs, both direct and indirect, and through skills development.
"In fulfilling its commitment, the film and Television Production incentive has been running successfully since its inception by the dti in June of 2004."
The incentive is geared towards enhancement of international profile, increasing the country's creativity and employment opportunities, as well as technical base.
"For companies to benefit under this incentive, Foreign Production and Post-Production, the spend in South Africa must be R12 million and above, provided that at least 50% of the principal photography schedule is filmed in South Africa, for a minimum of four weeks," said the department.
Since its inception, more than 100 foreign productions were approved, with investment of more than R4 billion.
South Africa has been seeing several blockbusters landing on its shores, such as Avengers -Age of Ultron and Mad Max-Fury Road.
The Oscars will take place at the Dolby Theatre in Hollywood, Los Angeles in the United States on 4 March.