Manufacturing Competitiveness Enhancement cash grants from DTI

Minister Rob Davies, department of trade and industry (DTI), has announced yet a further set of incentives to bolster manufacturing and general engineering industries against the current downturn in economic conditions, intended also to counter dismal local market conditions and the effects of recession in some of South Africa’s top export destinations.

Known as the Manufacturing Competitiveness Enhancement Programme (MCEP), DTI’s programme is aimed at tempting manufacturers to upgrade their production facilities, the incentives being greater as more labour sustainability appears in the returns and value is added by expansion to the processes involved and markets are built.

Said Davies, “The MCEP will also aim to address the general ability of the South African manufacturing industry to compete against imports and to also to compete globally against its counterparts in other export markets.” His statement followed his budget vote speech in the National Assembly on this point.

“It is proposed”, he said, “that the MCEP incentive will be available not only to entities engaged in manufacturing, but also to engineering services and other agencies servicing and supporting the manufacturing industry.”

The grants in general will be managed by the DTI and in the case of capital grants “cost sharing” will be between 30 and 50% of the investment, with smaller firms receiving a larger percentage of their investment. This incentive has been opened to all manufacturing enterprises not covered by sector-specific incentives, such as those available to companies in the automotive, clothing and textiles and business process outsourcing industries, Minister Davies said.

Launching the R5.8-billion programme, Minister Davies added that a number of types of grant were involved – namely a straight forward capital investment, as already mentioned, involving upgrading capital equipment and expansion of productive capacity.

Then there was a “green technology” grant for an existing production process that becomes “greener” as a result of capital injection, resulting in cleaner production and improved energy efficiency. This would have the same cost sharing arrangement at between 30 and 50% of the investment, with smaller firms again receiving a larger percentage of their investment.

There are also to be enterprise-level grants, where investment in the adoption of world-class manufacturing practices were involved, ranging from lean production technology to gaining an ISO mark and where cost sharing would be as high as 50 -70%.  Similar cost sharing arrangements would be offered for feasibility studies grant, resulting from a programme where “a bankable feasibility study for new manufacturing projects” was found to be acceptable.

Finally, there would be cluster initiatives grants towards support for cluster initiatives to improve competitiveness, innovation and access to new markets and where technology development centres, market research, international advertising and publicity costs were deployed to gain new markets. Dr Rob Davies said that it was important for DTI to ensure that the MCEP grant programme was “flexible” in its application and he said that the working capital portion of the grant which will be managed by the Industrial Development Corporation. Manufacturers and organisations can begin applying from June 4, which is when DTI will open its Internet online application system, the Minister said, implying this would be on the DTI website.

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