Boost for the Manufacturing Sector

187 projects with grant requests of R2.3 billion have been received, and 60 have been approved with commitments of over R300 million, since the launched of the Manufacturing Competitiveness Enhancement Programme (MCEP) by Minister Rob Davies in May this year. MCEP is a package of incentives designed for established manufacturers with the aim of promoting competitiveness and ensuring job retention.

The Minister of the Department of Trade and Industry (the dti), Rob Davies says that the incentives have been designed to improve the general ability of the South African manufacturing industry to compete against imports and to compete globally against its counterparts 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.”

Minister Davies added that the MCEP is being deployed towards upgrading the competitiveness of relatively labour-intensive and value-adding manufacturing sectors impacted by the currency, 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,” he said.

The Manufacturing Competitiveness Enhancement Programme (MCEP) cash grants and concessionary industrial financing facilities are available to companies operating in certain key manufacturing industries, managed by the department of Trade and Industry (the dti) and the Industrial Development Corporation (IDC). The interventions are clustered around the production incentive, administered by the Department of Trade and Industry (the dti), and the working capital facility, managed by the Industrial Development Corporation (IDC).

There are five types of production incentive grants, administered by the dti: 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 and contribution to exports, and that would otherwise not be candidates for commercial or IDC funding, may be eligible for an MCEP grant that can be structured as part of the borrower’s equity contribution.

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