Through its current suite of industrial financing schemes, the Department of Trade and Industry (DTI) says it is currently in a position to extend about R5-billion a year to support industrial development, small businesses and export-promotion initiatives.
The department’s Industrial Development Incentives Administration deputy director-general Tumelo Chipfupa reported this week that the incentives have been clustered into schemes that support manufacturing investment, competitiveness-raising projects, services and infrastructure investments and black-economic empowerment and cooperatives programmes.
The flagship manufacturing support incentives included the Automotive Investment Scheme (AIS ), the Manufacturing Investment Programme (MIP), and the 12i tax incentive, while the Manufacturing Competitiveness Enhancement Programme (MCEP) has emerged as the DTI’s main tool for supporting firm-level competitiveness programmes.
During 2012/13, 593 MIP projects were sanctioned, leading to grant approvals of R1.2-billion and disbursements of R922-million. Chipfupa says the grants, which are generally directed towards medium-sized investment activities across industry subsectors, will support investments of R10-billion and the creation of more than 12 000 jobs.
Through the AIS, new grants of R407-million were approved across 28 mostly automotive-component projects during the period, which will reportedly support investments of R1.8-billion. The DTI reports that the projects should also generate over 855 jobs.
A total of 12 large projects benefited form the 12i tax incentive during the fiscal year, which Chipfupa indicated translated into a total allowance of R3.35-billion and the foregoing of R904-million in tax revenues.
However, he said it would support investments collectively valued at R10-billion, which should yield 1 357 direct jobs and a further 44 220 indirect jobs.
Project beneficiaries included Phyto Energy’s R2.8-billion Eastern Cape biodiesel project, the R220-million project to upgrade, expand and reopen the Cisco steel mill in the Western Cape, following its purchase by DHT Africa, of Turkey, and a R144-million capital investment programme by Tiger Brands.
Chipfupa reports that a total of 197 projects were also approved under the Manufacturing Competitiveness Enhancement Programme (MCEP), which was formally launched in May last year.
Grants worth R997-million were approved between June and the end of March, with R73-million of that actually disbursed. A total of nine loans, collectively valued at R150-million, were also approved under the MCEP scheme. The approvals would support investments worth R4-billion and sustain 33 551 jobs.
Two of the larger MCEP beneficiaries included Astral Foods, which received a R36-million grant for an investment in a solution that would enable it to use poultry litter as a fuel for energy production, and Ellies’ Megatron Infrastructure Solutions, which received a R29-million grant to expand its medium voltage switchgear and distribution transformer manufacturing plant.
In the services milieu, 12 business process outsourcing projects received grant support worth R66.7-million during the period in support of call-centre investments worth R1.3-billion. The DTI says the incentive will support the creation of more than 3 800 jobs. The department also approved R339-million for 70 film and coproduction projects during the period.
DTI investment promotion and facilitation chief director Yunus Hoosen said that, despite the public perception of weak investment interest in South Africa, the department had identified a near-term investment pipeline worth R45-billion as of the third quarter of 2012.
He indicated that, should these investments be implemented, they had the potential to create over 20 000 jobs.
“Multinationals have affirmed South Africa as a hub and a gateway into the continent with new investments and expansions in the manufacturing sector,” he said, pointing to recent investments by companies such as Unilever, Procter & Gamble, Johnson Controls, Nestle, Tellumat and Kimberly-Clark.
He also unveiled a booklet entitled ‘South Africa’s Top 10 Investment Projects’, which had been published ahead of the recent Brics Summit of Brazil, Russia, India, China and South Africa, which took place in Durban.
The booklet outlines opportunities in areas as diverse as biofuels manufacture and renewable energy, through to automotive components and business process outsourcing.