The DTI's Manufacturing Competitiveness Enhancement Program

Manufacturing competitiveness enhancement program

• Cash grants on investment cost

• Improve productivity & competitiveness

• Retain jobs.

Main Qualifiers

• Applicant company’s activities must include

manufacturing or Engineering services or conformity

assessment agency.

• At least 1 financial year of trading history

• BEE Level 4 or provide 2 year plan

How much?

A cash grant varying between 30% and 80% of

investment Cost.

Tax Exempt, but not really.

Qualifying investment costs

1. Upgrading and expansion of equipment and

buildings

2. Converting to Green technology & Energy saving

3. Improving competitiveness (soft issues)

4. Feasibility studies

5. Cluster initiatives

Also on offer

• Pre- and post production working capital loans @ 6% p.a. from IDC

CLASSIFICATION

Size of applicant according to BALANCE SHEET + ACC. DEPR.

Grant % varies from component to component

R0 – R5 million Highest % grant

R5 – 30 million

R30 – R200 million

> R200 million Lowest % grant

MVA Limitation

This is an overall limitation on the first 4 cost types

• MVA = Manufactured sales less cost of materials

used.

Example: MVA calculation

IncomeStatement

MVA Calculation

Sales of manufactured goods 1 000 000 1 000 000

Sales of other goods and services 788 000 n/a

Total sales 1 788 000 1 000 000

Raw materials & Packaging 600 000 600 000

Operating cost 231 000 n/a

Administrative cost 97 000 n/a

MVA 400 000

Limit according to size of applicant, e.g. R30m> <R5m= 25% R100 000

Size of applicant

Expand Green Soft Feas. study

Cluster MVA %

R % % % % % %

<5m 50 50 70 70 80 n/a

>5 <30m 40 40 60 70 80 25

>30m <200m 30 30 60 50 80 20

>200m 30 30 50 50 80 10

MVA limit? Yes Yes Yes Yes No

Summary of grant percentages

CONCLUSION

• More generous than any program before.

• Fewer entry level requirements and performance

requirements than any program before.

• The only exclusions are, no subsidies on 2nd hand

assets, no vehicles and no leased buildings