Presentation to the Portfolio Committee on Trade and

Presentation to the Portfolio Committee on Trade and Industry 20 August 2014

IDAD MISSION AND STRATEGIC OBJECTIVE Incentive Development and Administration Division Mission Strategic Objective • To stimulate and facilitate the development of sustainable, competitive enterprises through efficient provision of effective and accessible funding mechanisms (i. e. incentive schemes) that support national priorities • Facilitate transformation in the economy, to promote industrial development, investment, competitiveness and employment creation

INCENTIVE PROGRAMME CLUSTERS Broadening Participation Competitiveness Investment Manufacturing Investment Services Investment Infrastructure Investment • Black Business Supplier Development Programme (BBSDP) • Cooperatives Incentive Scheme (CIS) • Incubation Support Programme (ISP) • Manufacturing Competitiveness Enhancement Programme (MCEP) • Export Marketing Investment Assistance (EMIA) • Sector Specific Assistance Scheme (SSAS) • Capital Projects Feasibility Programme (CPFP) • • 12 I Tax Allowance Programme Automotive Investment Scheme (AIS) People-carrier Automotive Investment Scheme (P-AIS) Aquaculture Development and Enhancement Programme (ADEP) • Film & TV Production Incentive • Business Process Services (BPS) • Critical Infrastructure Programme (CIP) • Shared Economic Infrastructure Facility (SEIF) • Special Economic Zones (SEZs)

BROADENING PARTICIPATION CLUSTER § To broaden economic participation of small enterprises owned by historically disadvantaged individuals including women, youth, and people with disabilities. § To promote economic participation of enterprises from historically disadvantaged communities and marginalised regions into the mainstream economy.

INCUBATION SUPPORT PROGRAMME (ISP) § Objectives o Encourage partnership between private sector and government to support incubators to develop and nurture SMMEs into sustainable enterprises that can provide employment and contribute to economic growth. o Provide funding for incubators generate revenue through the provision of services and initiatives that can be self sustainable. § Eligible Applicants o Registered legal entity with CIPC o Registered higher / further education institution o Licensed / registered science council

COMPETITIVENESS INVESTMENT CLUSTER To create an enabling environment that promotes industrial competitiveness and the growth of South African goods and services in the global economy.

MANUFACTURING COMPETITIVENESS ENHANCEMENT PROGRAMME (MCEP) § Objective: To promote or enhance entities’ competitiveness and job retention. § Programme Components o o Production Incentive (administered by the dti) Ø Capital Investment Ø Green Technology Ø Enterprise Competitiveness Improvement Ø Feasibility Studies Ø Cluster Competitiveness Improvement Industrial Financing Loan Facilities (administered by IDC) Ø Pre and post dispatch Working Capital Ø Industrial Policy Niche Project Funding Ø Gold Loan Scheme – to assist gold jewellery manufacturers

MANUFACTURING COMPETITIVENESS ENHANCEMENT PROGRAMME (MCEP) § Eligible Applicants o Registered manufacturing entities (under SIC 3). o Engineering services that support the manufacturing sector. o Conformity assessment bodies that support the manufacturing sector. o Automotives manufacturer with <25% of base-year turnover earned as part of the supply chain locally and/or internationally may be considered for eligibility. § Eligibility Criteria o Entity should be a in possession of a valid tax clearance certificate. o Entity should be at least a Level 4 B-BBEE contributor status in terms of B-BBEE codes. If not, entity must submit a plan showing how it will achieve L 4 within 2 years. BEE plans will be accepted until 31 May 2015 (no plans will be accepted from 01 June 2015). v MCEP has approved 562 projects to the value of R 3. 8 million since its inception in May 2012

KEY ACHIEVEMENTS FOR CIC 2013/14 MCEP NUMBER OF APPROVALS PER SECTOR MCEP VALUE OF APPROVALS PER SECTOR Manufactures in the agro-processing, metals and chemical sectors continued to dominate the MCEP approvals for 2012/13 and 2013/14. 9

CAPITAL PROJECTS FEASIBILITY PROGRAMME (CPFP) § Description o A cost-sharing grant that contributes to the cost of feasibility studies likely to lead to projects that will increase local exports and stimulate the market for South African capital goods and services. § Objectives o Facilitate feasibility studies that are likely to lead to high-impact projects which will stimulate value-adding economic activities in South Africa. o Attract high levels of domestic and foreign investments. o Strengthen international competitiveness and create a long-term demand of South African capital goods sector and allied industries. o Create sustainable jobs. o Stimulate upstream and downstream linkages. v 54 CPFP projects have been approved since 2009/10, to a total value of R 289. 9 million

KEY ACHIEVEMENTS FOR CIC 2013/14 CPFP APPLICATIONS APPROVED PER COUNTRY 11

MANUFACTURING INVESTMENT CLUSTER To address economic shortfalls and market failures within the manufacturing sector as well as to enhance and stimulate the manufacturing sector.

12 I TAX ALLOWANCE § Description Tax allowance for investment in assets and training to encourage investment in manufacturing and the use of new technology § Point Scoring calculation is based on: o Upgrading technology (innovative process, cleaner production, energy efficiency) o Business linkages o Procurement of goods / services from SMMEs o Creation of direct employment o Skills development o Locating in an IDZ (in the case of a new project) Since the 12 I’s inception in 2010/11, 39 projects have been approved to the tax allowance value of R 12. 9 billion and training allowance of R 181 million

AUTOMOTIVE INVESTMENT SCHEME (AIS) § Description o A grant of between 20 -30% of the value of qualifying investment in productive assets by light motor vehicle manufactures. o A grant of between 25 -35% of the value of qualifying investment in productive assets by component manufactures and tooling companies. § Objectives o To grow and develop the automotive sector through investment in new and/or replacement models and components. o To stimulate the increase of plant production volumes, sustain employment and/or strengthen the automotive value chain. Since the AIS’s inception in 2009/10 to 2013/14, 195 projects were approved for an incentive value of R 6. 2 billion. Of the 195, 177 were component manufacturers (R 1. 3 billion), 16 were Original Equipment Manufacturers (R 1. 6 billion) and 2 were People Carrier Automotive (26 million).

AQUACULTURE DEVELOPMENT ENHANCEMENT PROGRAMME (ADEP) § Description The incentive is available to registered aquaculture entities engaged in primary, secondary and ancillary aquaculture activities in marine and freshwater. § Objectives o o o To stimulate investment in the aquaculture sector ; Increase production; Sustain and create jobs; Encourage geographical spread; and Broaden participation.

SERVICES INVESTMENT CLUSTER § To stimulate investment that creates employment opportunities and attracts foreign investors with the intention of building South Africa’s international profile.

FILM AND TELEVISION PRODUCTION § Description o Foreign Film and Television Production and Post-production: aims to attract foreign-based film productions to shoot on location in South Africa and conduct post-production activities in the country. o South African Film and Television Production and Co-production: aims to assist local film producers in the production of local content. To stimulate investment that creates employment opportunities and attracts foreign investors with the intention of building South Africa’s international profile. o South African Emerging Black Filmmakers production incentive – to support merging Black fillmakers with an intention to nurture and grow them to take-up big productions and thus contribute towards employment opportunities § Eligible Formats: feature films, tele-movies, television drama series, documentaries and animation. Reality television is excluded. v 395 applications have been approved to the value of R 2 billion h

BUSINESS PROCESS SERVICES § Description Business Process Services Incentive comprises two components: o Base incentive: offers a 3 year operational expenditure (OPEX) grant that tapers down in line with the narrowing cost gap between South Africa and other destinations. o Graduated bonus incentive: is offered for greater job creation, if the applicant exceeds certain annual offshore job creation targets as stipulated by the dti. § Objectives o To attract investment and create employment in South Africa through offshoring activities. o To build on the talent pool of the Monyetla Work Readiness Programme, which is designed to provide work-readiness training and placement for entry-level agents within South Africa’s growing BPS industry. v 42 projects have been approved to the value of R 402 million since January 2011

INFRASTRUCTURE INVESTMENT CLUSTER Enhance and develop the country’s infrastructure for investment purposes.

CRITICAL INFRASTRUCTURE PROGRAMME (CIP) § Description o A cost-sharing cash grant for projects designed to improve critical infrastructure in South Africa. o Grant covers qualifying development costs of between 10% and 30% towards the total development costs of qualifying infrastructure. o Grant is made available to the applicant upon the completion of the infrastructure project concerned. o Infrastructure for which funds are required is deemed to be ‘critical’ if the investment would not operate optimally or take place without the said infrastructure.