Manufacturing Competitiveness
Enhancement Programme
(MCEP)
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Outline
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Objectives
Key Principles
MCEP Framework
MVA Calculation
Eligibility Criteria
Transitional provisions
MCEP Components
Exclusions
Budget
Application Process
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Objectives of MCEP
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Encourage enterprises to upgrade their production facilities, processes,
products and up-skill workers
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Provide for upgrading of sectors in order to maximise output and
employment
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Expand existing IDC distressed funding facility to SMEs, and reduce cost
of capital for distressed enterprises
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Reduce the price of working capital for exporters and businesses
participating in govt infrastructure programmes
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Strengthen the responsiveness of available incentive schemes to the
current economic challenges.
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Key principles
• Flexibility and customisation
– MCEP matrix incentive operates as a single programme with one
overarching budget
– Budget can be shifted amongst components depending on
uptake between and during financial years – “test the market”
– Individual components have clear, rules-bound access criteria
– However, criteria can be customised on a sectoral basis
informed by market failures / constraints identified in CSPs.
• Sector prioritisation
– Labouri Intensity
– Strategic linkages within value chains
– Vulnerability
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MCEP Framework
• Non-taxable grant calculated as a % of Manufacturing Value
Added (MVA) and capped as follows:
– 7% of MVA - enterprises larger than R200m in assets
– 10% of MVA - enterprises with assets >R30m – <R200m
– 12% of MVA - enterprises with assets between >R5m –
<R30m
– 15% of MVA – 100% black-owned enterprises and
enterprises with assets below R5m
• Available over a two year period
• Grant more favourable to SMEs
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MVA Calculation
Sales/Turnover
Less:
Sales value of imported goods
Less:
Sales value of other Bought in Finished Goods
Less:
Material Input costs (Used in manufacturing process)
=
MVA
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MCEP Components
• Production Incentive (the dti: TEO)
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Capital Investment
Green Technology and Resource Efficiency Improvement
Enterprise-Level Competitiveness Improvement
Feasibility Studies
Cluster Competitiveness Improvement
• Loan Facilities (IDC)
– Pre/post-dispatch Working Capital Facility; and
– Distress Funding interest make-up facility
– Niche Fund Facility
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MCEP Eligibility Criteria
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Manufacturing (SIC 3) conformity assessment agencies servicing the
manufacturing sector.
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Basic chemicals, Basic iron and steel, Manufacture of pulp and paper, Basic precious
and non ferrous metals, Petroleum refineries and Processing of nuclear will be
considered if projects create down stream jobs.
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Employment: Projects are required to sustain existing employment
levels at the date of application, for the duration of their participation in
MCEP. The programme is designed to last for six years and enterprises
are required to renew their participation at the end of every two years.
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B-BBEE: Applicants should achieve at least a level four (4) B-BBEE
contributor status, in terms of the codes of good practice or submit a
plan to demonstrate how they will achieve level – 4 B-BBEE contributor
status within a period of four (4) years.
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Applicants who are unable to comply to the B-BBEE and employment criteria have to
provide a motivation to the dti at the time of application.
MCEP Eligibility Criteria
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Submission of applications: Applicant/s must submit a complete
application at least 60 calendar days prior to commencement of
commercial use of the assets or undertaking activities being applied for.
– the dti to adjudicate and respond within 60 calendar days after submission
of a complete application
– If the dti does not respond within the 60 calendar days after submission of
a complete application, applicant should notify the dti in writing of its
intention to commission the qualifying assets for commercial use or
undertake implementation of business development activities before
approval may proceed with the project before approval
– The assets or activities will not be disqualified on the basis of having been
in commercial use or being undertaken before approval
Transitional Provisions
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PI Capital Investment and Green Technology Upgrading grants with a
start of production date falling on 30 May 2012 up to 30 July 2012.
Such projects may lodge applications until the 31 August 2012
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MIP expansion Projects not in commercial production before the start
date of MCEP on 04 June 2012 and have not claimed the grants under
the MIP are eligible to apply
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MIP application and/or agreement should be withdrawn or cancelled
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Projects that have submitted MIP claims, cannot convert such approval
or claims to the PI Capital Investment and Green Technology
Upgrading grants
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However, such projects may apply for other components of the MCEP
MCEP (PI) Components
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A Capital Investment grant :
– A cost sharing grant towards investment in upgrading capital equipment and
expansion of productive capacity. Cost sharing will be between 30, 40% and 50%
of the investment with smaller enterprises receiving a larger percentage of their
investment. Max grant R50m.
– Minimum eligible projects: Small enterprises (assets below R5m) R500,000.
– Enterprises with assets above R5m; capital investment of at least 20% of total
assets
– Additional 10% bonus grant for enterprises with assets above R5m, if the create
new additional jobs or Procure at least 50% ‘in rand value’ of the total project
budget in machinery and equipment and tooling manufactured in South Africa
(SA).
Enterprise size
No. Of new additional jobs
>R5 million – <R30 million
>10 jobs
>R30 million – <R200 million
>20 jobs
>R200 million
>25 jobs
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MCEP (PI) Components
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Green Technology and Resource Efficiency Improvement grant:
– A cost sharing grant towards investment in technology and process that will make
the production process greener resulting in cleaner production and improved
energy efficiency. Cost sharing will be between 30, 40% and 50% of the investment
with smaller firms receiving a larger percentage of their investment. Max grant
R50m.
– Additional bonus grant also available for enterprises that create new additional jobs
or procure machinery and equipment manufactures in SA
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Enterprise-Level Competitiveness grant:
– A cost sharing grant towards investment in the adoption of world class
manufacturing practices such as lean production system, Six Sigma, etc, adoption
and accreditation of conformity and quality standards such as ISO, the CE mark,
improved packaging design, acquisition of IT software systems, project specific
skills upgrading, etc. Cost sharing will be between 50 to 70% of project costs.
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MCEP (PI) Components
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Feasibility Studies grant:
– A cost sharing grant towards developing a bankable feasibility
study for new manufacturing projects. Qualifying costs will include
engineering design costs, EIA costs and other relevant consulting
fees. Cost sharing will be between 50 to 70% of project costs.
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Cluster Interventions grant:
– A cost sharing grant towards support for cluster initiatives to
improve competitiveness, innovation and access to new markets.
Examples of initiatives that can be funded include shared
infrastructure such as a sector technology development centre,
market research, international advertising and publicity costs, etc.
Access will be subject to a defined minimum number of enterprises
and cost sharing will be 80% of qualifying project costs.
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Exclusions
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Enterprises already receiving dedicated sector support such as those
benefiting from the MIDP, APDP, AIS, the Clothing and Textile CTCIP
are excluded.
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An automotives manufacturer with less than 25% of its base-year
turnover earned as part of motor manufacturers’ vehicle (light, medium
or heavy) supply chain (including after-market supply) locally and/or
internationally may be considered for eligibility under MCEP
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Sector Examples
SECTOR
→ Investment
support
Agro-processing
Support for small
scale maize milling
Capital / Transport Investment in new
Equipment
equipment /
technology to
supply
componentry into
rapidly scaling up
rail procurement
programmes
Renewables: Wind Investment in new
and Solar
equipment /
technologies to
implement existing
capabilities (e.g.
fabrication / casting,
composites) to wind
and solar
component
manufacture
→ Working capital → Project
→ Competitiveness → Competitiveness → Standards,
Feasibility Studies upgrading - firm
upgrading - sector Accreditation and
level support
level support
Certification
Pre-shipment
finance for large
orders, offered on
terms comparable
to those secured by
import competitors
Support to explore Support for product
feasibility of
development and
industry canning
commercialisation
facility to combat in domestic and
monopolistic tin and export markets
packaging prices
Market studies to Support for meeting
identify processed SPS standards in
food opportunity new markets
into high growth,
net food importing
developing
countries
Feasibility studies
into new capital
projects linked to SA
capital equipment
supply base
Support for
technolgy / skills
development e.g.
NTI
Support for 'lateral
migration' of
capabilities to wind
and solar
componentry
Support to meet
OEM standard and
safety requirements
Support for
domestic
manufacturers for
SABS system testing
of SWH systems.
Support for new
companies in wind
and solar for
certification that
e.g. blades meet
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OEM tolerance
thresholds
MCEP Budget
Assumptions
Total VA of
sectors covered
2010
R'm
2012
2013
2014
2015
2016
113,431
10% of VA cap 11,343
% of VA
covered
Amount of
incentive
Actual MTEF
allocation
2011
Total
Total
(20122017 (2012-2014) 2017)
11,910 12,506
15%
13,131
25%
13,788 14,477 15,201 15,961
30%
1,876
3,283
4,136
1.,250
2,000
2,500
20%
2,895
10%
1,520
5%
798
9,295 14,508
5,750
•Selected Sectors Cover:
•44% of manufacturing Jobs
•15% of fixed capital in manufacturing and
•33% of manufacturing MVA
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APPLICATION FORM
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THANK YOU
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MCEP (Loan) Components
• Pre/Post-dispatch Working Capital Facility:
– Finance to cover working capital requirements from
• Date of receipt of order to dispatch to customer; including raw material,
packaging and transportation costs
• Date of dispatch of goods to date when seller realises the proceeds of
sale. Can include performance bonds and guarantees
– Finance fixed at 6%
• Distressed Concessionary Fund
– Preferential interest rate facility for any distressed manufacturers
– Finance fixed at 6%
– No fees to be levied
• Niche Funding
– Strategic projects proposed by IDC and dti sector desk
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