Grants & Incentives
Agri-Processing
5 March 2013
Agenda
•
Introduction to Innovative
Finance
•
Government Grant Objectives
•
Grants in Agriculture
•
Manufacturing Investment
Programme (MIP)
•
Manufacturing Competitiveness
Enhancement Programme
(MCEP)
Introduction to
Innovative Finance
• Specialist Financial Services Company adding
value to Manufacturers and Industrial
Businesses
• Holistic Approach to procuring relevant finance
products:
•
Funding in the form of debt / government subsidies
•
Private Equity and Venture Capital
Government Grant
Objectives
• Industrial Policy Action Plan and NewGrowth
Path
• Focus on:
•
Employment Creation
•
Improving industrial capacity and output
•
Stimulating investment and growth in industrial sector
•
Broad Based Black Economic Empowerment
Grants in Agriculture
• Manufacturing in the Agricultural Industry?
• Secondary processes = value add processes
• Grants viewed as bonus payments from
government and not financing
• Paid retrospectively and payment is subject to
meeting monitoring criteria during contractual
period
• Business sense is the first priority
Grants Application Process
Grants Claim Process
Manufacturing Investment
Programme
• Released July 2008 for a six year term
• Available to Manufacturers (SIC Code 3)
• Companies, Closed Corporations and CoOperatives legally registered in SA
• New start-ups or Expanding Businesses
• Application must be submitted 90 days in
advance of first asset brought into operation
Manufacturing Investment
Programme
• Tax Free, Paid in Cash
•
< R 5 million – 30% of qualifying investment over a three year term
•
> R 5 million but < R 30 million – between 15% and 30% of qualifying investment
calculated according to a regressive sliding scale over two years
•
> R 30 million – fixed 15% on qualifying investment over two years
• Qualifying Investment includes:
•
Plant and Machinery
•
Owned buildings / rented premises and leasehold improvements
•
Commercial Vehicles used in production process
Manufacturing Investment
Programme
MIP Qualifying Criteria
•
Meet the required number of points according to the prescribed
Economic Benefit Criteria Tables
•
Expand in terms of revenue – 15% growth in year one and 25%
growth in year two calculated respectively from base year
•
Prove sustainability and business feasibility
•
Prove the need for financial grant assistance
•
No reduction in base year employment
•
Growth in respect of historical asset base. DTI will not fund mere
replacement.
Manufacturing Investment
Programme
• Qualifying Criteria to remember:
•
Are you making significant investment in Plant and Machinery or
Starting a New Business/Division?
•
Are you Creating Jobs?
If the answer is Yes...
You stand a good chance of obtaining a grant if the
application is correctly structured
MCEP
• Cost Sharing Grant paying back between 30%
and 70% of qualifying costs
• Encourages manufacturers to upgrade
facilities in order to sustain employment and
promote competitiveness
• Available to all existing manufacturers
• Applications must be submitted 60 days in
advance of project commencement
MCEP: Key Elements
•
Production Incentive:
•
Capital Investment
•
Green Technology and Resource Efficiency
•
Enterprise Level Competitiveness Improvement
•
Feasibility Studies
•
Cluster Competitiveness
• Industrial Financing Loan Facilities (via IDC)
MCEP Benefit
• Maximum grant calculated as a percentage of
the applicant’s average Manufacturing Value
Add over two years according to audited
financial statements.
• MVA = Gross Sales less Raw Material Input
Costs
MCEP Maximum Benefit
Enterprise Size
Maximum Percentage of MVA
< R 5 million
Direct Cost Sharing Grant; MVA cap
not applicable
100% Black Shareholding
25% of MVA
> R 5 million but < R 30 million
25% of MVA
> R 30 million but < R 200 million
20% of MVA
> R 200 million
10% of MVA
MCEP Eligibility Criteria
•
Registered legal entity within South Africa
•
Applicants with a historical asset base of < R 5 million should invest a
minimum of R 500 000 in Plant & Machinery
•
Applicants with historical asset base > R 5 million should expand by lower of:
•
20% of existing Plant and Machinery Cost
•
R 2 million
•
Manufacturing entity (SIC Code3) in operation for a minimum of one year
•
No reduction in base year employment levels
•
BBBEE Level Four or able to provide a plan as to how Level Four will be
achieved within four year period
Innovative Finance Contact
Details
•
Tara Moffitt: tara@inovativefinance.co.za
•
Rudi Scholtz: rudi@innovativefinance.co.za
•
Telephone: 021 838 2726
Thank you / Questions