SPECIAL FEATURESouth
SPECIAL FEATURESouth African investment incentivesThe South African government, particularly the Department of Trade,Industry and Competition, has a range of incentives available toinvestors, existing companies, entrepreneurs and co-operatives acrossmany sectors.South Africa wishes to diversify its economyand incentives are an important part of thestrategy to attract investors to the country.The Department of Trade, Industry andCompetition (the dtic) is the lead agency in theincentives programme, which aims to encouragelocal and foreign investment into targeted economicsectors, but the Industrial Development Corporation(IDC) is the most influential funder of projects acrossSouth Africa.There are a variety of incentives available andthese incentives can broadly be categorisedaccording to the stage of project development:• Conceptualisation of the project – includingfeasibility studies and research and development(grants for R&D and feasibility studies, THRIP, Stp, etc)• Capital expenditure – involving the creation orexpansion of the productive capacity of businesses(MCEP, EIP, CIP, FIG, etc)• Competitiveness enhancement – involving theintroduction of efficiencies and whetting thecompetitive edge of established companies andcommercial or industrial sectors (BBSDP, EMIA,CTCIP, etc)• Some of the incentives are sector-specific, forexample the Aquaculture Development andEnhancement Programme (ADEP), Clothing andTextile Competitiveness Improvement Programme(CTCIP) and the Tourism Support Programme (TSP).ManufacturingKey components of the incentive programme arethe Manufacturing Incentive Programme (MIP) andthe Manufacturing Competitiveness EnhancementProgramme (MCEP). The initial MCEP, launchedin 2012, was so successful that it was oversubscribedwith almost 890 businesses receiving funding. Asecond phase of the programme was launchedFREE STATE BUSINESS 202526
SPECIAL FEATUREbetween 10% and 30% of the total developmentcosts of qualifying infrastructure• Co-operative Incentive Scheme, which is a 90:10matching cash grant for registered primaryco-operatives• Sector Specific Assistance Scheme, which is areimbursable 80:20 cost-sharing grant that can beapplied for by export councils, joint action groupsand industry associations.Incentives for SMMEsA lot of emphasis is placed on the potential role ofsmall, medium and micro enterprises in job creationand a number of incentives are designed to promotethe growth of these businesses. These include:• Small Medium Enterprise DevelopmentProgramme (SMEDP)• Isivande Women’s Fund• Seda Technology Programme (Stp).in 2016. The grants are not handouts as thefunding covers a maximum of 50% of the costof the investment, with the remainder to besourced elsewhere.The Enterprise Investment Programme (EIP)makes targeted grants to stimulate and promoteinvestment, BEE and employment creation in themanufacturing and tourism sectors.Aimed at smaller companies, the maximumgrant is R30-million. Specific tax deductions arepermissible for larger companies investing in themanufacturing sector under Section 12i of theIncome Tax Act.Other incentivesOther incentives that are available to investors aswell as existing businesses in more than one sectorinclude the following:• Technology and Human Resources for IndustryProgramme (THRIP)• Suport Programme for Industrial Innovation (SPII)• Black Business Supplier Development Programme(BBSDP), which is a cost-sharing grant offered toblack-owned small enterprises• Critical Infrastructure Programme (CIP) that coversThe Small Enterprise Development Agency (SEDA)and the Small Enterprise Finance Agency (SEFA)merged with the Cooperative Banks DevelopmentAgency (CBDA) to form the Small EnterpriseDevelopment and Finance Agency (SEDFA) on 1October 2024. The merger was made possible bythe National Small Enterprise Amendment Act 2024,which was signed by President Cyril Ramaphosa on23 July 2024.Trade-related incentivesThe Export Marketing and Investment Assistance(EMIA) Scheme includes support for local businessesthat wish to market their businesses internationallyto potential importers and investors. The schemeoffers financial assistance to South Africans travellingor exhibiting abroad as well as for inbound potentialbuyers of South African goods. ■ONLINE RESOURCESDepartment of Trade, Industry and Competition:www.thedtic.gov.zaFree State Development Corporation: www.fdc.co.zaIndustrial Development Corporation: www.idc.co.zaSmall Enterprise Development and Finance Agency:www.sedfa.org.zaSouth African government incentive schemes:www.investmentincentives.co.za27 FREE STATE BUSINESS 2025
