Export incentives – part 2

This is a follow-up article; please read part 1 too. A recap of the definition and applicable websites are given below:

Export incentives are intended to encourage exports by providing financial assistance to exporting companies to enable them to compete effectively in international markets. Whilst they have been widely used internationally, some are regarded as contrary to both the spirit and word of the World Trade Organisation (WTO). Consequently, the more blatant forms of export incentives will be phased out by countries, probably to be replaced by forms of assistance more compatible with the free trade objectives of the WTO. Such assistance programmes would be those designed to restructure, along more efficient and competitive lines, industrial sectors as a whole and not merely subsidise exports; general assistance with export marketing costs, which do not translate directly into price subsidies, are also acceptable.

https://www.gov.za/services/services-organisations/business-incentives
http://www.thedtic.gov.za/sectors-and-services-2/1-4-2-trade-and-export/export-development-and-promotion/national-exporter-development-programme-nedp/
http://www.thedtic.gov.za/sectors-and-services-2/1-4-2-trade-and-export/export-development-and-promotion/export-organisations/
http://www.thedtic.gov.za/sectors-and-services-2/1-4-2-trade-and-export/investment-promotion/sector-opportunities/
https://www.idc.co.za/who-how-we-help/
https://www.sippo.co.za/
www.creditguarantee.co.za
www.ecic.co.za
sars.gov.za

Export incentives currently in operation in South Africa include:

Export Marketing and Investment Assistance Scheme (EMIA)
Sector Assistance Scheme (SSAS)
Export Credit Insurance
Export Finance

Innovation Support Programmes For Industry

Support Programme for Industrial Innovation (SPII)

Support for South African based products or process development that represents a significant technological advance and has a commercial advantage over existing products, and thus have a potential to be successfully marketed. This is part of government’s strategy for the promotion of technology in South Africa’s manufacturing industry. The programme provides an incentive for the development of innovative products and processes that represents a significant technological advance and has a commercial advantage over existing products. The programme is administered by Industrial Development Corporation (IDC) on behalf of the Department of Trade and Industry (DTI). The SPII Programme offers three schemes:

The Matching Scheme gives a grant of 50% of the actual direct cost incurred in development activity, up to a maximum grant amount of R1.5 million per project.

The Partnership Scheme gives a grant of 50% of the actual direct cost incurred in development activity, with no maximum grant amount and with a repayment mechanism in the form of a levy on sales. The Partnership Fund is intended to fund large scale research and development.

The Feasibility Scheme supports the preparation of a feasibility study for potentially innovative projects by means of a grant of 50% of the costs of a consultant. The grant is limited to R30 000 and only small, medium or micro enterprises qualify for support. This scheme is currently under review and no applications are currently being considered.

Technology and Human Resources for Industry Programme (THRIP)

THRIP is aimed at enhancing the global competitiveness of South African industry through the development of technology and appropriately skilled people and encourages long-term strategic partnerships between industry, research and educational institutions and government. The programme provides resources and mechanisms in support of collaborative research in the areas of science, engineering and technology (SET). THRIP will consider contributing R1 for every R2 invested by the private sector in SET research projects where the project leader and project are based at a higher educational or SET institution. A matching grant may be considered if certain criteria relating to promoting BEE, developing SMME’s and industry collaboration, are met. THRIP is administered by the National Research Foundation, an agent of the DTI.

For more information, contact the National Research Foundation.

The Innovation Fund The Innovation Fund is a programme designed to support large scale science, engineering and technology (SET) innovation programmes. Statutory research and technology institutions, the higher education sector, the business and industrial community and non-governmental bodies are eligible to apply for assistance. The Innovation Fund is designed to encourage collaborative research and technology development programmes; a multi-disciplinary approach to problem-solving; and application-based research programmes.

Proposals are called for annually and should involve projects that generate products/processes for commercialisation or new methodologies for development programmes orientated towards service delivery. A minimum annual funding requirement of one million Rand and a maximum of five million Rand have been set for large, two to three-year collaborative projects aimed at technological innovation. The Innovation Fund was established by the National Department of Arts, Culture, Science and Technology (DACST) and is managed by the National Research Foundation (NRF).

Technology for Women in Business (TWIB)

TWIB is an initiative aimed at enhancing the accessibility of science and technology to women in business and in particular SMME’s. It is a national programme under the auspices of the DTI and administered by the CSIR. Activities include identifying technological needs of women in business in various sectors and addressing these needs in a project specific way; identifying and creating market and business opportunities and provision of support to learners in the fields of science and technology and exposure to international trends.

For more information, please contact the CSIR.

Production Incentive (PI)

The Production Incentive (PI) forms part of the overall Clothing and Textile Competitiveness Programme (CTCP) and flows from the implementation, by the Department of Trade and Industry (the dti), of customised sector programmes (CSPs) for the clothing, textiles, footwear, leather and leather goods industries. The PI Guidelines seek to enable companies to present their business cases to the CTCP Desk of the Industrial Development Corporation (IDC). They also provide a framework for the CTCP Desk to evaluate such cases.

Competitiveness Programmes

Competitiveness Fund

The fund is a cost-sharing grant scheme administered by the DTI using funds sourced from the World Bank. It provides financial support for improving competitiveness of the private sector South African firms. The fund supports the introduction of technical and marketing expertise to firms. The scheme assists on a 50% contribution by the firm itself and grants are paid on a reimbursement basis. Funds are allocated on a first-come first-served basis. Applications include a realistic plan for development of business activities.

Sector Partnership Fund

The objective of the Sector Partnership Fund (SPF) is to promote collaborative projects that will enhance productivity and competitiveness of the manufacturing and agro-processing firms or industries. The fund is available to groups of five or more firms in preparation and execution of marketing and production related projects with the aim of improving competitiveness and productivity. The fund covers 65% of projects up to a maximum of R1,5 million. SPF is administered by the DTIC.

Industrial Development Zones

The objective of Industrial Development Zones (IDZ) is to encourage international competitiveness of South African based manufacturing sector. IDZ’s include quality infrastructure, expedited customs procedures and duty-free operating environments.

Work Place Challenge

The Work Place Challenge programme aims to improve the country’s competitiveness and employment creation. The programme enhances co-operation between workers and management to improve industrial performance and productivity.

Skills Support Programme

The Skills Support Programme encourages greater investment in training, improved industrial training systems and creates opportunities for introduction of new advanced skills. The SSP provides a cash grant to subsidise 50% of training costs with a ceiling of 30% of actual costs.

Critical Infrastructure Programme

A top-up grant of between 10% and 30% of actual costs is provided to supplement infrastructure developed by the public or private sectors or a public-private sector partnership. The CIP is administered by the DTIC.

Strategic Investment Projects (SIP) (pending approval)

Strategic Investment Projects (SIP) is an incentive programme designed to encourage investments into South African operations from both local and foreign investors by providing industrial investment allowances, in the form of tax relief, to qualifying industrial projects. The key objective of the SIP programme is to attract industrial investments into South Africa that serve to upgrade South African industry and create employment opportunities. This allowance is intended to lower the cost of investing in critical industrial projects in South Africa.

Export Marketing and Investment Assistance

The Export Marketing and Investment Assistance (EMIA) scheme develops export markets for South African products and services and to recruit new foreign direct investment into the country.

Objectives

Provide marketing assistance to develop new export markets and grow existing export markets;
Assist with the identification of new export markets through market research;
Assist companies to increase their competitive by supporting patent registrations, quality marks and product marks;
Assist with facilitation to grow FDI through missions and FDI research; and
Increase the contribution of black-owned businesses and SMMEs to South Africa’s economy.

The benefits are:

Individual Exhibition Participation;
Transport of samples;
Rental of exhibition space;
Construction of stands;
Interpretation fees;
Internet connection;
Telephone installation;
Subsistence allowance per day;
Return economy-class airfare; and
Exhibition fees up to a maximum of R50 000.
Primary Market Research & Foreign Direct Investment:
Exporters will be compensated for costs incurred recruiting in new FDI into South Africa through personal contact by visiting potential investors in foreign countries.
Return economy-class airfare;
Subsistence allowance per day;
Transport of samples; and
Marketing material.

Individual Inward Missions:

Assistance is provided to South African entities organising an inward buying investor, to make contact with them to conclude an exporters order or to attract foreign direct investment.
Registration of a patent in a foreign market: 50% of the additional costs capped at R100 000 pa;
Return economy class-airfare;
Subsistence allowance per day;

Eligible Enterprises

South African manufactures and exporters;
South African export trading houses representing at least three SMMEs or businesses owned by Historical Disadvantaged Individuals (HDIs);
South African commission agents representing at least three SMMEs/HDI-owned businesses; and
South African exports councils, industry associations and JAGs representing at least five South African entities.

Assistance in expanding into the European Market

Trade and Investment South Africa (TISA) has a Memorandum of Understanding with the Swiss Import Promotion Programme (SIPPO) which offers assistance with export development and export promotion for SMEs entering into the EU, Swiss and other EFTA markets.

SIPPO helps SMEs in selected partner countries (such as South Africa) and selected sectors to export their high-quality products to Europe.
https://www.sippo.co.za/

Author Craig Tonkin

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