the dti Incentives Scheme Name: Wiseman MYENI Event: MINARA CHAMBER OF COMMERCE CAPACITY BUILDING WORKSHOP Date: 05 November 2018

Transcription

1 the dti Incentives Scheme Name: Wiseman MYENI Event: MINARA CHAMBER OF COMMERCE CAPACITY BUILDING WORKSHOP Date: 05 November 2018

2 PRESENTATION OUTLINE - Introduction - Black Industrialists Scheme - Agro- Processing Scheme 2

3 BLACK INDUSTRIALISTS SCHEME

4 INTRODUCTION AND BACKGROUND 04 Nov 2015: Cabinet approved the Black Industrialist Policy which aligns with the National Development Plan and the Industrial Policy Action Plan (IPAP); which underpins development of the Manufacturing Sector, with an aim to raise the impact of interventions to support industrial development; 09 Nov 2015: Launch by the Minister of Trade and Industry, as part of government s broad industrial base and inject new entrepreneurial dynamism in the economy The BIP Policy calls for bolder policy interventions on the part of the State to expand the industrial base of the country and grow the economy through dedicated support directly at black manufacturers; as highlighted in the latest IPAP; Launch of Black Industrialist Scheme (BIS) incentive programme of the Black Industrialist Policy, which aims to promote the participation of black industrialists as manufacturers in key sectors as identified in IPAP; BIS Outlines key measures aimed at supporting majority black-owned manufacturing companies such as access to finance, access to markets, skills development, standards, quality and productivity improvement. 4

5 OBJECTIVES OF THE BIS Accelerate the quantitative & qualitative increase and participation of Black Industrialists in the national economy, selected industrial sectors & value chains. Create multiple & diverse pathways and instruments for Black Industrialists to enter strategic & targeted industrial sectors & value chains in the short to medium term. Utilise Black Industrialists for economic growth, economic transformation, employment creation and sustainability. 5

6 DEFINITION OF BLACK INDUSTRIALISTS A Black industrialist is a juristic person that includes co-operatives, incorporated in terms of the Companies Act 2008 (as amended) owned by Black South Africans as defined by the B-BBEE Act, who creates and owns value-adding industrial capacity and provides long-term strategic and operational leadership to a business. Characterized by: Provision of strategic and operational leadership; has a high level of ownership (>50%) and/or exercises control over the business; Entrepreneurial driven; takes personal risk in the business; does business in the manufacturing sector ( IPAP), long term commitment to the business and is a medium to long term investor. While there is a desire to support entities with significant and dominant Black ownership and control, it is accepted that there may be a need to include other shareholders to attract relevant skills, finance and opportunities. 6

7 INTENDED BENEFICIARIES The BI Policy targets entities that have extensive experience, operations and track record in their respective or envisaged industrial sectors and value chains, that can become real players in domestic and or global markets within 10 years of being in the programme through : New operation or business start-up Current business expansion Acquisition of an existing Business Such entities should be operating in the following manufacturing sectors in line with industrialisation path as articulated by IPAP: 7

8 TARGETED PRIORITY SECTORS Generally assembling, fabricating, manufacturing, processing, with respect to key products in the following sectors: Brownfield & Greenfield Blue/Ocean economy including Ship building Oil and gas Information Communication Technologies Manufacturing related logistics Designated Sectors for localisation Clean Technology and Energy Agro Processing Clothing Textiles / leather and footwear Mineral beneficiation Aerospace, Rail and Automotive components Nuclear Industrial Infrastructure Capital equipment Pulp, paper and Furniture

9 ELIGIBILITY CRITERIA Be a registered legal entity in South Africa in terms of the Companies Act, 1973 (as amended) or the Companies Act, 2008 (as amended); the Close Corporations Act, 1984 (as amended) or the Co-operatives Act, 2005 (as amended) Be a taxpayer in good standing and must, in this regard provide a valid tax clearance certificate at assessment as well as before the grant is disbursed Be involved in starting a new operation or in expanding or upgrading an existing operation or the acquisition of an existing business/ operation. Be aligned to the productive sectors of the economy within the identified sectors

10 ELIGIBILITY CRITERIA Have greater than fifty percent (>50%) shareholding and management control. Have a valid B-BBEE certificate of compliance. Be directly involved in the day-to-day running of the operation and must have requisite expertise in the sector. Have a project with a minimum investment of (R30m). Undertake a project which should result in securing or increasing direct employment.

11 INCENTIVE OFFERINGS Cost sharing grant ranging from 30% to 50% to approved entities to a maximum of R50 million. Quantum of grant depends on: level of black ownership, management control and the project value. The maximum grant of R50 million may be utilised for: 1. Capital investment costs; 2. Feasibility studies towards a bankable business plan (to the maximum of 3% of projected investment project cost); 3. Post-investment support (to the maximum of R ); and 4. Business Development Services (to the maximum of R2 million)

12 ECONOMIC BENEFIT CRITERIA Criteria Description Points A. Employment Securing/retaining or increasing direct employment 1 B. Market Share New business/operations: Securing market share for the entity; or 1 [1] Existing business/operations: Increase market share for the entity C. Quality Improvement Reduction of relative prices and/or increasing the quality of products to consumers 1 D. Green Technology and Resource Efficiency Improvements Savings or better utilisation of energy or materials and/or cleaner production improvement and/or waste management improvement and/or water usage improvement and/or use of renewable energy 1 E. Localisation Increasing the localisation of production activities (diversification and exports) F. Regional Spread Projects should be located in rural areas or areas with unemployment higher than twenty five percent (25%) G. Personal Risk Demonstrate own financial and/or non-financial contribution to the business H. Empowerment Achieve at least a level Four (4) B-BBEE contributor status as per revised B-BBEE codes of good practice published in October 2013 (as amended)

13 QUALIFYING COSTS Capital Investment Machinery and Equipment (owned or capitalised financial lease), tools, jigs and dyes and forklifts, at cost and will also include green technology, energy and resource efficiency equipment. Owned and leased (capitalised lease) factory buildings, at cost. The investment in qualifying buildings must either constitute newly acquired buildings or the acquisition of an existing building at cost. The building is capped at R5 million Commercial vehicles (owned or capitalised financial lease) are only eligible if such vehicles are to be used for commercial purposes linked to the production process. This includes vehicles such as for collection, delivery and distribution of goods.

14 Investment Support Feasibility Studies QUALIFYING COSTS The objective of this component is to offer support for project feasibility studies and related assessments that have a positive impact on the developmental aspects including job creation, skills development, as well as black business empowerment. The feasibility studies will include licences, quality assurance, conformity assessments and standards. The appointed service provider(s) for the feasibility studies must be sourced from the DFI s list of accredited service providers following due procurement processes and procedures. Post Investment Support Specialised technical training will be supported in selected areas identified by the BI with the assistance of the DFI s Mentorship guidance will include financial management, operations and production planning, human resource development, administration, marketing and business continuity services.

15 QUALIFYING COSTS (BDS) Focus areas Categories Consulting fees and expenses Product Development Conformity assessment certification Information technology systems Procurement process improvement Patents Costs Product design Product development Conformity assessment of products e.g. testing, inspection, certification Consumer acceptability studies Packaging design Quality management improvement, Environmental management improvement, process capability improvement and Product quality improvement Accreditation Acquisition and deployment of systems Introducing improved and efficient procurement processes Registration of Patents Pattern-making, prototyping, grading, sizing and counter-sampling Introducing product ranges and product adaptations for new markets Costs for conformity assessment of products Marketing new products to focus groups before product launch to market Consultancy and design costs - Cost of Installing or improving quality management systems; - Costs for preparations for certification and pre/initial assessment costs Costs for preparations for accreditation and pre-/initial assessment Acquisition software for integrated production management information systems Cost of introducing new procurement processes Registration costs

16 GRANT CALCULATION Quantum of grant Depends on level of black ownership and points achieved on the economic benefit criteria Points on Economic Benefit Criteria Percentage Black ownership 50% to 75% > 75% to 90% > 90% to 100% 4 to 6 Points 30% 35% 40% 7 Points 40% 45% 50%

17 NON QUALIFYING COSTS Assets purchased from a connected party and Business Development Services including Feasibility studies and Post-investment support sourced from a connected party will be excluded from qualifying costs. Salaries and Wages Passenger Vehicles (non-commercial vehicles) such as sedans, luxury 4 X 4s, SUVs and People Carrier Minibuses VAT and finance charges on assets Rates and Taxes Training that is not related to the manufacturing operations of the entity Staff wages & salaries and staff related costs incurred in implementing any of the above projects Costs incurred before approval

18 Feedback to applicant by the dti Black Industrialist Programme Process Flow BI Proposal / Application Submission of Proposal / Application to the dti Acknowledgement Pre- assessment by the dti Technical BI Financing Forum Project appraisal & referral Revised Proposal Feedback / advice to Applicants Days? DFIs MOA s Technical BI Forum: Contracting or Co-funding / MOA with BIS BI Funding partners Reports Outcome / Decision DFI s Harmonized Referral to Rules Access to markets SOE s, Non-financial support the dti - ipreinvestment support & incentives Disbursement + Post Investment Support Monitoring by the dti Reporting by the dti through Ministerial oversight

19 AGRO PROCESSING SUPPORT SCHEME

20 The Objectives of the APSS: The objective of the APSS is to stimulate investment by South African agro processing/beneficiation (agri-business) enterprises. The investment should demonstrate that it will achieve some of the following: 1. Increased capacity, 2. Employment creation, 3. Modernised machinery and equipment 4. Competitiveness and productivity improvement, 5. Broadening participation.

21 Description of Qualifying Processes/Projects New and existing agro-processing/beneficiation projects. This can also involve a wide range of processing or beneficiation activities of post-harvest, that result in value addition and/or enhanced storage life, such as cleaning, sorting, grading, waxing, controlled ripening, labelling, packing & packaging, warehousing, canning, freezing,freeze drying, wood carving, extrusion, synthesizing, polymerisation, and Various levels of processing that change agricultural product form. In the forestry value-chain may also include sawing, pulping, peeling and preservation.

22 5 key identified sub-sectors (focus areas) Food and beverage value addition and processing (including Black winemakers); Furniture manufacturing; Fibre processing; Feed production; and Fertilizer production.

23 Mandatory Conditions Be a registered legal entity in South Africa Be a taxpayer in good standing. Be B-BBEE compliant in terms of the B-BBEE codes (achieve level 1 to level 4) and submit a valid B-BBEE certificate of compliance or affidavit. Demonstrate that at least 50% of the inputs (raw materials) will be sourced from South African suppliers and that at least 30% of the inputs will be sourced from Black South African suppliers in particular. Commencement date of the project or activities applied for must take place within 90 calendar days after the application has been approved. Minimum qualifying investment size, including competitiveness improvement cost, will be at least one million rand (R1 million).

24 Grant Offering The scheme offers a twenty percent (20%) up to a thirty percent (30%) cost sharing grant to a maximum of twenty million rand (R20 million) over a two (2) year investment period, with a last claim to be submitted within six (6) months after the final approved milestone. The cost-sharing grant percentage will be differentiated by (qualifying) enterprise and investment size as follows: Type of Applicant Historical Costs of Assets Qualifying Investment Costs Grant Percentage Maximum Grant Amount New Entity N/a R 1 million up to R10 million 30% R3 million Existing Entity < R10 million R 1 million up to R10 million 30% R3 million Existing Entity > R10 million > R10 million 20% R20 million New N/a > R10 million 20% R20 million

25 Economic Benefit Criteria the dti may consider an additional 10% grant for projects that meet all Economic Benefit Criteria in the table below: Economic Benefit Criteria Criteria Description A. Employment Increase base year employment by at least 25% B. Transformation Achieve a level 1 on B-BBEE codes of good practice C. Geographical Spread Projects located in state owned industrial parks or areas with unemployment higher than 25%2 D. Local procurement Procuring at least 70% of inputs or equipment and machinery that is locally manufactured

26 Qualifying Assets and Investment Costs The APSS offers support on a cost-sharing basis towards: 1. New Machinery and Equipment New machinery and equipment (owned or capitalised financial lease), tools, and forklifts, at cost and will also include green technology, energy and resource efficiency equipment. 2. Commercial Vehicles New commercial vehicles (owned or capitalised financial lease) are only eligible if such vehicles are to be used for commercial purposes linked to the production process. This includes vehicles such as collection, delivery and distribution vehicles. Commercial vehicles must be registered in the name of the applicant. Investments in commercial vehicles may not exceed 25% of the qualifying investment in machinery and equipment, up to a maximum grant amount of two million rand (R2 million).

27 Qualifying Assets and Investment Costs 3. Buildings The investment in buildings must not exceed the qualifying investment in machinery, equipment and tools and is limited to a maximum grant amount of two million rand (R2 million). 4. Competitiveness Improvement Costs Competitiveness costs to a maximum of ten percent (10%) of the qualifying investment in machinery and equipment and limited to a maximum grant amount of two million rand (R2 million). Focus Areas Categories Consulting Fees and Expenses Conformity Assessment Certification Information Technology and Logistics Systems Quality management improvement, Environmental management improvement, process capability improvement and Product quality Improvement. Accreditation Acquisition and deployment of systems Cost of Installing or improving quality management systems; - Costs for preparations for certification and pre/initial assessment costs Acquisition software for integrated production management information systems

28 THANK YOU 28

29 CONTACT DETAILS Incentive Development and Administration Division (IDAD) Wiseman MYENI Regional Manager: KwaZulu-Natal Province DEPARTMENT OF TRADE AND INDUSTRY 136 Margaret Mncadi Avenue Durban Tel: / 64/ 65/ 66 wmyeni@thedti.gov.za