Beneficiaries of the MCEP
A total of 197 manufacturing enterprises across all provinces have been assisted with projects to the value of R983 million under the Manufacturing Competitiveness Enhancement Programme (MCEP) during the 201213 financial year.
This came to light when the Minister of Trade and Industry (DTI), Rob Davies, released the department’s Incentive Performance Report for the 2012/3 year recently.
Overall, the DTI has approved more than R3 billion in incentives for 436 manufacturers since the inception of the MCEP in May 2012.
The MCEP is a support scheme that offers manufacturing companies incentives to raise their competitiveness and retain jobs. It has a budget of R5.8 billion over a three-year period.
The MCEP consists of two key components: the Production Incentive Programme (PIP), managed by the DTI and the Industrial Financing Loan Facility (IFLF), managed by the Industrial Development Corporation (IDC).
The PIP comprises five sub-programmes: capital in-vestment, green technology and resource efficiency improvement, enterprise-level competitiveness improvement, feasibility studies and cluster competitiveness improvement.
The IFLF consists of two sub-programmes, namely the pre- and post-dispatch working capital facility, and the industrial policy niche projects fund.
The programme also offers a working capital facility of up to R50 million.
Applicants can apply for one or a combination of the sub-programmes at company and/or cluster level, based on their needs.
Of the 197 approved projects under the MCEP, the capital investment component had the most number of approvals (192). Enterprise level competitiveness improvement accounted for three, and green technology and resource efficiency for two.
One of the incentive beneficiaries, Pinetown printing company First Impression Film, boosted its production by 20% year-on-year since buying a top quality nine-colour printing press with funds received under the MCEP.
The new printing press has enabled First Impression Films not only to grow its customer base, but to employ 12 more staff.
How you can apply for the MCEP
Application for support from the Manufacturing Competitiveness Enhancement Programme (MCEP) is open to South African-registered entities with existing manufacturing operations in this country engaged in:
- Manufacturing, classified as code 3 in the Standard Industrial Classification.
- Engineering services that support manufacturing.
- Conformity assessment services that service the manufacturing sector.
Certain manufacturing sectors that already have the support of the Department of Trade and Industry (DTI), for example clothing and textile manufacturers, will not qualify for MCEP assistance.
Manufacturers who qualify for the MCEP may apply to the Industrial Development Coproration (IDC) for a working capital facility of up to R50 million, over a term of up to four years, at 4% interest.
This facility is available on condition that the applicant has a confirmed contract or purchase order, or the applicant has an order that forms part of the state-owned Competitiveness Suppliers Programme, or that the manufacturer’s product is part of a designated product value chain, as determined by the DTI.
The MCEP covers pre-dispatch working capital including production, pack-aging, raw material and transportation costs, while post-dispatch finance covers working capital requirements from the point of dispatch to the point of the seller realising the proceeds of the sale. This may include performance bonds and performance guarantees.
While each proposal is carefully considered, the IDC gives preference to projects that demonstrate economic merit, and show profitability and sustainability.