Thousands of co-operatives exist in South Africa, with the newly-formed Department of Small Business Development making assurances that its focus and strategic planning will include the integration and development of co-operatives, as well as that of small and medium businesses.
Co-operatives are collectively run enterprises that provide a wide range of services and products ranging from agriculture, manufacturing, construction and many others.
In the Department of Trade and Industry’s Integrated Strategy on the Development and Promotion of Co-operatives 2012-2022, government states that “though enterprise development agencies have provided some support to co-operatives, the challenge is that this support has been negligible, unfocused, uncoordinated and lack systematic and sustained targeting on co-operatives”.
We look at the how start-up and existing co-operatives can benefit from the government’s incentive scheme.
What is the Co-operative Incentive Scheme?
The Co-operative Incentive Scheme (CIS) is a 100% grant for registered primary co-operatives whose objective is to improve the viability and competitiveness of co-operative enterprises by lowering their cost of doing business through an incentive that supports Broad-Based Black Economic Empowerment.
The maximum grant that can be offered to one co-operative entity is R350 000. A co-operative enterprise can apply for multiple activities provided that the cumulative grant awarded to the enterprise does not exceed the maximum grant offered.
How does the CIS work?
The CIS assists emerging co-operatives to acquire their start up requirements and to build an initial asset base to enable them to leverage other support.
What are the benefits?
Eligible co-operatives can use the money in activities that include business development services, including feasibility studies, business, manufacturing and production systems, and production efficiency and improvement.
Also among these activities are technological improvements, machinery, equipment and tools, commercial vehicles, and infrastructure linked to the project and working capital.
The requirements say cooperates must be incorporated and registered in terms of the Co-operatives Act and also be emerging co-operatives with a majority black ownership. This relates to the ownership requirement which states that cooperatives must be owned by historically disadvantaged individuals.
Also, cooperatives must have projects in any of the different economic sectors, as well as adhere to co-operative principles and be be biased towards women, youth and people with disabilities.
Activities that are already funded by other government grants or parastatals do not qualify for a CIS grant.
Also costs associated with tendering and tendering documentation, liquor related activities,gambling related activities, cost of acquiring buildings, cost of building of office structures and factories, and operation cost such as rent and salaries are not funded.
How to apply?
There are no fees or charges levied for the processing or evaluation of any Co-operative Incentive Scheme.
With regards to CIS online application, interested cooperatives can contact:
Mmakopa Makwela : MMakwela@thedti.gov.za 012 394 5815
Jamela Nkabinde: JNkabinde@thedti.gov.za 012 394 5814
Kesentseng Moche: KMoche@thedti.gov.za 012 394 5830