The Department of Trade, Industry and Competition (dtic) provides institutional support for industrial development in the country. Together with a range of institutions and stakeholders, it develops strategies and policies to achieve rapid industrialisation of the country’s manufacturing sectors.
The South African government has identified industrialisation as central to unlocking the country’s economic growth as it boosts economic activity, increases productivity of the workforce and generates formal employment. An industrialised economy also relies less on exports by developing its own domestic industries.
South Africa’s industrialisation efforts focus on a broad range of sectors including- manufacturing, mining, transportation and retail, among others. These are sectors that are labour-intensive and highly productive activities/sectors that can help to tackle major South African challenges of poverty and unemployment.
Manufacturing, in particular, is of great importance to the South African economy and is an important driver of economic growth. The sector focuses on the creation of new products, either from raw materials or components with the help of equipment, labour, machines, tools, and chemical or biological processing or formulation. It is South Africa’s fourth largest sector, contributing to 14% of the country’s Gross Domestic Product (GDP).
To support these important sectors, the dtic’s policies function to lower barriers to entry, stimulate innovation and open up opportunities for entrants with new business models and products.
Creating an economy that is industrially focused and globally competitive is the dtic’s main mandate. As such, the agency is tasked with encouraging exports, international trade and investment. With this in mind, its interventions focus on the following manufacturing sectors and other production and services sectors.
Find out more about other government funding instruments: A Guide To Government Funding For SMEs
In general, the dtic’s works to develop policies, legislation and regulations. It also provides financial support and investment incentives, as well as offer information, advisory support, and value-added partnerships. Furthermore the dtic is responsible for broadening participation in the South African economy through broad-based black economic empowerment.
For small businesses, in particular, the agency offers financial support to qualifying companies in various sectors. The aim of the funding is to provide small businesses with better opportunities and to level out the competitive landscape across markets in South Africa. This can help all kinds of small businesses to expand, broaden their economic opportunities, and even reach international markets.
The success of the agency’s interventions are measured against the following strategic objectives:
The agency’s industrialisation strategy is administered through the following flagship programmes:
1. The BBBEE’s Codes of Good Practice as envisaged by the dtic, forms part of the department’s transformation policy to encourage the growth of black entrepreneurs through Enterprise and Supplier Development elements. The policy aims to realise the country’s full economic potential, while helping to bring the black majority (African, Indian and Coloured) into the economic mainstream.
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2. Special Economic Zones (SEZs) are tools to industrialise the country and create jobs. SEZ are geographically designated areas of a country set aside for specifically targeted economic activities and are created to encourage rapid economic growth. They are supported through special arrangements that may include laws and tax incentives). The purpose of SEZs is to attract domestic and foreign fixed direct investment in value-added and export-oriented manufacturing industries and services.
3. The dtic is responsible for the development and industrialisation of a wide range of sectors from the automotive sector, agro-processing and green industries, among others. As part of its industrial development mandate it offers sector-specific interventions, including: dtic funding; the deployment of conditional incentives; local procurement and the offset programme the National Industrial Participation Programme (NIPP); and a wide variety of demand- and supply-side industrial policy policies to designed to increase investment and raise the competitiveness of the productive sectors of the economy.
4. In partnership with the Provincial Investment Promotion Agencies (PIPAs), the agency undertakes export promotion activities, specifically in markets that are aligned to South Africa’s international relations and co- operation agreements. Additionally, the export marketing and investment assistance (EMIA) scheme, aims to increase exports of South African manufactured products. The objective of the scheme is to develop export markets for South African products and services and to recruit new foreign direct investment into the country.
5. Together with a number of regulatory institutions within the government, the dtic is responsible for providing “sound, coherent, predictable and transparent business regulatory solutions”. The dtic’s work is governed by a broad legislative framework, which includes the following:
Dtic funding, in the form of industrial incentives, is allocated to small businesses to develop trade and certain industries and create a more equitable and socially responsible business environment. Additionally, it broadens participation in the economy and generally strengthens and improves economic development.
The 12I Tax Incentive is designed to support Greenfield investments (i.e. new industrial projects that utilise only new and unused manufacturing assets), as well as Brownfield investments (i.e. expansions or upgrades of existing industrial projects). The incentive offers support for both capital investment and training.
A R1-billion cost-sharing grant fund designed to boost investments in new and existing agro-processing projects.
Read the full article: Know Your Incentives: The Agro-Processing Support Scheme
A dtic funding grant that targets registered South African entities that are engaged in primary, secondary, and ancillary aquaculture activities. The grant allows marine and freshwater aquaculture businesses to expand their facilities and develop new projects.
This incentive is designed to grow and develop the automotive sector through investment in new and/or replacement models and components that will increase plant production volumes, sustain employment and/ or strengthen the automotive value chain.
An initiative by the Department of Trade and Industry to get more black people involved in the productive sectors of the economy like transport, green industries, agro processing, biofuels and chemicals. As of 2017, R3.6 billion has been allocated to the scheme.
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A cost-sharing grant that contributes to the cost of feasibility studies is likely to lead to projects that will increase local exports and stimulate the market for South African capital goods and services.
A cost sharing grant for projects designed to improve critical infrastructure in South Africa. The Critical Infrastructure Programme (CIP) aims to leverage investment by supporting infrastructure that is deemed to be critical, thus lowering the cost of doing business.
This programme works to grow employment, improve overall competitiveness and to grow the clothing, textiles, footwear, leather and leather goods manufacturing industries.
The scheme aims to develop export markets for South African products and services and to recruit new foreign direct investment into the country.
The various incentives to boost the local film productions with hopes of sustaining the industry. includes Foreign Film and Television Production and Post-Production Incentive (Foreign Film), SA Film & TV Production and Co-production (SA Film), South African film and Television Incentive, SA Emerging Black Film.
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The primary objective of the incentive is to create employment in South Africa through servicing offshore activities.
This programme provides enhanced manufacturing support, encouraging manufacturers to upgrade their production facilities to sustain employment and maximise value-addition in the short to medium term.
This forms part of the overall Clothing and Textile Competitiveness Programme (CTCP). PIP focuses on rewarding capital investment, operational improvements and training costs.
A reimbursable cost-sharing grant that pays for 80% of the costs incurred by (non-profit) export councils, joint action groups and industry associations to provide support to companies to grow the export market for South African goods.
The objective of SPP is to encourage large private sector enterprises in partnership with the government to support, nurture and develop SMEs within the partner’s supply chain or sector to be manufacturers of goods and suppliers of services in a sustainable manner.
This incentive was designed to provide financial assistance for the development of commercially viable, innovative products and/or processes and facilitate the commercialization of such technologies.
A partnership programme funded by the Department of Trade and Industry (DTI) and managed by the National Research Foundation (NRF). The programme supports science, engineering and technology research collaborations focused on addressing the technology needs of participating firms and encouraging the development and mobility of research personnel and students among participating organisations.
An intervention of the dtic focused on actively encouraging and supporting negotiated workplace change towards enhancing productivity and world-class competitiveness, best operating practices, continuous improvement, and lean manufacturing while resulting in job creation.