SME Incentive Schemes: What SMEs Need to Know in 2026

South Africa has many funding sources for small to medium-sized enterprises (SMEs), some backed by private companies and some backed by the government. When it comes to government-backed funding mechanisms, one of the least known by some SMEs is the incentive schemes.

SME incentive schemes in South Africa are government-backed financial and non-financial support mechanisms designed to foster the growth, sustainability, and competitiveness of SMEs. Managed by the Department of Trade, Industry and Competition (DTIC), these include cash grants, tax allowances, and cost-sharing incentives for things such as manufacturing, agro-processing, and innovation. For SMEs, knowing how to navigate incentive schemes can unlock various opportunities such as funding, development support and increase competitiveness. In this article, we look at how the incentive schemes are structured at the DTIC and which ones are open for SMEs.

The DTIC – through its incentive programmes – provides financial support to qualifying companies for various economic activities, including manufacturing, business competitiveness, export development and market access, as well as foreign direct investment. The incentive programmes are grouped into the following clusters:

Industrial Innovation

Industrial innovation promotes innovation and technology development. Its incentive programmes are the Support Programme for Industrial Innovation (SPII) and the Technology and Human Resources for Industry Programme (THRIP).

Manufacturing Investment

This encourages additional investment in the manufacturing sector through the Automotive Investment Scheme (AIS), which includes:

• People-Carrier Automotive Investment Scheme (P-AIS)
• Medium and Heavy Commercial Vehicles Automotive Investment Scheme (MHCV-AIS)
• Black Industrialist Scheme (BIS)
• Agro-Processing Support Scheme (APSS)
• Aquaculture Development Enhancement Programme (ADEP)
• Manufacturing Competitiveness Enhancement Programme (MCEP) loan facility
• Clothing and Textile Competitiveness Improvement Programme (CTCIP)
• Strategic Partnership Programme (SPP)

Export Promotion

The export promotion cluster supports industrial competitiveness and consists of the Export 5 Marketing and Investment Allowance (EMIA) programme, the Sector-Specific Assistance Scheme (SSAS), and the Capital Projects Feasibility Programme (CPFP).

Services Investment

This cluster stimulates increased investment and growth in the services sector through the Global Business Services (GBS) and Film and Television Production incentive programmes.

Infrastructure Support

This cluster leverages investments by providing infrastructure critical to industrial development and enterprise competitiveness within an industrial cluster, as well as tax benefits for locating to geographically designated areas of the country set aside for specifically targeted economic activities and supported through special arrangements and systems often different to those that apply to the rest of the country. The incentive programmes in this cluster are the Critical Infrastructure Programme (CIP) and Special Economic Zone (SEZ) Programme. All incentive schemes on offer by the DTIC have their own specific guidelines and qualifying criteria.

These are some of the incentive programmes available for SMEs from the DTIC.

Technology and Human Resources for Industry Programme (THRIP)

The objective of the programme is to increase the number of people with the appropriate skills in the development and management of applied, research-based technology for industry. The objectives will be achieved through:

• Improved knowledge exchange and technology transfer through increased interaction and mobility among researchers in higher education institutions (HEIs) and science, engineering and technology institutions (SETIs), as well as technology personnel in industry.
• An increase in investment by industry and government in research and technology.
• Technology transfer and product or process improvement or development, through research collaboration between enterprises (large and small), HEIs and SETIs.

The THRIP is a cost-sharing grant of up to R5 million per annum for a period of three years up to a maximum of R15 million for approved projects engaged in applied research and development in science, engineering and technology. Mandatory Requirements and Funding 1. The applicant must be a registered legal entity in South Africa. 2. In operation for more than 12 months, SARS and B-BBEE compliant. 3. The project must partner with at least one public institution of higher education (university) or public research facility or institution. 4. Qualified researchers and full-time post-graduate students (Hons – PhD). 5. Graduate placements (fixed two-years). 6. The duration of the partnership must be equal to or more than the period of the THRIP project. 7. 100% bursary costs. 8. Researcher costs, materials, equipment (research) and patent costs. 9. The project’s intention should be to innovate. 10. The project must have clearly defined scientific and technological outputs

Support Programme for Industrial Innovation (SPII)

This programme is designed to promote technology development in South Africa’s industry, through the provision of financial assistance for the development of innovative products and/or processes. The SPII focuses specifically on the development phase, which begins at the conclusion of basic research and ends at production of a preproduction prototype. The SPII offers two schemes: SPII Product Process Development (PPD) Scheme Provides financial assistance to small, very small and micro enterprises whose total assets (excluding fixed property) are below R5 million, turnover is less than R13 million, and have a total employee complement of below 50, as defined in the National Small Business Amendment Act of 2003 or any other Act replacing it. SPII Matching Scheme Provides financial assistance to all enterprises in the form of a nonrepayable grant. The scheme has a maximum grant limit of R5 million. If the applicant has 25% or less BEE ownership, 50% of qualifying costs are incurred by the scheme; 25% to 50% BEE ownership, 65% of qualifying costs are incurred; and above 50% BEE ownership or more than 50% shareholding by women or people with disabilities, 75% of qualifying costs are incurred. Financial assistance under the Matching Scheme is provided to large companies on a 50% matching basis. Criteria for SPII Support:

• Development should represent a significant advance in technology
• Development and subsequent production must take place within South Africa
• Intellectual property to reside in a South African registered company
• Participating businesses must be South-African-registered enterprises
• Government-funded institutions (e.g. the CSIR) do not directly qualify for support, but may participate as subcontractor(s)
• No simultaneous applications are allowed from the same company

Qualifying Costs Personnel related:

• Travel expenses (defined maximum)
• Direct material
• Capital items and tooling
• Software (not general software)
• Documentation
• Testing and trials
• Licensing
• Quality assurance and certification
• Patent
• Subcontracting and consulting

Non-qualifying projects/costs:

• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at least 20% of total project costs)
• Production and commercialisation related
• Marketing and administrative costs
• Product/process development for a single client
• Basic and applied research
• Projects that at the time of application are more than 50% (70% for PPD) complete
• All costs incurred prior to submitting a duly completed application

Automotive Investment Scheme (AIS)

The AIS 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. The scheme provides a non-taxable cash grant of 20% of the value of a qualifying investment in productive assets for original equipment manufacturers (OEMs) and 25% of the value of qualifying investment in productive assets for component manufacturers and tooling companies, as approved by the DTIC. Eligible Enterprises:

• The applicant must submit a valid B-BBEE certificate of compliance (i.e. B-BBEE levels 1 to 4).
• The applicant must retain base-year employment levels during the entire incentive period, from the application stage to the claim period.
• Light motor vehicle manufacturers should have achieved or be able to demonstrate that they will achieve within three years a minimum of 50 000 annual units of production per plant.
• A special dispensation on volumes may be considered for new OEMs entering South Africa.
• Existing OEM applicants must achieve a minimum production volume of 50 000 units per annum per plant to qualify for a grant offering of 20% of the qualifying investment. This should be achieved within 24 months following the anticipated start of production date and be maintained throughout the claim cycle.
• Failure to maintain the annual production threshold of 50 000 units per annum per plant will result in a reduction of the base grant of the qualifying investment.

Component Manufacturers or Deemed Component Manufacturers

• A component manufacturer that can prove a contract is in place and/or has been awarded, and/or a letter of intent has been received for the manufacture of components to supply to the light motor vehicle manufacturer supply chain locally and/or internationally.
• A component manufacturer that can prove that after this investment, it will achieve at least 25% of total entity turnover or R10 million annually by the project at the end of the first full year of commercial production, as part of a light motor vehicle manufacturer supply chain locally and/or internationally.

People-Carrier Automotive Investment Scheme (P-AIS)

The P-AIS is a sub-component of the AIS and provides a non-taxable cash grant of between 20% and 35% of the value of a qualifying investment in productive assets approved by the DTIC. The scheme is designed to stimulate a growth path for the people-carrier-vehicle industry through investment in new and/or replacement models and components that will result in new jobs or the retention of employment and/or strengthen the automotive vehicle value chain. Qualifying projects will be evaluated on the following economic benefit requirements:

• Tooling
• Research and development (R&D) in South Africa
• Employment creation/retention
• Strengthening the automotive supply value chain
• Empowerment

Medium and Heavy Commercial Vehicles Automotive Investment Scheme (MHCV-AIS)

The MHCV-AIS provides for a non-taxable cash grant of 20% of the value of a qualifying investment in productive assets by medium and heavy commercial vehicle manufacturers and 25% of the value of a qualifying investment in productive assets by component manufacturers and tooling companies for MHCVs, as approved by the DTIC. Mandatory Conditions

• The applicant must be a registered legal entity in South Africa and undertake manufacturing in the country.
• The applicant must be a taxpayer in good standing and provide a valid tax clearance certificate before the MHCV-AIS grant is disbursed.
• The grant will only be applicable to investment in assets that will be used in the entity’s South African operations.
• The applicant must submit a business plan with a detailed marketing and sales plan, a production plan, a budget and a projected financial income statement, cash flow statement and balance sheet for a period of at least three years for the project.
• The applicant must submit a B-BBEE certificate, ITAC registration certificate, projected financial income statement, cash flow statement and balance sheet for a period of at least three years of the relevant division, cost centre or branch where the project is located, if applicable.
• The applicant must submit a cost-benefit analysis for the project in cases where it cannot provide information.
• Completed applications should reach the offices of the DTIC no later than 120 days, but not earlier than 180 days prior to commencement of production for medium and heavy commercial vehicle manufacturers; and no later than 90 days, but not earlier than 120 days prior to commencement of production for component manufacturers, deemed component manufacturers and/or tooling companies.

The Black Industrialist Scheme (BIS)

The purpose of the BIS is to accelerate the quantitative and qualitative increase and participation of black industrialists in the national economy, selected industrial sectors and value chains, as reflected by their contribution to growth, investment, exports and employment. The programme focuses on productive sectors such as oil and gas, clean technology and energy, agro-processing, clothing and textiles, and industrial infrastructure, amongst many others.

Manufacturing Support Programme (MSP)

The MSP is designed to grow and develop the manufacturing sector through investment in new or expansion manufacturing projects that will create and sustain employment, encourage transformation, and promote localisation. The MSP is available to South African registered entities engaged in manufacturing activities.

Agro-Processing Support Scheme (APSS)

This scheme aims to stimulate investment by the South African agro-processing/ beneficiation (agri-business) enterprises. The investment should demonstrate that it will achieve some of the following:

• Increased capacity
• Employment creation
• Modernised machinery and equipment
• Competitiveness and productivity improvement
• Broadening participation

Eligibility Criteria

• An applicant must submit a completed application form and business plan with detailed agro-processing/beneficiation activities, budget plans and projected income statement and balance sheet, for a period of at least three years for the project. The project/business must exhibit economic merit in terms of sustainability.
• The application must be submitted within the designated application window period, prior to the start of processing/beneficiation or undertaking of activities applied for. Any assets bought and taken into commercial use or competitiveness improvement costs incurred before applying for the incentive will be considered as non-qualifying.
• Existing entities must submit the latest financial statements, reviewed by an independent external auditor or accredited person and not older than 18 months.
• The approved entity may not reduce its employment levels from the average employment levels for a 12-month period prior to the date of application, and these employment levels should be maintained for the duration of the incentive period/agreement.
• Any reduction in the total number of employees over the duration of the incentive will disqualify the applicant. Any claims not yet evaluated or paid will immediately lapse, and no obligation will accrue to the DTIC on such claims.

Aquaculture Development Enhancement Programme (ADEP)

This programme is available to South-African-registered entities engaged in primary, secondary and ancillary aquaculture activities in both marine and freshwater classified under SIC 132 (fish hatcheries and fish farms) and SIC 301 and 3012 (production, processing and preserving of aquaculture fish). The grant is provided directly to approved applications for new projects or the upgrading of existing projects. Eligible Enterprises Primary Aquaculture Operations

• Hatchery facilities and operations (e.g. broodstock, seed, spat, fry, fingerling, etc.)
• Nursery facilities and operations
• Grow-out facilities and operations [e.g. rafts, net closures, net pens, cages, tanks, raceways and ponds
• Recirculating Aquaculture System (RAS), ranching, etc.

Secondary Aquaculture Operations

• Primary processing: (post-harvest handling, gutting, packing, quick freezing)
• Secondary processing: (filleting, portioning, packaging, setting up trader, and distribution networks)
• Tertiary processing or value adding (curing, brining, smoking, further value adding such as terrines, roulades, pates, paters)
• Waste stream

Ancillary Aquaculture Operations

• Aquaculture feed manufacturing operations

Small Black Enterprises

• ADEP’s definition of small black enterprises
• 100% black-owned
• Exercises operational and management control over the business
• Makes a long-term commitment to the business and is a medium- to long-term investor
• Investment of below R5 million

Strategic Partnership Programme (SPP)

The DTIC initiated this programme to encourage large private-sector enterprises, in partnership with 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. The programme supports the cost for machinery, product or service development, operational costs, and business development services, among others. Qualifying Criteria

• A South-African-registered legal entity in terms of the Companies Act, 1973 (as amended) or the Companies Act, 2008 (as amended); the Close Corporation Act, 1984 (as amended) or the Co-operatives Act, 2005 (as amended).
• An entity with a minimum turnover of R100 million per annum for at least two consecutive years at the application stage, confirmed by the latest available audited financial statements.
• An association with five or more registered legal entities.
• An association that can organise itself for this purpose, and must, in this regard, provide a letter(s) of commitment from manufacturer(s) that control(s) and/or have a direct influence on the market/manufacturing value chain to be developed.

Sector-specific Assistance Scheme (SSAS)

This scheme provides financial support for participation in physical and digital events by qualifying emerging exporters. Organisations supported under SSAS include export councils, joint action groups, SEDA, provincial investment and economic development agencies, industry associations and those involved in the development of emerging exporters. Qualifying Projects

• The project is a collection of specific tasks to achieve measurable outcomes and milestones, with a defined short-term period and its associated costs.
• The project must focus on improving sector export, performance and/or emerging exporter capabilities and be developmental and/or promotional in nature.
• The project should benefit the sector as a whole or specific value chains within sectors, in terms of the SSAS objectives.

South African Emerging Black Filmmakers Incentive

This programme is aimed at strengthening the competitiveness of the South African film and television industry, and to develop black talent in the South African film and television industry while ensuring distribution of films into the market. Additionally, it seeks to address the historical imbalances in the sector and ensure diversity and inclusion at all levels of production, including ownership and control. Mandatory Requirements

• The applicant must be a black South African production company.
• The production company must have at least 75% black South African citizens of which the majority must play an active role in the production and be credited in that role.
• Use of multiple subsidiaries and connected companies to be regarded as production companies is not allowed.
• The applicant must complete and apply prior to commencement of the project anywhere in the world. If a project commences prior to receiving an outcome from the DTIC, the applicant would have done so at their own risk.
• If the applicant chooses to commence with the project prior to receiving an outcome, the project must be fully funded. Should such projects receive approval, the project will not be eligible for milestone payments.
• The applicant must procure a minimum of 20% of qualifying goods and services from entities that are 51% black-owned by South African citizens and have been operating for at least one year.
• Where the project is not fully funded, the applicant must have secured at least 10% of the total production budget at the application stage, supported by firm commitments such as concluded agreements and ring-fenced funds in the Special Purpose Corporate Vehicle (SPCV) bank account. Such applications must receive an outcome before commencing with the principal photography.
• The applicant must provide the DTIC with a financial plan and a signed contract from financier(s).
• Prior to commencing with principal photography, the applicant must have secured 100% of the budget following the grant awarding decision by the DTIC, and such proof must be submitted.
• The applicant must register an SPCV incorporated in the Republic of South Africa, solely dedicated to the production of the film or television project, to participate in this incentive programme. The SPCV must be wholly owned by the applicant.
• The qualifying expenditure and payments made to third-party companies must be settled directly from the primary bank account of the established SPVC.

Critical Infrastructure Programme (CIP)

This programme aims to leverage investment by supporting infrastructure that is deemed to be critical, thus lowering the cost of doing business. The South African Government is implementing the CIP to stimulate investment growth in line with the National Industrial Policy Framework (NIPF) and Industrial Policy Action Plan (IPAP). Mandatory Requirements

• The applicant must be a registered legal entity in South Africa.
• The project must be at least a level 4 B-BBEE contributor in terms of the Codes of Good Practice for B-BBEE. This requirement considers the exemptions in terms of Qualifying Small Enterprises (QSEs) as set out in terms of the Codes of Good Practice.
• For FDI (i.e. foreign investors incorporated in South Africa), where it can be proven that such a foreign investor does not enter into any partnership arrangements in foreign countries, the Codes of Good Practice make provision for the recognition of contributions in lieu of a direct sale of equity.
• For all projects, a grace period of 15 months after the date of submission of the application is given for them to comply. In all cases, a B-BBEE certificate should be submitted at the claims stage.
• The envisaged investment projects that may qualify for benefits under any investment incentive schemes offered by the department are eligible to apply for the CIP, provided such application is not for the same infrastructure activity items proposed by the project.
• Projects that have applied for the Shared Economic Infrastructure Facility (SEIF) will not be funded or co-funded for the same infrastructure activity under the CIP.

Special Economic Zone (SEZ) Programme

SEZs are geographically designated areas of a country set aside for specifically targeted economic activities, supported through special arrangements (that may include laws) and systems that are often different from those that apply in the rest of the country. The purpose of the SEZ programme is to expand the strategic industrialisation focus to cover diverse regional development needs and contexts, and provide a clear, systemic planning framework for the development of a wider array of SEZs to support industrial policy objectives. Major operational SEZs include Coega (Eastern Cape), Richards Bay (KwaZulu-Natal), Dube TradePort (KwaZulu-Natal), East London (Eastern Cape), and OR Tambo International (Gauteng). Benefits of operating within an SEZ

• Preferential 15% corporate tax
• Building allowance
• Employment incentive
• Customs-controlled area
• 12I Tax Allowance

These are just some of the incentive schemes offered by the DTIC. For information on application requirements and funding, visit the DTIC website.