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Grants & Incentives Agri -Processing. 5 March 2013. Agenda. Introduction to Innovative Finance Government Grant Objectives Grants in Agriculture Manufacturing Investment Programme (MIP) Manufacturing Competitiveness Enhancement Programme (MCEP). Introduction to Innovative Finance.

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Grants incentives agri processing
Grants & IncentivesAgri-Processing

5 March 2013


Agenda
Agenda

  • Introduction to Innovative Finance

  • Government Grant Objectives

  • Grants in Agriculture

  • Manufacturing Investment Programme (MIP)

  • Manufacturing Competitiveness Enhancement Programme (MCEP)


Introduction to innovative finance
Introduction to Innovative Finance

  • Specialist Financial Services Company adding value to Manufacturers and Industrial Businesses

  • Holistic Approach to procuring relevant finance products:

    • Funding in the form of debt / government subsidies

    • Private Equity and Venture Capital


Government grant objectives
Government Grant Objectives

  • Industrial Policy Action Plan and NewGrowth Path

  • Focus on:

    • Employment Creation

    • Improving industrial capacity and output

    • Stimulating investment and growth in industrial sector

    • Broad Based Black Economic Empowerment


Grants in agriculture
Grants in Agriculture

  • Manufacturing in the Agricultural Industry?

  • Secondary processes = value add processes

  • Grants viewed as bonus payments from government and not financing

  • Paid retrospectively and payment is subject to meeting monitoring criteria during contractual period

  • Business sense is the first priority




Manufacturing investment programme
Manufacturing Investment Programme

  • Released July 2008 for a six year term

  • Available to Manufacturers (SIC Code 3)

  • Companies, Closed Corporations and Co-Operatives legally registered in SA

  • New start-ups or Expanding Businesses

  • Application must be submitted 90 days in advance of first asset brought into operation


Manufacturing investment programme1
Manufacturing Investment Programme

  • Tax Free, Paid in Cash

  • < R 5 million – 30% of qualifying investment over a three year term

  • > R 5 million but < R 30 million – between 15% and 30% of qualifying investment calculated according to a regressive sliding scale over two years

  • > R 30 million – fixed 15% on qualifying investment over two years

  • Qualifying Investment includes:

    • Plant and Machinery

    • Owned buildings / rented premises and leasehold improvements

    • Commercial Vehicles used in production process


Manufacturing investment programme2
Manufacturing Investment Programme

MIP Qualifying Criteria

  • Meet the required number of points according to the prescribed Economic Benefit Criteria Tables

  • Expand in terms of revenue – 15% growth in year one and 25% growth in year two calculated respectively from base year

  • Prove sustainability and business feasibility

  • Prove the need for financial grant assistance

  • No reduction in base year employment

  • Growth in respect of historical asset base. DTI will not fund mere replacement.


Manufacturing investment programme3
Manufacturing Investment Programme

  • Qualifying Criteria to remember:

    • Are you making significant investment in Plant and Machinery or Starting a New Business/Division?

    • Are you Creating Jobs?

If the answer is Yes...

You stand a good chance of obtaining a grant if the application is correctly structured


MCEP

  • Cost Sharing Grant paying back between 30% and 70% of qualifying costs

  • Encourages manufacturers to upgrade facilities in order to sustain employment and promote competitiveness

  • Available to all existing manufacturers

  • Applications must be submitted 60 days in advance of project commencement


Mcep key elements
MCEP: Key Elements

  • Production Incentive:

    • Capital Investment

    • Green Technology and Resource Efficiency

    • Enterprise Level Competitiveness Improvement

    • Feasibility Studies

    • Cluster Competitiveness

  • Industrial Financing Loan Facilities (via IDC)


Mcep benefit
MCEPBenefit

  • Maximum grant calculated as a percentage of the applicant’s average Manufacturing Value Add over two years according to audited financial statements.

  • MVA = Gross Sales less Raw Material Input Costs



Mcep eligibility criteria
MCEP Eligibility Criteria

  • Registered legal entity within South Africa

  • Applicants with a historical asset base of < R 5 million should invest a minimum of R 500 000 in Plant & Machinery

  • Applicants with historical asset base > R 5 million should expand by lower of:

    • 20% of existing Plant and Machinery Cost

    • R 2 million

  • Manufacturing entity (SIC Code3) in operation for a minimum of one year

  • No reduction in base year employment levels

  • BBBEE Level Four or able to provide a plan as to how Level Four will be achieved within four year period


Innovative finance contact details
Innovative Finance Contact Details


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