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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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Presentation Transcript
  • 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

  • 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
  • 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

Thank you / Questions