Transcript manufacturing investment cluster

An Overview of Performance of The Enterprise
Organisation’s (TEO) Incentive Programmes
Presentation to Portfolio
Committee on Trade and Industry
19 October 2011
1
the dti DELEGATION
Name
Designation
Lionel October
Director General
Tumelo Chipfupa
DDG: The Enterprise Organisation
Tsepiso Makgothi
COO: The Enterprise Organisation
Francisca Strauss
Chief Director: Incentive Administration
Tumelo Marivate
Chief Director: Incentive Administration
Kaya Ngqaka
Chief Director: Special Projects
Nonceba Mashalaba
Chief Director: Product and Systems Development Unit
2
BACKGROUND
•Follow-up to the Portfolio Committee presentation in July this
year
•TEOs understanding of the request is to provide incentive
comprehensive report that includes the following;
(a)The years/months since implementation
(b) the number of projects approved (per Province)
(c) the value of projects approved
(d) the total cost to the fiscus = amount/claims paid
(e) the number of direct jobs created as a result of the incentive
programmes (projected/actual)
(f)cost per job
3
CONTENT
•TEO strategic overview
•Incentive Programmes and estimated number of jobs
•Broadening Participation Cluster
•Manufacturing Investment Cluster
•Services Investment Cluster
•Competitiveness Investment Cluster
•Infrastructure Support Cluster
4
TEO OVERVIEW
5
DTI Support for Industry
Programme
Number of Jobs supported
Critical Infrastructure
Programme
Enterprise Investment
Programme
Automotive Investment
Scheme (AIS)
Business Process Services
Incentive
31 778 direct permanent jobs
12-I tax allowance (from
Sept 2010)
FILM
Co-operative Incentive
Scheme
Export Marketing and
Investment Scheme
Black Business Supplier
Development Programme
Industrial Development
Zones
3134 direct full-time equivalent job
•
DTI Incentives are focused on
investment,
job creation,
competitiveness and broadening
participation.
•
Five programmes accounted for
most of the reported job creation;
automotive support under AIS,
enterprise support under EIP,
infrastructure support under CIP
and IDZs as well as export
promotion support under EMIA.
15 014 direct full-time equivalent jobs
3944 direct full-time equivalent jobs
(projected jobs based on approvals until
March 2011)
370 direct jobs (projected jobs based on
approvals until March 2011)
No estimate available
1 426 direct permanent jobs
10 545 direct permanent jobs
Assisted enterprises employ between 8 &
20 employees
41,229 direct jobs (projected jobs for
construction jobs and investor jobs
combined)
6
BROADENING PARTICIPATION CLUSTER
STRATEGIC FOCUS
AIM
• To promote broader economic participation in the economy through provision of incentive
support measures
OBJECTIVES
• Increase participation in the economy by historically disadvantaged individuals
• Stimulate economic activity in marginalized regions
STRATEGY
• Facilitate the development of cooperatives
• Promote the growth and development of black-owned business
• Promote the growth and sustainability SMMEs
• Promote a wider geographic spread of economic activity
INSTRUMENTS
• Black Business Supplier Development Programme (BBSDP)
• Co-operative Incentive Scheme (CIS)
7
BROADENING PARTICIPATION CLUSTER
OUTLINE OF PROGRAMMES
PROGRAMME
PURPOSE
TARGET
OFFERING
BUDGET
11/12
MAX FUNDING
PER
ENTERPRISE
Black Business
Supplier
Development
Programme
(BBSDP) 2002 to
date
Broader
participation of
black-owned
SMMEs through
provision of
business
development
services
• Majority black
owned entities
• R250k to R35m
turnover
• 1 year trading
• 80:20 cost sharing
grant for business
development
services
• 50:50 cost sharing
grant for tools,
machinery and
equipment
R88m
R1 000 000
Cooperative
Incentive
Scheme (CIS)
2006 to date
Broader
participation by
promoting the
development of
cooperatives
• Registered cooperative
• Operate in the
emerging sector
• Manufacturing,
retail & services
90:10 cost sharing
grant for machinery,
equipment &
business
development
services
R44m
R350 000
8
BROADENING PARTICIPATION CLUSTER
BLACK BUSINESS SUPPLIER DEVELOPMENT
PROGRAMME: PERFORMANCE
• 2002 to March 2011:
• 10 761 projects approved across all nine provinces
Approval:5849 •
54%
Approvals: 658
6%
Approvals: •
1216
11%•
Approval: •
530
5%•
• R458,189,045 funds committed
• R303,889,103 total cost to fiscus
• Assessment of BBSDP in July 2010 showed that the
incentive programme was successful in reaching its
targeted beneficiaries: majority (82%) of sampled
beneficiaries were small businesses (turnover less than
R1million)
• Majority of BBSDP enterprises employ between 8 & 20
employees. 67% of Network Facilitators employ less
than 4 people. Service Providers employ more than 7
people per enterprise.
Approvals: 880•
8%•
• BBSDP assisted beneficiaries to improve service
quality, increase revenue and turnover, leverage
marketing opportunities, increasing the skills and
competency of management and introduction of new
products
Approvals:139
1%
Approvals: 497•
5%•
Approval: •
606
6%•
• Recommendations from the study have resulted in the
following developments within the revised BBSDP
which was launched in September 2010:
• Cost-sharing of grant revised
• Integrated Information Management System
Approvals: 386•
4% •
• Training for Network Facilitators compulsory
• Monitoring and Evaluation framework developed
9
BROADENING PARTICIPATION CLUSTER
BLACK BUSINESS SUPPLIER DEVELOPMENT
PROGRAMME: PERFORMANCE
Provincial Growth : 2002 , 2006 , 2010
120%
% of Applications Processed
100%
100%
2002/3
80%
60%
2006/7
71%
2010/11 YTD
57%
40%
11%
4%
20%
5%
0%
0%
0%
GAU
4%
LIM
KZN
3%
1%
0%
WC
1%
9%
8%
4%
2%
7%
5%
1%
5%
0%
0%
0%
0%
0%
0%
FS
EC
NW
MPU
NC
Provinces
10
BROADENING PARTICIPATION CLUSTER
COOPERATIVES INCENTIVE SCHEME:
PERFORMANCE
Approvals: 106
23%
Approvals:
100
Approvals: 22
5%
22%
Approvals:
25
5%
Approvals:
18
4%
• 2005 to March 2011
• 455 projects approved over all nine provinces
• R100,509,964 funds committed
• R92,523,000 total cost to fiscus
Approvals: 69
15%
Approvals: 5
1%
Approvals: 35
8%
• A study commissioned in June 2011 aims to
determine why the majority of co-operatives assisted
by the CIS to date are still performing poorly and to
investigate challenges faced by the co-operatives
(being finalised).
• 293 out of 360 co-operatives were interviewed
implying that 81% of supported enterprises are still
operating.
• Interviewed co-operatives created 1 426 jobs.
Approvals: 75
16%
• Estimated average cost to the dti per job created is
R64,883.
11
BROADENING PARTICIPATION CLUSTER
COOPERATIVES INCENTIVE
SCHEME: PERFORMANCE
•
Findings from the CIS Study includes:
•
•
•
•
•
•
•
•
•
22% of co-operatives considered themselves as
successful; 67% as Struggling/surviving; 1.7% as failing
and 9.2 % Not yet Operating
Total Employment is 1 426 comprising 37 from those
who consider themselves as successful, 1,029 from
struggling and Surviving and 60 from Failing
Common activities: crop farming, sewing, vegetables,
poultry, livestock, brick making, piggery and baking
Financial record keeping is weak, except for cooperatives categorised as successful
Customers vary from private individuals (highest %),
private companies, supermarkets, schools and
government
Strengths - Managing customers, Managing employees
of the co-operatives, Technical skills, Managing credit,
Negotiating discounts, Product pricing, Marketing the cooperatives’ products/ services
Weaknesses - Applying for tenders, Bookkeeping and
budgeting, Managing the co-operative, Computer literacy,
Marketing the co-operatives’ products/ services
3 Main cost items – Raw material/inputs/transport costs
and salaries and wages
Current problems - Lack of cash to buy raw
materials/inputs and operate business effectively; No
vehicle to transport goods; Lack of financial management
and business skills; Do not have sound financial/business
advice; Provision of resources and Inadequate industry
knowledge & lack of basic essential resources
•
Recommendations from the study includes:
MARKETING
•
Create awareness amongst co-ops on how the CIS grant
works
•
Approach other organisations & institutions to assist coops with other requirements.
MENTORING/TRAINING
•
Co-op Agency to assist with industry knowledge and skills
development .
•
Assist co-ops in calculating the total amount they will
require
•
Increase the grant and thus use a portion for industry
related training
ADMIN
•
Amalgamation of Co-ops - give opportunity for co-ops to
gain information on other co-ops in order to create
linkages
•
Lack of Business Plans after receiving the grant - the dti
should ensure that co-ops keep a copy
•
Create a system where there is a reserve to cover
unexpected changes in quotations
•
Selection process to focus on co-ops that are already in
business and operating.
•
Co-ops should indicate the degree of importance for
resources applied for.
•
Second Chance Assistance for failed co-ops
•
Continuous monitoring and evaluation of co-ops
12
BROADENING PARTICIPATION CLUSTER
COOPERATIVES INCENTIVE SCHEME:
CASE STUDY
MakQs Marketing and Supply
Primary Co-operative
•Operate from Mthwalume under
Umzumbe Municipality in Kwazulu
Natal Province
•3 men and 2 women.
•Water purification bottling and
branding.
•Employ extra 5 people
•Approved = R 199 014
•.Supply hotels, catering
companies, municipalities and
supermarkets
13
BROADENING PARTICIPATION CLUSTER
COOPERATIVES INCENTIVE SCHEME:
CASE STUDY
Dinatla Primary Co-operatives
•Established in Galeshewe,
Northern Cape
• 6 Women
• Bake bread and supply to local
schools.
•Approved = R244 985
•Baking equipment and delivery
van.
14
BROADENING PARTICIPATION CLUSTER
COOPERATIVES INCENTIVE SCHEME:
CASE STUDY
Marchand Primary Cooperative’s
• 10 Co-operatives from Marchand,
Northern Cape Province
• 50 members
• Compost manufacturing.
•Approved = R2,7m
•. Compost Turner Equipment,
Landini Rex, Chip Machines and
Digi Line platform Scale
15
MANUFACTURING INVESTMENT CLUSTER
STRATEGIC FOCUS
AIM
•
To promote additional investment in the Manufacturing sector.
OBJECTIVES
•
Job Creation
•
Value addition
•
Investment in additional capacity
STRATEGY
•
Promotion of labour absorbing activities
•
Facilitation of increased value addition and beneficiation
•
Provision of world class and competitive infrastructure
•
Focus on priority sectors
INSTRUMENTS
•
•
•
•
•
Manufacturing Investment Programme (MIP)
Foreign Investment Grant (FIG)
Automotive Investment Scheme (AIS)
Strategic Industrial Projects (SIP)
Investment and Training Allowance (12I)
16
MANUFACTURING INVESTMENT CLUSTER
OUTLINE OF PROGRAMMES
PROGRAMME
PURPOSE
TARGET
OFFERING
BUDGET
11/12
MAX FUNDING
PER
ENTERPRISE
EIP:
Manufacturing
Investment
Programme
(MIP) - May
2008 to 2014
To promote
investment in the
manufacturing
sector
Manufacturers with
emphasis on lead
sectors with investment
up to R200m
•15-30% grant for qualifying
investment in land &
buildings, machinery &
equipment and customised
commercial vehicles
•15% transportation costs
for imported machinery &
equipment by FDI
R674m
R30m for the
investment grant
and R10m for the
Foreign
Investment Grant
Foreign
Investment
Grant (FIG) –
linked with MIP
(SMEDP 2000)
Promote foreign
investment.
Increasing foreign
direct investment.
Contributing to the
country's economic
growth.
Small, medium and
large manufacturing
enterprises
Foreign manufacturing
enterprises.
Approval of FIG grant is
subject to the project being
approved for SMEDP or EIP.
(SMEDPlinked)
May 2008
(MIP-linked)
R10 million
17
MANUFACTURING INVESTMENT CLUSTER
OUTLINE OF PROGRAMMES
PROGRAMME
PURPOSE
TARGET
OFFERING
BUDGET
11/12
MAX FUNDING
PER
ENTERPRISE
Automotive
Investment
Scheme (AIS ) –
July 2009
To grow the
automotive sector
through investment
in light motor
vehicle and
components
manufacturing that
increases plant
production volumes
and strengthens the
auto supply chain
•Light motor vehicle
manufacturers producing
50,000 units per plant
within 3 years
•Component
manufacturers that are
part of light motor vehicle
manufacturer supply
chain
20-30% grant for qualifying
investment in machinery &
equipment, tooling &
buildings.
R947m
N/A
SIP – July 2001
to July 2005
12 i (Investment
and training
allowance)- July
2010
Contribute to
development and
competitiveness of
enterprises
Large scale industrial
manufacturing
enterprises
To promote
industrial upgrading
and new investment
in manufacturing
Medium to large
manufacturers with
investment between
R30m and R1.5bn
Investment in qualifying
assets, brought into use for
the first time within four years
from date of approval, which
are equal to or exceed R50
million in costs.
• Training allowance: max
R36 000 per person
• Max 55% of qualifying
investment costs in
machinery & equipment
N/A
N/A
30% of taxable
income
Investment
allowance of
R900m and
training allowance
of R30m
18
MANUFACTURING INVESTMENT CLUSTER
MANUFACTURING INVESTMENT
PROGRAMME: PERFORMANCE
Approvals: 39
5%
Approvals:
250
Approvals: 18
2%
30%
• 2008 to March 2011
• 846 projects approved over all nine provinces
Approvals:
28
3%
• R2,292,008,317 funds committed
• R198,380,873 total cost to fiscus
• 23 996 projected direct jobs
Approvals: 8
1%
• 2851 direct jobs supported
Approvals: 163
19%
Approvals: 15
2%
Approvals: 227
27%
Approvals: 98
12%
• Average cost per job supported is R69,583
• MIP figures above includes the Foreign Investment
Grant figures.
•A macro-economic impact assessment of the EIP
(MIP and TSP), was completed in January 2011 at the
national and provincial levels using the Social
Accounting Matrix model to measure the economic
and socio-economic impact that will result from the
EIP
•A total of 623 projects analysed, 395 from MIP and
228 from TSP
•The results summary presented on the next slide:
19
Overall National Macroeconomic Impact for the EIP
(Constant 2009 prices), Total Approved Projects
EIP IMPACT STUDY
Direct
Impact
Indirect
Impact
Induced
Impact
Total
Impact
Impact on Gross Domestic Product
(GDP) [R millions]
Impact on Capital Formation [R millions]
16 022
26 125
26 273
68 420
16 737
56 118
53 329
126 184
Impact on Employment [Numbers]:
22 112
154 662
163 334
340 108
-
Skilled Impact on Employment
8 323
34 710
38 877
81 910
-
Semi-skilled Impact on
Employment
Unskilled Impact on Employment
7 864
65 276
65 333
138 472
5 925
54 676
59 124
119 726
-
Impact on Households [R millions]:
44 455
-
Low Income Households
7 520
-
Medium Income Households
9 154
-
High Income Households
27 781
Fiscal Impact [R millions]:
20 959
-
National Government
20 435
-
Provincial Government
126
-
Local Government
398
Impact on the Balance of Payments [R
millions]
32 274
•The average annual impact of the
EIP on SA’s GDP amounts to
R68.4b. Thus each year R68.4b of
GDP will be generated consisting of
remuneration of employees, and
returns on capital invested due to
the construction and operation
taking place with regards to EIP
projects.
•A R126b of capital is required on
an annual basis to sustain all EIP
projects.
•The EIP sustains 304 108 job
opportunities annually (41% of
which is for semi-skilled labourers)
•The total impact on household
income amounts to R44.5b (17% of
which goes to lower income
households).
• Annual fiscal impact amounts to
approximately R20.9 billion per
annum through direct and indirect
taxes (which will be used to improve
the quality of life of the average
20
South African citizen.
MANUFACTURING INVESTMENT CLUSTER
MANUFACTURING INVESTMENT
PROGRAMME: PERFORMANCE
PROVINCIAL IMPACT OF EIP STUDY
GDP: R2251m
5.4%
Labour: 12171
4.9%
GDP: R20899m
50.3%
Labour: 126373
50.8%
GDP: R343m
0.8%
Labour: 4639
1.9%
GDP:
R1096m
2.6%
Labour: 4839
1.9%
GDP: R107m
0.3%
Labour: 1134
0.5%
GDP:R 6507m
15.7%
Labour: 34431
13.8%
GDP:R 5655m
13.6%
Labour: 41578
16.7%
Provincially, EIP impacts
the most on Gauteng’s
GDP and Labour.
GDP: R718m
1.7%
Labour: 4007
1.6%
GDP: R3952m
9.5%
Labour: 19538
7.9%
21
MANUFACTURING INVESTMENT CLUSTER
SMALL AND MEDIUM ENTERPRISE DEVELOPMENT PROGRAMME
SMEDP PERFORMANCE DATA FROM INCEPTION (2000) TO MARCH 2011
Province
Approved
Projects
Funds Committed (R)
Projected Investment (R)
Eastern Cape
705
R
256 344 231
R
2 221 756 910
Free State
277
R
88 120 082
R
619 231 114
Gauteng
2464
R
1 125 372 593
R
13 311 351 084
Kwazulu-Natal
1565
R
650 943 406
R
7 423 017 080
Limpopo
435
R
150 574 359
R
1 008 966 243
Mpumalanga
552
R
202 575 794
R
1 539 678 125
North West
146
R
45 541 533
R
381 566 502
Northern Cape
322
R
123 070 193
R
1 001 132 807
Western Cape
2386
R
940 722 710
R
7 865 015 221
8852
R
3 583 264 901
R
35 371 715 086
TOTAL
22
MANUFACTURING INVESTMENT CLUSTER
AUTOMOTIVE INVESTMENT SCHEME- :
PERFORMANCE
Approvals: 4
11%
Approvals: 1
3%
• July 2009 to March 2011
• 36 projects approved over all nine provinces
• R2,155,688,982 funds committed
Approvals: 8
22%
• R 249,252,065 total cost to fiscus
• 15014 supported direct jobs
• Average cost per projected job is R143,579.
Approvals: 6
17%
Approvals: 17
47%
23
MANUFACTURING INVESTMENT CLUSTER
STRATEGIC INDUSTRIAL PROJECTS :
PERFORMANCE
Approvals: 3
8%
Approvals: 3
8%
Approvals: 3
8%
Approvals: 14
35%
Approvals: 2
5%
• July 2001 to July 2005
• 40 projects approved over all nine provinces
• R15,559 million value of projects
Approvals: 9
23%
• R6.9 billion committed funds
• R 2,529 million tax forgone
• 7 977 supported direct jobs
Approvals: 2
5%
Approvals: 4
10%
24
MANUFACTURING INVESTMENT
CLUSTER
STRATEGIC INDUSTRIAL PROJECTS
AIS
Province
Cost to Fiscus (Tax
Forgone)
Number of Approved
Projects
4
Direct Jobs
supported
Eastern Cape
R270m
Free State
R358m
3
Gauteng
R492m
14
457
Kwazulu-Natal
R711m
9
3492
Limpopo
R230m
3
0
Mpumalanga
R221m
3
135
North West
R211m
2
78
Northern Cape
0
0
0
Western Cape
R36m
2
50
R2,529m
40
7977
Grand Total
2673
92
25
MANUFACTURING INVESTMENT CLUSTER
STRATEGIC INDUSTRIAL PROJECTS
SIP STUDY
PURPOSE OF THE STUDY - conducted in 2004
•
The key strategic question that this evaluation sought to address was “ Is the
programme attracting the right projects?”.
•
For the purpose of this study, right projects were defined by reviewing what
constitutes a strategic project in the context of investment promotion and what are
the objectives of the programme.
•
Consequently the right projects were viewed to be projects that upgrade local
industries, enable the higher value manufacturing and generally improve the overall
cluster competitiveness.
26
MANUFACTURING INVESTMENT CLUSTER
STRATEGIC INDUSTRIAL PROJECTS
KEY FINDINGS
SIP STUDY

There is a strong indication, that the level of awareness of the SIP programme and its complementary incentives is
low amongst industrialists.

The awarding of the SIP allowance has played a decisive part in the investment decision for only a third of the
respondents with approved projects.

The majority of the SIP-approved projects are forecasted to have positive impacts on their clusters. However, the
level of direct job creation from the projects is forecasted to be low.

SIP is predominately attracting applications from existing companies who are expanding their South African
operations.

The extra tax revenue enabled by the SIP incentive will more than pay for the cost of the incentive.

There is a paucity of applicants with focused labour intensive projects as well as a paucity of applications from
foreign direct investors.

The key issue with regards to the administrative process is the time taken to process applications.
LESSONS

Generally, South Africa is struggling to attract the mega-million Rand investments which are also labour-intensive,
due to its inferior competitive advantages compared to other regions.

The present criteria and design of SIP have resulted in the Adjudication Committee approving projects which pass
the criteria, but which are not necessarily aligned to the specific development of sector objectives.

The key weakness with the SIP administration processes is the long processing time for applications. Secondly the
process followed to assess applications from foreign applicants needs to be streamlined
27
MANUFACTURING INVESTMENT CLUSTER
INVESTMENT AND TRAINING
ALLOWANCE (12i)
AIM
•
To promote industrial upgrading and new investments in manufacturing
Objectives
•
Improved energy efficiency with emphasis on cleaner production technology
•
Innovative: focus on projects that will utilize processes of innovation, thereby changing pre-existing techniques
and the use of plant, machinery or equipment and these processes will materially improve production time, reduce
production costs, improve product quality or improve product longevity.
•
General business linkages: acquiring goods and services from small, medium or micro enterprises
•
Location in industrial development zone
•
Direct employment creation and Skills development
Performance
•
•
•
•
•
Projects recommended by the Adjudication committee as of 31 march 2011: 4
Total investment: R4.1 billion
Investment allowance: R1.3 billion
Training allowance: R13.3 million
Direct Jobs: 370
28
SERVICES INVESTMENT CLUSTER
STRATEGIC FOCUS
AIM
•
To promote additional investment in the Services sectors.
OBJECTIVES
•
Job Creation
•
Growth in tradeable services
STRATEGY
•
Promotion of labour absorbing activities
•
Growth of new service sectors
INSTRUMENTS
•
•
•
Business Process Outsourcing and Offshoring (BPO&O)
Film & TV Production Incentive Support Programme
Tourism support Programme (TSP)
29
SERVICES INVESTMENT CLUSTER
OUTLINE OF PROGRAMMES
PROGRAMME
PURPOSE
TARGET
OFFERING
BUDGET
11/12
MAX FUNDING
PER
ENTERPRISE
BPS (Business
Process
Services)
Incentive –
January 2011
Encourage the creation
of employment
opportunities from the
offshore market
Enterprises offering
Business Process
Services to the
offshore market
• Operational Incentive
of R112,000 per job
created in 2011/12;
R104,000 per job
created in 2012/13 and
R88,000 per job
created in 2013/14.
R143.1m
Unlimited
Film & TV
Production
2004 to date
To grow the film
industry to create jobs
and to transfer skills
Local and foreign
film producers
•15% of qualifying
South African
Expenditure for
foreign films
•25-35 of qualifying
South African
Production
Expenditure for local
films
R260m
R20m
EIP: Tourism
Support
Programme
May 2008
To promote job
creation in non
traditional tourism
clusters
Tourism businesses
•15-30% grant for
qualifying investment
in land & buildings;
furniture, fittings &
equipment; and
tourism vehicles
Part of MIP
budget
R30m*
30
SERVICES INVESTMENT CLUSTER
BUSINESS PROCESS OUTSOURCING &
OFFSHORING: PERFORMANCE
Approvals: 5
28%
Approvals: 1
6%
Approvals: 2
11%
• December 2006 to March 2011:
• 18 projects approved across all nine
provinces
• R362,788,365 funds committed
• R260,743,329 total cost to fiscus
Approvals: 1
6%
• 7275 direct jobs supported
• R35,851 average cost per job
Approvals: 2
11%
Approvals: 1
6%
Approvals: 6
33%
31
SERVICES INVESTMENT CLUSTER
BUSINESS PROCESS OUTSOURCING & OFFSHORING: PERFORMANCE
BPO &O STUDY
•
•
•
•
•
•
•
•
•
A review and benchmarking of the government assistance and support (GAS) that is currently offered by the
BPO sector was conducted in 2010.
The objective was to analyse performance of and benchmark SA incentives, and make future
recommendations
SA’s current incentives were compared with established offshore locations’ (India and Philippines) and Tier
2 competitors (Egypt, Malaysia and Kenya)
A key finding was that countries attempt to address most elements of the BPO cost structure in their
incentives and most provide significant incentives that address operational expenditure (opex) in addition to
capital expenditure (capex).
The benchmarking also shows that the total value of incentive per Full Time Job Equivalent (FTE) provided
by South Africa is comparable to established destinations but lesser than that of emerging destinations.
SA’s incentives should include opex and offered for new offshore jobs, in order ensure competitiveness and
achieve maximum impact.
The dti should continue to market SA’s value proposition globally for foreign direct investments through
missions.
Following the study, the dti launched a revised BPS incentive programme effective 1 January 2011.
the dti developed a targeted Value Proposition targeted to economic distress areas.
32
SERVICES INVESTMENT CLUSTER
BUSINESS PROCESS SERVICES INCENTIVE:
PERFORMANCE
Approvals: 1
• January 2011 to March 2011:
10%
• 10 projects approved across all nine
provinces
Approvals: 1
10%
• R157,760,000 funds committed
• 3 944 projected direct jobs
• R40 000 estimated average cost per job
Approvals: 3
30%
Approvals: 5
50%
33
SERVICES INVESTMENT CLUSTER
FILM & TELEVISION PRODUCTION INCENTIVE
PROGRAMME: PERFORMANCE
Shooting weeks:
WC – 189 (59%)
Gau – 94 (30%)
Mpu – 0 (0%)
NW – 0 (0%)
KZN – 15 (5%)
NC – 3 (1%)
EC – 6 (2%)
Limp – 5 (1.5%)
FS – 5 (1.5%)
•169 films approved
•R704,165,844 funds committed
•R377,620,856 total cost to fiscus
QSAPE V/s Incentive
1200
992
981
1000
800
697
Number
600
365
400
QSAPE
486
394
Incentive
216
214
200
30
14
5
49
0
South African
Co
Productions
Foreign
Productions
Total
Various box office hits supported:
• Spud, Invictus, Jock and Oh Shucks it’s 2010.
• Chanda’s Secrets/Life - which was filmed in Limpopo and tells
the story of a 12 year old girl whose family is struck by illness and
she becomes the head of the family - was nominated within the
best nine films for an Oscar.
•Skoonheid won the Queer Palm award at the 2011 Cannes
International Film Festival.
•Winnie, Lucky, Skoonheid premiered at the Toronto
International Film Festival 2011.
• Liefling with a full South African cast was the first Afrikaans
musical to be made in South Africa in more than 20 years.
34
• The co-production, Judge Dredd with a budget of R263 million is
the first film production to be made at the Cape Town Film Studio.
SERVICES INVESTMENT CLUSTER
FILM & TELEVISION PRODUCTION INCENTIVE
PROGRAMME: PERFORMANCE
FILM AND TV STUDY
•
Findings of the study by the Independent Production Organization (IPO), The Production Alliance
(TPA), Documentary Filmmakers Association (DFA) and the South African Screen Federation
(SASFED) on the impact of the global financial crisis on foreign productions made in South Africa
dated 25 June 2009.
•
QSAPE ratio – QSAPE attracted for each R1.00 of incentive paid
– South African 4.21
– Co productions 3.39
– Foreign 7.91
Economic multiplier of 2.5
Fiscal returns – Report dated 2009 indicate that an amount of R338m in incentives generated taxes
of R413m
•
•
Challenges
•
•
Economic downturn- fewer movies, smaller budgets
Fierce competition between countries to attract film “dollars”
Amendment to guidelines
•
Milestone payments for South African films
•
Removalof the capped incentive amount
35
Winnie
36
SERVICES INVESTMENT CLUSTER
TOURISM SUPPORT PROGRAMME:
PERFORMANCE
Approvals: 40
10%
Approvals:
105
Approvals:32
8%
26%
Approvals:
29
7%
• 2008 to March 2011
• 401 projects approved over all nine provinces
• R869,369,283 funds committed
Approvals:
15
4%
• R64,039,658 total cost to fiscus
Approvals: 40
10%
• 283 direct jobs supported
• Average cost per job supported is R226,289
Approvals: 31
8%
Approvals: 54
%
Approvals: 55
14%
37
COMPETITIVENESS INVESTMENT CLUSTER
STRATEGIC FOCUS
AIM
• To promote industrial upgrading and the growth of South African export of goods
and services in the global economy.
OBJECTIVES
• Increase exports and value addition
STRATEGY
• Promote access for South African goods and services to export markets
• Promote quality and efficiency of South African goods & services
INSTRUMENTS
• Export Marketing & Investment Assistance (EMIA)
• Sector Specific Assistance Scheme (SSAS)
• Capital Projects Feasibility Programme (CPFP)
38
COMPETITIVENESS INVESTMENT CLUSTER
OUTLINE OF PROGRAMMES
PROGRAMME
PURPOSE
TARGET
OFFERING
BUDGE
T 11/12
MAX FUNDING
PER
ENTERPRISE
Export
Marketing and
Investment
Assistance
(EMIA ) 1997 to
date
To develop
export market for
SA goods and
services and
recruit FDI
Export ready
manufacturers
Cost sharing grant
for exhibition costs,
marketing material
& research in
foreign markets
R17,5m
N/A
Sector Specific
Assistance
Scheme (SSAS)
2007 to date
To develop
export market for
SA goods and
services and
recruit FDI
Non profit
business
organisations
(export councils,
Business
Associations,
Joint Action
Groups) in
priority sectors
Cost sharing grant
(max 80%) for
developmental
projects
R4m
N/A
Capital Projects
Feasibility
Programme
2005 to date
Promote the
export of SA
capital goods
and services
Capital goods
sectors and
consulting
engineers
Cost sharing grant
(max 55%) for
feasibility study
costs
R9.8m
R5m
39
COMPETITIVENESS INVESTMENT CLUSTER
EXPORT MARKETING & INVESTMENT
ASSISTANCE: PERFORMANCE
Approvals:
3573
Approvals: 30
0%
49%
Approvals: 63
1%
Approvals: 159
2%
Approvals: 26
0%
Approvals: 954
13%
•
August 1997 to 31 March 2011
•
7295 projects approved across all nine
provinces
•
R452,947,886 funds committed
•
R350,866,370 total cost to fiscus
•
10 545 jobs supported
•
Average cost per job supported:
R33,273
• Promote greater participation of smme,
hdi and large companies
Approvals: 112
2%
Approvals:
2114
29%
Approvals: 264
4%
• On-going training on export readiness
• Focusing on exhibition , makert
research, fdi and mission participation
(local & international)
• Eligible applicants are manufacturers
and service oriented companies.
40
EMIA & SSAS/Emerging Exporters Provincial Spread
No.
of 2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
TOTAL
enterprises
EC
70
36
36
23
11
19
20
11
19
19
264
OFS
27
15
6
5
1
14
19
12
9
4
112
1,171
407
350
238
233
188
171
204
254
357
3,573
KZN
355
94
97
68
69
51
56
60
59
45
954
LIM
11
6
3
2
2
0
1
2
1
2
30
MP
56
15
12
8
17
2
4
13
16
16
159
NC
10
0
0
1
3
4
4
1
0
3
26
NW
11
10
10
8
3
1
6
1
6
7
63
WC
561
190
214
138
185
126
163
163
174
200
2,114
132
264
396
444
599
802 1049
EMIA & SSAS HDI
57
53
40
60
100
138
237
132
232
264
402
396
633
G
SSAS
TOTAL
EMIA (HDIs)
SSAS/EE
(HDIs)
TOTAL
% HDI
2,272
773
728
543
189
137
0
0
0
543
189
137
491
0
57
524
0
53
23.90 24.45 18.82 11.61 10.11
405
0
40
0
60
9.88 13.51 38.73 50.12 60.34
7292
41
HDIs and SSAS/Emerging Exporters
HDIs &
EE: % of
Exporters
Assisted
by EMIA
Period: 2002 - 2011
42
COMPETITIVENESS INVESTMENT CLUSTER:
CAPITAL PROJECTS FEASIBILITY PROGRAMME
PERFORMANCE
•
22 Feasibility projects approved, 3 projects are bankable.
•
Total commitment: of R67,272,343
•
Total cost to fiscus: R32,219,901
•
Sectors: Agro-processing, mining & infrastructure.
APPLICANT
PROJECTS
LOCATION
PGBI
Greenfieids sugar cane
Ghana
E+PC Engineering & Projects (Pty)
Ltd
Duration Gold
Zimbabwe
Kwezi V3 Engineers
Chingola Railway
Ghana
Kovacs Engineering
Residential & resort
development
Oman
Netgroup Int. (Pty) Ltd
Wind farm
Lesotho
Afrinaissance Mining Resources
Alluvial gold mine
Mozambique
Econologistics
Tete industrial park
Mozambique
Consulmet Metals
Gold beneficiation plant
Kyrgyzstan
43
INFRASTRUCTURE SUPPORT CLUSTER
STRATEGIC FOCUS
AIM
•
To promote additional investment in the Manufacturing sector.
POLICY OBJECTIVES
•
Reduce the costs of logistics and infrastructure
•
Skills Development
STRATEGY
•
Promotion of labour absorbing activities
•
Facilitation of increased value addition and beneficiation
•
Provision of world class and competitive infrastructure
•
Focus on priority sectors
INSTRUMENTS
•
•
Critical Infrastructure Programme (CIP)
Industrial Development Zones (IDZs)
44
INFRASTRUCTURE SUPPORT CLUSTER
CRITICAL INFRASTRUCTURE PROGRAMME
• Critical Infrastructure Programme (CIP) is a 70:30 cost-sharing grant intended to leverage
strategic investment projects (green- and brownfields) by financially supporting infrastructure critical to
such projects, enabling them to establish. The programme was launched in August 2000.
• Since inception, the programme supported 42 investment projects with an estimated investment
value of R88,4 billion.
• The grant has mainly supported investment mining, manufacturing, energy, chemicals, tourism and
steel sectors.
• The CIP grant disbursed to projects amounts to R1,147,054,564.
•The approved projects will support an estimated 47 219 direct permanent jobs.
• Total infrastructure development cost by all projects amounts to R5.3 billion.
45
INFRASTRUCTURE SUPPORT CLUSTER
CRITICAL INFRASTRUCTURE PROGRAMME
9 investment
projects worth
R7,5bn
7 investment
projects worth
R15,3 bn
Sector; mining,
manuf.
9900 direct
jobs
3 Investment
projects worth
R12 bn
Sector mining
1300 direct
jobs
Sector
autom,manuf,
chemicals,
energy. 5700
direct jobs
6 Investment
projects worth
R11,3 bn
Sector; mining
6100 direct
jobs
4 investment
projects worth
R15 bn
Sector; mining
6300 direct
jobs
1 investment
project worth
R1.1 bn
Sector; Film
300 direct jobs
10 Investment
projects worth
R21,9 bn
Sector; manf.,
mining, chemicals,
Energy, Steel
14000 direct perm
jobs
2 investment
projects worth
R3.1 bn
Sector; Manuf,
energy
3200 direct
jobs
•
August 2000 to 31 March 2011
•
42 projects approved across all nine
provinces
•
R1,670,781,624 funds committed
•
R1,147,054,564 total cost to fiscus
•
47,219 projected direct jobs
•
31778 jobs supported
•
R36,096 average cost per job
46
INFRASTRUCTURE SUPPORT CLUSTER
CRITICAL INFRASTRUCTURE PROGRAMME
Kalagadi Manganese (Pty) Ltd
Kalagadi Manganese (Pty) Ltd is company owned by Kalahari
Resources ( Women owned) , IDC and Acerlomittal.
Critical Infrastructure Programme support
The CIP contribution amounts to R50,2 million towards the
following infrastructure items:
• Bulk electrical infrastructure
• Rail connection to the main Railway line
• Access roads
The project has estimated R4, 3 billion worth of investment and
will consist of:
•An ore preparation facility and sinter plant which will beneficiate
the ore into 2.4 million tons per annum of a high grade sinter.
•A smelter located in Coega that will produce 320 000 tons per
annum of high carbon ferromanganese.
•The smelter will consume some 700 000 tons per annum of the
sinter leaving 1.7 million tons for export.
•The project has already invested R6,1 billion in underground
mine in the Northern Cape
and further R4,2 billion will be invested towards the smelter at
Coega in the Eastern Cape
•Kalagadi Manganese project estimated to create 877 direct
permanent job opportunities .
• To date 56 direct permanent jobs were created
47
INFRASTRUCTURE SUPPORT CLUSTER
CRITICAL INFRASTRUCTURE PROGRAMME
Impact study of CIP
IMPACT OF CIP TO THE ECONOMY (study done in 2009)
•
CIP is one of the most effective grant scheme in SA in terms of value for
money. The long term value added to the wider economy for every R1 allocated
to the scheme is considerable.
•
On average R67 worth of new capital investments is leveraged in the economy
for every R1 CIP grant allocated to the project.
•
Compared with Municipal Infrastructure Grant (MIG) between 2005/06 to
2007/08, total MIG allocations totaled R5.4 bn and CIP R700m, but CIP has
been able to leverage more than 50% of the total MIG funding allocated by
National Treasury.
•
Compared with Agriculture, Transport and Government Services, CIP performs
best in terms of output, leveraging investments to the economy and job creation.
48
INFRASTRUCTURE SUPPORT CLUSTER
CRITICAL INFRASTRUCTURE PROGRAMME
Impact study of CIP
IMPACT OF CIP TO THE ECONOMY
•
36 investments supported by CIP led to 3% increase in investments in the economy –
translating into 1.14% increase in GDP and 2.8% increase in exports (2000 prices).
•
From inception to 2009, CIP created 23915 direct jobs abd 64615 construction job
opportunities – leading to a 0.3% reduction in national unemployment rate.
•
CIP has benefited households, mainly in urban areas where CIP investment projects are
located.
CHALLENGES
Subdued economic growth that has negative effect on investment demand
SOLUTIONS
Revised guidelines for CIP that will lead to accommodation of other sectors of the economy
Improved marketing of the scheme to attract more applications
49
INFRASTRUCTURE SUPPORT CLUSTER
INDUSTRIAL DEVELOPMENT ZONES (IDZs)
Background
•
The South African government approved the Industrial Development
Zones (IDZ) Programme in 2000.
•
The main aim of the programme was to improve South African
competitiveness through attraction of foreign direct investments and
export of value added commodities. This would in turn create jobs and
promote linkages between zone and non-zone enterprises.
•
An Industrial Development Zone (IDZ) can be defined as a purposebuilt industrial estate linked to an international port or seaport that
leverages both domestic and foreign fixed direct investment in valueadded and export-oriented manufacturing industries and services.
50
INFRASTRUCTURE SUPPORT CLUSTER
INDUSTRIAL DEVELOPMENT ZONES (IDZs)
Background
•
So far there are 4 designated IDZs, that is
–
–
–
–
Coega (designated in 2001 and issued with Operator Permit in 2007)
East London IDZ (designated in 2002 and issued with operator permit in 2007)
OR Tambo International IDZ (designated in 2002 and issued with Operator Permit
in 2010)
Richards Bay IDZ (designated in 2002 and issued with Operator Permit in 2009)
– Performance:
–
–
–
–
•
Total value of investment: R 15,749,650,000
Total cost to fiscus: R 4,830,842,000
Direct projected jobs: 41 229 (construction and investor jobs combined)
Average cost per job: R117,171
Potential designations
–
Saldanha Bay
51
Industrial Development Zone
•Customs
•Controlled
•Area
•IDZ’s are considered part of
the Customs Territory of South
Africa.
•There are 4 designated IDZs,
•i.e. Coega, East London, O.R.
•Tambo International Airport
•& Richards Bay.
•A new IDZ is about to be
•designated at Saldanha
•ORT
•Saldanha
• RCB
•Customs Territory
•of
•South Africa
•An IDZ is located adjacent to a
•port allowing importation of raw
•materials, plant machinery &
•equipment; and the export of
•finished products;
•Coega
•EL
•Customs
•Services
•Secured
•Enterprises
•Area
•Industry &
•Service Area
•One
•Stop
•Center
•IDZ
East London IDZ
______________________________________
•Multi-Level Car Terminal
•Containerization
•Auto-Supplier Park
•Vehicle Storage Facility
53
Coega IDZ
______________________________________
•Automotives Logistic Park
•Great office space
•Road Infrastructure
•Frozen Yoghurt exporter
54
Richards Bay IDZ
______________________________________
55
OR Tambo International Airport IDZ
______________________________________
OR T
IDZ
Phase
1
56
INFRASTRUCTURE SUPPORT CLUSTER
INDUSTRIAL DEVELOPMENT ZONES (IDZs)
IDZ STRATEGIC DIRECTION
•
In line with the Industrial Policy Action Plan and the New Growth Path there is a need to
regionally diversify the manufacturing industries in new economic regions in addition to
the traditional industrial hubs.
•
the dti has through IDZ policy review process undertook to expand the IDZ programme into
a Special Economic Zones Programme (SEZ) that will consist of IDZs and other types of
specialised zones.
•
The SEZ, if effectively managed, can be useful instruments for promoting a regionally
diverse manufacturing industry and regional coherence and integration.
•
In order to achieve that the following gaps are being address:
– Governance model of the industrial zones,
– Stakeholder coordination (ports, rail, electricity, customs, permits, etc),
– Re-look at the funding and business models,
– Strategies to attract more investors to the SEZ (IDZs and others).
57
Actions taken to improve the IDZs
___________________________________
•
New dedicated Special Economic Zones Act
•
New Governance Model
•
Planning and coordination structures
•
Funding mechanisms
•
Provision of infrastructure
58
Thank you
59