DTI temporarily suspends manufacturing incentive owing to depleted budget

The Department of Trade and Industry (DTI) has temporarily suspended new applications for its Manufacturing Competitiveness Enhancement Programme (MCEP), as the large number of applications far exceeded the funds set aside for the programme. Initially, R5 billion had been set aside for the programme, which was designed as an incentive to support enterprises in the production sectors of the economy, but these funds had now been fully committed.

The MCEP sought to secure higher levels of investment, raise competitiveness and retain employment in the country s waning manufacturing sector. To date, the MCEP had supported 1 153 entities acquire capital equipment and reengineer business processes to improve their competitiveness. All assisted enterprises also retained jobs and were committed to black economic empowerment.

The DTI had highlighted the high number of applications it had received under the MCEP in May this year, when it limited the programme incentives to projects requiring investments of less than R50 million. A new application window would be opened in April 2016, pending the availability of funds. All other incentives of the department would continue as normal. The DTI also emphasised that it would continue to honour all approved applications under the MCEP.

According to the DA: “A large percentage of manufacturing companies rely on this programme to continue operations and contribute to the economy of the country. Suspending the MCEP will consequently force a number of companies to either close down operations or lay-off a number of employees.

“The programme is vital to ensuring that our manufacturing sector remains competitive, retains jobs and has the necessary space to create more jobs. Our current manufacturing sector is already in turmoil due to the ongoing electricity crisis, failing commodity prices and labour unrests. Effectively suspending intake into this crucial programme until April next year will cause a number of companies to shut their doors. Our economy cannot survive further business closures.”

“In addition to the suspension of the MCEP, the DTI reports in its latest annual report that it under-achieved dramatically with regards to the projected number of jobs to be retained from approved enterprises through the MCEP. The planned target of 99 600 jobs will under-achieve by 61 703 jobs, a staggering 62% less than expected.”