( 4 minutes read)
· There are over 200 grants being given by the government for the South African businesses for industrialization
· But only a very few are aware of these incentives. Interestingly, these incentives are administered through the South African Revenue Service or the Department of Trade, Industry and Competition (DTIC)
· The incentive space suffers from a capacity shortage; business owners do not know where they can go for assistance; many small and medium businesses do not apply for incentives because of a lack of awareness and a suspicion that the funds are not worth the effort
There are over 200 grants being given by the government for the South African businesses for industrialization. But only a very few are
aware of these incentives. Interestingly, these incentives are administered through the South African Revenue Service or the Department of Trade, Industry and Competition (DTIC). They include various enterprise and supplier development sops and sector -specific incentives.
The manufacturing sector accounts for 13.2% of the GDP, employed 1.21 million people (11.8% of total formal non-agricultural employment) and contributed 56.4% of overall merchandise exports in 2019. The diversified industrial base of South Africa is dominated by food and
beverages; chemicals, rubber and plastics; base metals and fabricated metal products; machinery and equipment; as well as transport
equipment. These sectors serve largely the domestic market. There are a good number of them focused on exports. There is a feeling that the competitiveness of these sub sectors have eroded in recent times. The incentives evolved by the government are largely to pep up these sectors.
One the ground these incentives suffer from several shortcomings. Foremost,the incentive space suffers from a capacity shortage. Also,
business owners do not know where they can go for assistance. Also, many small and medium businesses do not apply for incentives because
of a lack of awareness and a suspicion that the funds are not worth the effort. It is also compounded by laborious and cumbersome application procedures and paperwork. Inadequately drawn up applications are often rejected. There is very limited coordination
of policy and prioritization of activities between the private and public sector.
Happily, post Covid-19, many facilitators have sprung up to help needy people to do the documentation and paperwork to help them avail these incentives. They are reaching out to many. An estimate puts that in recent times, they have assisted over 2 000 SMEs to avail
incentives. One such agency is South African Institute of Tax Professionals (SAIT), which has helped businesses to avail an average
of R53.5 million per enterprise. The Institute also helps businesses in zeroing in what they should make. Many businesses do not know what they have to do to make themselves bankable enough to access these funds. For instance, the demand profile changed during the Covid-19 days. Industrial manufacturing of personal protection equipment like masks, sanitizers, specialized detergents and ventilators are in great demand. The major takeaway for the South African enterprises is to focus on low hanging fruits and gradually graduate to reach out to
goal posts, which are difficult to scale up.
