Dti lifts suspension of industrial financing scheme as loans repaid
APPLICATIONS for an industrial financing loan facility that forms part of the manufacturing competitiveness enhancement programme (MCEP), which was suspended last year, has been reopened after the repayment of loans.
However, the production incentive grant remains suspended pending the allocation of new funding by National Treasury. The programme was initially allocated R5 billion, with R1bn for the loan facility and R4bn for the production incentive grant.
Rob Davies, the Minister of Trade and Industry, said yesterday that the programme had to be suspended last year because of the high demand for the loans and grants available through the programme.
Davies said the current reflows to the industrial financing loan facility allowed for a re-opening of another window for pre- and post-dispatch working capital loans, which were limited to R50 million for each qualifying manufacturers at a fixed rate of 4percent a year.
Davies said this facility would provide funding of up to R50m for plant and equipment to all qualifying start-up and existing black industrialists businesses at the same rate and which was repayable over a period of 84 months.
Malebo Mabitje-Thompson, the deputy director-general incentive administration and development at the Department of Trade and Industry (dti), said the loan facility fund was initially capitalised for R1bn and they expected that R1bn from “reflows” would be reinvested in the economy as they got payments from investors.
Mabitje-Thompson said 78 percent of the loan facility had been disbursed and in excess of R500m had been recouped.
Lionel October, the director-general at the dti, stressed that the MCEP was introduced as an emergency measure when South Africa was facing a recession in the manufacturing sector.
October said the department at the time received a budget for five years for the programme, which was always a short-term intervention to tide the manufacturing sector through this difficult period, with that period running from 2012 to next year.
“What was in the budget has been allocated into the two facilities. What we have now submitted to Treasury is (a proposal) for a continuation of the programme. It’s a completely new programme,” he said.
Davies said when the MCEP was suspended in October last year, it supported 1153 entities to the value of R7.2bn with acquisition of capital equipment and reengineering of business processes to improve their competitiveness under the production incentive, of which R4.1bn had already been disbursed.
He said the programme leveraged about R30.8bn in private sector investment and retained more than 200000 jobs across all priority sectors.
Davies said industrial financing loan facility, which was administered by Industrial Development Corporation (IDC), approved working capital loans to the value of R988m, of which 78percent had been disbursed.
A total of 1553 jobs had been saved and 7933 jobs been created through this loan facility, he said.
Mabitje-Thompson said the department had engaged the National Treasury on an allocation for the production incentive grant but it was difficult to say when an announcement would be made because it was part of the budgeting process.
She said 20 applications with an average value of between R10m and R15m each had been received for the loan facility but applicants would have to apply for the grant when an announcement was made. “Depending on the structure of the grant programme, it may have different qualifying criteria and requirements.”
Representatives from labour and business at the trade and industry chamber at the National Economic Development and Labour Council and from the council welcomed the reopening of applications for the loans.