South Africa offers various attractive investment incentives, targeted at specific sectors or types of business activities.
The Department of Trade and Industry (the dti) has a number of incentive schemes ranging from tax allowances to support in the automotive sector, from helping innovation and technology companies to film and television production.
- 12I Tax Allowance: is designed to support new industrial projects that utilise only new and unused manufacturing assets and expansions or upgrades of existing industrial projects. The incentive offers support for both capital investment and training.
- Agro-Processing Support Scheme (APSS): aims to stimulate investment by South African agro-processing/beneficiation (agri-business) enterprises.
- Aquaculture Development and Enhancement Programme (ADEP): is available to South African registered entities engaged in primary, secondary and ancillary aquaculture activities in both marine and freshwater classified under SIC 132 (fish hatcheries and fish farms) and SIC 301 and 3012 (production, processing and preserving of aquaculture fish).
- Automotive Investment Scheme (AIS): designed to grow and develop the automotive sector through investment in new and/ or replacement models and components that will increase plant production volumes, sustain employment and/ or strengthen the automotive value chain.
- Medium and Heavy Commercial Vehicles Automotive Investment Scheme (MHCV-AIS): is designed to grow and develop the automotive sector through investment in new and/or replacement models and components that will increase plant production volumes, sustain employment and/or strengthen the automotive value chain.
- People-carrier Automotive Investment Scheme (P-AIS): provides a non-taxable cash grant of between 20% and 35% of the value of qualifying investment in productive assets approved by the dti.
- Business Process Services (BPS): aims to attract investment and create employment opportunities in South Africa through offshoring activities.
- Capital Projects Feasibility Programme (CPFP): is a cost-sharing grant that contributes to the cost of feasibility studies likely to lead to projects that will increase local exports and stimulate the market for South African capital goods and services.
- Cluster Development Programme (CDP): aims to promote industrialisation, sustainable economic growth and job creation needs of South Africa through cluster development and industrial parks.
- Critical Infrastructure Programme (CIP): aims to leverage investment by supporting infrastructure that is deemed to be critical, thus lowering the cost of doing business.
- Clothing and Textile Competitiveness Improvement Programme (CTCIP): aims to build capacity among manufacturers and in other areas of the apparel value chain in South Africa, to enable them to effectively supply their customers and compete on a global scale.
- Export Marketing and Investment Assistance (EMIA): develops export markets for South African products and services and recruits new foreign direct investment into the country. The purpose of the scheme is to partially compensate exporters for costs incurred in respect of activities aimed at developing export market for South African product and services and to recruit new foreign direct investment into South Africa.
- Foreign Film and Television Production and Post-Production Incentive: to attract foreign-based film productions to shoot on location in South Africa and conduct post-production activities.
- Incubation Support Programme (ISP)
- Innovation and Technology Funding instruments
- Manufacturing Competitiveness Enhancement Programme (MCEP): aims to encourage manufacturers to upgrade their production facilities in a manner that sustains employment and maximises value-addition in the short to medium term.
- Production Incentive (PI): forms part of the Clothing and Textile Competitiveness Programme, and forms part of the customised sector programmes for the clothing, textiles, footwear, leather and leather goods industries.
- Sector-Specific Assistance Scheme (SSAS): is a reimbursable cost-sharing incentive scheme with financial support granted to organisations supporting the development of industry sectors and those contributing to the growth of South African exports.
- Shared Economic Infrastructure Facility (SEIF)
- Support Programme for Industrial Innovation (SPII): is designed to promote technology development in South Africa’s industry, through the provision of financial assistance for the development of innovative products and/or processes. SPII is focussed specifically on the development phase, which begins at the conclusion of basic research and ends at the point when a pre-production prototype has been produced.
- Strategic Partnership Programme (SPP)
- Technology and Human Resources for Industry Programme (THRIP)
- Workplace Challenge Programme (WPC): managed by Productivity South Africa, WPC aims to encourage and support negotiated workplace change towards enhancing productivity and world-class competitiveness, best operating practices, continuous improvement, lean manufacturing, while resulting in job creation.
Investment incentives portal
To help companies or individuals wanting to make use of the government’s business and infrastructure development and job creation, incentives can be found in one place, on a one-stop web portal.
The website helps potential investors find the incentive that might fit by dividing state incentives into three categories:
- Concept, research and development incentives – for private sector businesses that invest in the creation, design and improvement of new products and processes.
- Capital expenditure incentives – for companies that want to acquire or upgrade assets in order either to establish or expand their business’ productive capacity.
- Competitiveness enhancement incentives – for investments that facilitate increased competitiveness, sustainable economic growth and development in a specific sector.
Research and development incentives offer:
- Grants for small R&D projects;
- Grants for large R&D projects;
- R&D tax incentives;
- Grants for feasibility studies;
- The Technology and Human Resources for Industry Programme;
- The Small Enterprise Development Agency (Seda) technology programme;
- A technology venture capital fund; and
- R&D in the automotive industry.
Capital expenditure incentives are available for:
- Small industry;
- Large industry;
- Critical infrastructure;
- Industrial development zones;
- Capital expenditure in the automotive industry;
- Foreign investment;
- Capital expenditure in the textiles industry; and
- Manufacturing competitiveness enhancement.
Competitiveness enhancement incentives are for:
- Business process services (outsourcing);
- Black business supplier development;
- Export marketing and investment assistance;
- Sector specific assistance;
- Film production;
- Competitiveness in the clothing and textiles industries;
- Female economic empowerment through the Bavumile training programme for rural women and the Isivande Women’s Fund; and
- Manufacturing competitiveness enhancement.
- Department of Trade and Industry
- Southern African Development Community
- Absa Economic Research team
- Standard Bank
- Bureau for Economic Research (Stellenbosch University)
- Reserve Bank
- National Treasury
Sources: The Department of Trade and Industry, Industrial Development Corporation
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