Most Government incentive programmes are designed to stimulate select industries and to shape the overall direction of certain sectors in the economy, irrespective of location. Government also endeavours to stimulate growth in certain geographic areas (Industrial Development Zones – IDZ’s and Special Economic Zones – SEZ’s planned for the future).
In general most manufacturing businesses should qualify for Government grants, provided the underlying projects conform to the rules and regulations of the particular incentive programme. Excepting armaments (in some instances), liquor and tobacco products, a business is classified as a manufacturer if its products are categorised under Standard Industrial Classification (SIC) Code 3. Some incentive programmes are specific in terms of which industries qualify (for example, the Automotive Investment Scheme only applies to the automotive industry), while others are available to the manufacturing sector as a whole.
Engineering services that support manufacturing and conformity assessment bodies (SIC 88220) servicing the manufacturing sector, also qualify for grants.
Note – the Research & Development Allowance incentive is not limited to specific sectors.
For Manufacturing, the Key Industries (Priority Sectors) are identified in the 2013-2015 Industrial Policy Action Plan (IPAP3) as follows:
Cluster 1 — New Areas of Focus
The metal fabrication, capital and transport equipment cluster of sectors includes:
• Basic iron and steel and basic non-ferrous metals
• Metal products and fabrication, excluding machinery
• Machinery and equipment
• Other transport equipment
• Electrical machinery and apparatus.
The domestic and sub-Saharan exploration and exploitation growth represents an enormous opportunity for South Africa to utilise and expand its existing infrastructure, engineering capacities and capabilities, logistics supply chains, service industries and relatively favourable location and experience to become a major hub for the entire region, which currently imports the bulk of its requirements from Europe, North America and Asia.
Focus areas include:
• Upstream Ship Repair Hub: repair, maintenance and upgrade of various kinds of oil and gas marine vessels
• Engineering services that design, fabricate and/or construct specialised modules or facilities for the oilfields
• Equipment and materials manufacturers providing a wide range of pumps, valves, pipes, motors, etc.
Focus areas include:
• Manufacture of Solar and Wind Energy products and components
• Energy Efficient products, e.g. Solar Water Heaters
• Waste Management and Recycling
• Food processing;
• Medicinal, Aromatics and Flavourants
• Building of boats
• The manufacture of engines and engine systems
• The manufacture of marine equipment and accessories
Cluster 2 — Scaled-up and Broadened Existing !PAP Sectors
Government focuses on incentivising:
• Manufacture of light vehicles and people carrying vehicles
• Manufacture of components for these vehicles
• Similar incentives will be introduced for heavy vehicle and component manufacturers in the near future
Cluster 3 — Sectors with Potential for Long-Term Advanced Capabilities
• Nuclear technology (including manufacturing of nuclear facility components (e.g. blast doors)
• Advanced materials development and manufacture
• Aerospace and Defence industries
• Electrotechnical (cabling, set-top boxes, tracking systems etc.) and ICT (scientific instrumentation etc.)
Government plans to incentivise these industries with sector-specific incentives in the short-medium term.
Note: Don’t be concerned if your specific industry sector is not listed above. Fill out our free assessment to see what government incentives you’re eligible for. Chances are, if you’re manufacturing and making investments in the short-term, your business will qualify for a Government Grant.