Sectors

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
These industries are at the centre of economic development because they produce products, applications and services used across the entire economy.

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.

Growth prospects for oil and gas exploration and exploitation in the sub-Saharan Africa region have remained largely unscathed and this region remains one of the fastest growing and highest potential oil and gas areas in the world.

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.

Research suggests that success in the large-scale development of renewables could create upwards of 50 000 jobs and realise $55 billion in green investment over the next 15 years. The localisation of elements of the global value chain for wind and solar power could establish South Africa as a regional renewables manufacturer and service hub.

Focus areas include:
• Manufacture of Solar and Wind Energy products and components
• Energy Efficient products, e.g. Solar Water Heaters
• Waste Management and Recycling

The agro-processing sector comprises a highly diverse group of sub-sectors and industries. The major sub-sectors include:
• Food processing;
• Beverages;
• Aquaculture;
• Horticulture
• Medicinal, Aromatics and Flavourants
The boatbuilding industry is divided into these main categories, namely:
• 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
The automotive production sector is a critical segment of many economies, because of its cross-cutting linkages across several industries and services as well as its documented contribution to various economic development imperatives. The production of a vehicle incorporates a wide range of industrial activities and as such the sector is South Africa’s leading manufacturing industry.

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

Government is committed to incentivising minerals beneficiation, at both the mining level (intermediate processing e.g. smelting, bar/roll forming) or downstream beneficiation (e.g. Platinum based catalytic convertors). Although there are no industry specific incentive programmes for the mining sector, they can participate in lucrative mainstream manufacturing industry grants and infrastructure investment grants. Mining companies are generally unaware of these opportunities.
This sector is self explanatory and manufacturing enjoys significant incentive support from Government – pharmaceuticals is particularly suited to the research & development allowance.
Developments in the biofuels sector have been slow. Governments’ intervention is designed to accelerate development in the biofuels supply-side at farm and manufacturing levels. Biofuel generated from any form of waste, e.g. crops, landfills, etc. will qualify for an incentive.
This sector is self explanatory and manufacturing enjoys significant incentive support from Government.
Production in this sector is often small scale, with hand processing being the main contributor to the end product. Production is classified in terms of material (textile, clay, glass etc), product type (home ware, giftware etc.). Government realises the potential of this sector and offers significant incentives for craft-related businesses.
This refers primarily to the establishment of call centres in South Africa by multinational companies. Although not manufacturing, Government offer specific incentives for this business activity.
Cluster 3 — Sectors with Potential for Long-Term Advanced Capabilities
These sectors comprise:

• 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.