02/03/2016
GOVERNMENT FUNDING FOR BUSINESSES IN SA – 2015
Government’s New Growth Path is targeting 5 million new jobs by 2020, while it also aims to reduce the unemployment rate from 27% in 2011 to 6% by 2030 by creating 11 million new jobs.
South Africa needs over 49,000 scalable Small and Medium Enterprises (SMEs), growing at a rate of 20% per annum, to create 11 million jobs by 2030 to meet the National Development Plan (NDP) target.
Government Grant and contact details
Government grants are varied and support key deliverables such as black economic empowerment, job creation and developing the economy. These funds are awarded by government and do not need to be repaid, nor do they accrue interest but have strict guidelines for application.
The Department of Trade and Industry (DTI)
The DTI is the government arm which has been tasked to actively encourage small business by offering funding solutions as a path to economic growth, and they describe their role as a ‘valuable partner to any South African entrepreneur.’ The DTI provides financial support to various economic activities, including manufacturing, business competitiveness, export development, market access and provide a channel for foreign direct investment.
They are actively looking for new business owners , who will positively impact South Africa’s commercial environment and ultimately create valuable jobs. Here is an introduction to the department’s latest programs which provide essential funding to smaller enterprises.
Automotive Investment Scheme (AIS)
The AIS is designed to grow and develop the automotive industry through investment in new and replacement models and components that will increase production volumes, sustain and increase employment, and strengthen the automotive value chain. This is mainly aimed at Light Motor Vehicle Manufacturers, Component Manufacturers or Deemed Component Manufacturers
Contact: 0861 843 384
Black Business Supplier Development Programme (BBSDP)
The Department of Trade and Industry offers a grant of up to R1million for Black, Indian and Coloured owned businesses to purchase Tools, Plant and Machinery. The aim of the fund is to grow existing businesses and to employ more people. The BBSDP is not for start-up businesses. The BBSDP program offers a non-repayable grant of up to R1million to assist black owned businesses to improve their competitiveness and sustainability. It provides a grant (Gift) to a maximum of R800 000 for tools, machinery and equipment. This is to be used as a (50%) deposit, which can be used to secure the additional finance. You will be required to provide the DTI with proof that you can get bank financing.
Contact: 011 363 3000
Clothing and Textile Competitiveness Improvement Programme
(CTCIP)
Business owners in the clothing and textile industry are set to benefit from a new R200 million grant fund, launched by the Department of Trade and Industry (DTI) in 2015.
The Competitiveness Improvement Programme (CIP) is a part of the overall Clothing and Textiles Competitiveness Programme (CTCP). The progamme was instituted to stabilise employment and to improve overall competitiveness in the clothing, textile, footwear, leather and leather goods manufacturing industries. To join a regional cluster recognized by the programme, a business only needs to be operational.
Contact: 011 2693593
Critical Infrastructure Programme (CIP)
The Critical Infrastructure Programme (CIP) is a cost sharing grant for projects designed to improve critical infrastructure in South Africa. The grant is aimed at Public sector entities such as municipalities; private investors and companies. The grant covers qualifying development costs from a minimum of 10% to a maximum of 30% towards the total development costs of qualifying infrastructure. (A cash grant to a maximum of 30% capped at R30 million of the development cost of qualifying infrastructure.) It is made available to approved eligible enterprise upon the completion of the infrastructure project concerned. Infrastructure for which funds are required is deemed to be ‘critical’ if the investment would not take place without the said infrastructure or the said investment would not operate optimally.
Contact : 012 394 1431 or 012 394 5251
Tourism Support Programme (TSP)
The Department of Trade and Industry’s (the dti’s) Tourism Support Programme (TSP) is a sub-programme of the Enterprise Investment Programme (EIP). It is a targeted incentive, aimed at supporting the development of tourism enterprises, thereby stimulating job creation and encouraging the geographic spread of tourism investment. The TSP is targeted at both local- and foreign-owned entities and offers a cash grant of up to 30% towards qualifying investment costs in furniture, equipment, commercial vehicles, land and buildings required for establishing a new tourism facility or expanding an existing tourism facility.
Contact: 012 394 1650
Film Incentive Programme
This programme offers a package of incentives to promote its film production and post-production industry. The incentives consist of the 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, and the South African Film and Television Production and Co-Production incentive, which aims to assist local film producers in the production of local content. The South African Emerging Black Filmmakers incentive, a sub-programme of the South African Film and Television Production and Co-production Incentive, which aims to assist local emerging black filmmakers to nurture and grow them to take up big productions and thus contribute towards employment creation.
Contact: 0861 843 384
Incubation Support Programme
The Incubation Support Programme, or ISP for short, aims to assist new small businesses during the crucial first three years of operation. As an entrepreneur, you may be aware that this period is the time when new businesses either succeed or fail, with the first 18 months being crucially important, creating the need for support incentives like the ISP.
Download the South Africa Business Incubator Establishment Handbook aimed at introducing the basic concepts and issues involved in business incubation for all stakeholders that wish to establish incubators in their communities.
Contact : 012 394 1073 or 012 394 1119
South African Micro Finance Apex Fund (Samaf)
Samaf gives financial services to small-scale entrepreneurs living in rural and outer urban areas. Samaf does not lend money directly to the public. It uses existing institutions within communities to handle the funds and lend to qualifying entrepreneurs. Samaf has three products: the Micro-Credit Fund (gives loans to entrepreneurs), the Capacity Building Fund (gives funds to be used for equipping the institutions with skills, systems and equipment) and the Savings Mobilisation Fund (encourages savings).
Contact: 012 394 1805
Support Programme for Industrial Innovation (SPII)
The Support Programme for Industrial Innovation (SPII), an initiative of the dti, continues to play a key role in fulfilling this mandate by supporting the development of new technologies in the South African Industry. This funding focuses on the development of new technologies as part of an important thrust to strengthen South Africa’s competitiveness globally.
Contact: 011 269 3073
The Co-Operative Incentive Scheme (CIS)
The Co-operative Incentive Scheme (CIS) is a 90:10 matching cash grant for registered primary co-operatives (a primary co-operative consists of five or more members). The CIS is an incentive for cooperative enterprises in the emerging economy to acquire competitive business development services and the maximum grant that can be offered to one co-operative entity under the scheme is R350 000.
Contact: 012 394 5815
Small Enterprize Finance Agency (SEFA)
SEFA helps SMMEs to secure loans from banks. It does not lend money itself. These are loans that SEFA provides directly to Small and Medium sized Enterprises as well as co-operatives operating in all sectors of the economy. The facilities range from a minimum of R50 000 to a maximum of R5 million. Through its wholesale lending, SEFA provides facilities ( debt/equity) to intermediaries, joint venture, partnerships (Specialised Funds ) and other collaborative relationships to extend their reach of making funding available to small businesses across South Africa. They also provide mentorship to entrepreneurs, helping them to manage their businesses successfully. The mentorship programme includes the transfer of skills on a face-to-face basis, the development of viable business plans, and pre- and post-loan services.
Contact: 012 748 9600
National Empowerment Fund (NEF)
The National Empowerment Fund (NEF) is a government agency set up to provide capital for black economic empowerment transactions. The NEF is a driver and a thought-leader in promoting and facilitating black economic participation through the provision of financial and non- financial support to black empowered businesses, as well as by promoting a culture of savings and investment among black people.
They currently support 4 key funds
1. iMbewu Fund
This Fund is designed to support black entrepreneurs wishing to start new businesses as well support existing black-owned enterprises with expansion capital. The Fund supports these entities by offering debt, quasi-equity and equity finance products with the funding threshold ranging from a minimum of R250 000 to a maximum of R10 million.
2. uMnotho Fund
This Fund is designed to improve access to BEE capital and has five products: Acquisition Finance, Project Finance, Expansion Finance, Capital Markets Fund, and Liquidity and Warehousing. These products provide capital to black-owned and managed enterprises, black entrepreneurs who are buying equity shares in established black and white owned enterprises, starting new ventures, expanding existing businesses and BEE businesses that are or wish to be listed on the JSE.
3. Rural and Community Development Fund
Rural and Community Development Fund was designed to promote sustainable change in social and economic relations and supporting the goals of growth and development in the rural economy, through financing of sustainable enterprises. This would be achieved through the mobilisation of rural communities in legal entities or cooperatives, in order to participate in the broader economic activities and realise the economic transformation goals in rural South Africa. The fund has three products: Acquisition Finance, Expansion Capital and Project Finance (New Venture/Start-up/Greenfields) with the funding threshold ranging from a minimum of R1 million to R50 million.
4. Strategic Projects Fund
The SPF is at the centre of NEF’s investment strategy when it comes to securing the participation of black people in early stage projects. Its core function is to provide Venture Capital Finance aimed at developing South Africa’s new and strategic industrial capacity within strategic sectors identified by government as key drivers to economic growth.
Contact: 0861 843 633,
Application process
NEF’s total fund portfolio stands at approximately ZAR30 billion at financial close (US$4 billion or €2.91 billion). The goal of the DTI is to “facilitate transformation of the economy, to promote industrial development, investment, competitiveness and employment creation,” says Ms Malebo Mabitje-Thompson of the Industrial Development Incentive Administration Division (IDIAD).
IDIAD works closely with companies as it is critical for manufacturers to follow the right procedures when applying for incentives.
Tremendous funding exists to incentivise entrepreneurs in the manufacturing, agricultural, green economy, filming, tourism and many other industries.
Who can apply for Government Grants for Business?
All grants are not the same in their selection criteria however most of the funds require the following:
The business needs to be majority black-owned or needs to have a significant representation of black managers
All owners and major shareholders need a clear credit history
The business must have a minimum of one year in trading
The business must be a registered entity with a tax clearance certificate, Vat number, etc.
The business must comply with all regulations such as CIPC, SARS etc.
We can assist with the application process 082 882 2462/076 937 1891 [email protected]
