The Department of Trade and Industry (DTI) says the recent decision to limit the Manufacturing Competitiveness Enhancement Programme (MCEP) incentive to projects with an investment value of less that R50-million was made in an effort to sustain the incentive amid a “deluge of applications”.

Earlier this month, the department published a notice of changes to its flagship incentive, indicating that, as from May 11, new applications with an investment value of R50-million and above, would no longer be considered for MCEP benefits. It also indicated that applicantions with an investment value above that threshold should instead apply for the 12I Tax Allowance Incentive.

Incentive Administration and Development deputy director-general Malebo Mabitje-Thompson tells Engineering News that, owing to limited funds and a strong market appetite, the department was forced to make adjustments to the incentive. “This has been done to relieve pressure on the MCEP scheme whilst continuing to support investment in manufacturing.”

She notes that more than 900 competitiveness-enhancement projects have been supported under MCEP, with R5.3-billion committed to date.

“This represents the single highest nonsector-specific commitment by the State to the manufacturing sector in a space of under three years,” Mabitje-Thompson explains, adding that, in the last financial year, over R1-billion was disbursed to manufacturers that had achieved agreed milestones.

The scheme has also leveraged over R19-billion in investment to replace outdated or energy inefficient equipment and processes and the DTI calculates that it has helped sustain over 170 000 jobs.

“The department has opted to keep the programme open and prioritise strategic projects. These are projects which will unlock capacity to exploit existing market opportunities both domestically and globally, and sustain and expand employment and real income growth in the long term.”

Mabitje-Thompson urges manufacturers affected by the change to contact the department directly so that an assessment can be made as to whether their projects could be supported by either the 12I or other incentive schemes.