Export incentives are intended to encourage exports by providing financial assistance to exporting companies to enable them to compete effectively in international markets. Whilst they have been widely used internationally, some are regarded as contrary to both the spirit and word of the World Trade Organisation (WTO). Consequently, the more blatant forms of export incentives will be phased out by countries, probably to be replaced by forms of assistance more compatible with the free trade objectives of the WTO. Such assistance programmes would be those designed to restructure, along more efficient and competitive lines, industrial sectors as a whole and not merely subsidise exports; general assistance with export marketing costs, which do not translate directly into price subsidies, are also acceptable.
Export incentives currently in operation in South Africa include:
- Export Marketing and Investment Assistance Scheme (EMIA)
- Sector Assistance Scheme (SSAS)
- Export Credit Insurance
- Export Finance
Other forms of supply-side measures include:
- Structural adjustment programmes for industry
- Innovation Support Programmes
- Competitiveness Programmes
- Development Finance
- Private Sector Assistance
- Specialist Services
Certain outcomes are required as part of the broader role of the Department of Trade and Industry to achieve sustainable activity and employment and these are incorporated in the incentive programmes: promoting development of small, medium and micro- enterprises (SMME’s); increasing opportunity for black economic empowerment (BEE); women empowerment (WE); reducing inequality and poverty; strengthening international competitiveness of South African business and developing the SADC region.
|Tariff Restructuring Programme|
As a result of South Africa’s membership of the WTO, import tariff levels are also being reduced and the import tariff listing is also being simplified by reducing the number of tariff headings which means combining a number of items.
Note 1: All claims for benefits payable by DTI (exporters/claimants) must be accompanied by a new form called a Declaration of Good Standing Regarding Tax, issued by the South African Revenue Service. The completed and signed form should be sent to DTI for the attention of the Directorate Financial Assistance Schemes.
Note 2: All applications for DTI financial assistance schemes are subject to approval and are not automatic.
Note 3: Export incentives relate only to the export of goods destined for recognised export markets, which in general means to countries outside the Southern African Customs Union (SACU).
|Sector Assistance Scheme (SSAS)|
Financial assistance is available to industry sectors with the objectives of developing new export markets; broadening the export base; stimulating the participation of SME’s in the export sector, promoting black economic empowerment (BEE) and women empowerment (WE) within the overall objective of job creation.
Organisations eligible to apply for assistance from the scheme include:
- Export Councils formally approved by DTI. An Export Council is a Section 21 (non-profit) company that serves to represent the developmental and promotional objectives of a particular industry on a national level, where the needs of that industry justify the formation of an Export Council and where the identified industry falls within DTI’s key priority sectors.
- Recognised Industry Associations; and
- Joint Action Groups (JAGS) consisting of three or more companies which associate for the primary objective of embarking on project/s that benefit industry or industries as a whole.
Note: All applications for DTI financial assistance schemes are subject to approval and are not automatic.
Assistance for Export Councils is a grant of R50 000 for the establishment of an export council and a matching grant of membership income, where DTI funds the Export Councils up to R500 000 per year for the purpose of operational costs.
Project funding is available to all qualifying applicants (export councils, industry associations and JAGS) for specific projects which will contribute to the development and promotion of an industry as a whole. DTI will partially refund between 50% and 80% of the cost of approved projects.
Additional assistance is also available to all qualifying applicants which includes, on a matching grant basis, annual maximums of R250 000 for generic advertising and publicity; . R100 000 for specific marketing materials (export directories, video, CD’s) and R100 000 for local trade exhibition assistance (See EMIA).
Applications for project funding should be submitted to the Trade and Investment South Africa (TISA) industry sector co-ordinator at the beginning of each financial year. Claimants may claim according to milestones achieved on a project or on completion of the entire project. A report on achievements and details/proof of the outcomes of the project i.e. results, performance indicators and variance, must be submitted.
Applications for additional financial assistance must be discussed with and approved in writing by TISA before any project-related expenses are incurred.
Applicants for the matching membership grant must provide TISA annually with a reconciliation of membership fees received. Loans from banks or other sources will not be considered as a contribution from Export Councils.
|Other Forms Of Assistance / Supply-Side Measures|
The following forms of assistance are also available to South African companies. Many of them are not aimed specifically at the export sector but have the objective of encouraging or improving international competitiveness of South African industry. The mere objective of achieving global competitiveness implies that industries should be enabled to export competitively. Many of these schemes have been available for some time; some have been introduced recently.
An allowance for the appointment of agents in an export market: (Section 17 of the Income Tax Act). (See Agency Contracts for detailed information)
Exemption from value added tax on export sales: (See detailed information in the section entitled Value-Added Tax in South Africa.)
Customs and Excise duty rebates, drawbacks and refunds: Under the Customs and Excise Act of 1964 (as amended) provision is made for the refund, drawback or rebate of duties on goods exported from South Africa.
- Refunds are paid in respect of duty overpaid or duty paid on goods which are exported in the same condition as that in which they are imported.
- Drawbacks are paid in respect of duty paid on specified materials used in the manufacture, processing, packing, etc., of goods which have been exported.
- Rebates (i.e. where duty is not paid at all) are granted in respect of goods used for specific purposes (i.e. for production of export goods, or as an industrial rebate for goods produced not specifically for export). (See Customs Duty Refunds, Drawbacks and Rebates, for detailed information)
|Structural Adjustment Programmes for Certain Industries|
Motor Industry Development Programme (MIDP):
The objective of the Motor Industry Development Programme (MIDP) is to increase competitiveness and productivity within the industry. The programme is administered by Board on Tariffs and Trade (BTT). MIDP enables local vehicle and component manufacturers to increase production runs and encourages rationalisation of the number of models manufactured by way of exports and complementing imports of vehicles and components. In terms of the MIDP, the customs duty on specified components imported by manufacturers of light, medium and heavy motor vehicles and components can be rebated to varying extents
More information on the MIDP program is provided as part of the AutoclusterAfrica website.
For more information, contact Ingrid Metz on +27 (0)12 428-7748 or Email
Development programme for the textile and clothing industry:
The objective of this development programme was to achieve international competitiveness within the industry. The programme involved the phase-down of ad valorem duties to reach the following end rates by September 2002:
|PRODUCT||END RATE %|
|Household and other made-up textiles||30|
Specific duties: Minimum and minimum specific duties have been removed.
Rebate items: All rebate items are being phased out except for those items which have fallen into disuse and which will be withdrawn with immediate effect. However this provision does not affect the rebate provisions for export manufacturing 470.03 and the Duty Credit Certificate Scheme.
Duty Credit Certificate Scheme: The objective of the DCCS is to encourage textile and clothing manufacturers to compete internationally, independent of government subsidies. The Scheme has been extended for the fourth time to March 2005. In terms of the Duty Credit Certificate scheme (DCC), exporters of certain prescribed textile and clothing products can earn duty credits based on exports of these products during the 12 month periods ending 31 March 2001, 31 March 2002, 31 March 2003, 31 March 2004 and 31 March 2005. A duty credit certificate indicating the value of the duty credits will grant the participant credit to this value on duties payable by him on the importation of certain prescribed textile and clothing products. Benefits are granted subject to participation in the Performance Measurement Programme (PMP) and the achievement of certain Performance, Training and Export targets. The PMP is administered by the National Productivity Institute on behalf of the DTI.
For more information contact DTI Ms Elaine Smith CITA (International Trade Administration) Tel: +27 (0)12 428-7750 or E-mail
|Innovation Support Programmes For Industry|
Support Programme for Industrial Innovation (SPII)
Support for South African based products or process development that represents a significant technological advance and has a commercial advantage over existing products, and thus have a potential to be successfully marketed. This is part of government’s strategy for the promotion of technology in South Africa’s manufacturing industry. The programme provides an incentive for the development of innovative products and processes that represents a significant technological advance and has a commercial advantage over existing products. The programme is administered by Industrial Development Corporation (IDC) on behalf of the Department of Trade and Industry (DTI). The SPII Programme offers three schemes:
- The Matching Scheme gives a grant of 50% of the actual direct cost incurred in development activity, up to a maximum grant amount of R1.5 million per project.
- The Partnership Scheme gives a grant of 50% of the actual direct cost incurred in development activity, with no maximum grant amount and with a repayment mechanism in the form of a levy on sales. The Partnership Fund is intended to fund large scale research and development.
- The Feasibility Scheme supports the preparation of a feasibility study for potentially innovative projects by means of a grant of 50% of the costs of a consultant. The grant is limited to R30 000 and only small, medium or micro enterprises qualify for support. This scheme is currently under review and no applications are currently being considered.
Technology and Human Resources for Industry Programme (THRIP)
THRIP is aimed at enhancing the global competitiveness of South African industry through the development of technology and appropriately skilled people and encourages long-term strategic partnerships between industry, research and educational institutions and government. The programme provides resources and mechanisms in support of collaborative research in the areas of science, engineering and technology (SET). THRIP will consider contributing R1 for every R2 invested by the private sector in SET research projects where the project leader and project are based at a higher educational or SET institution. A matching grant may be considered if certain criteria relating to promoting BEE, developing SMME’s and industry collaboration, are met. THRIP is administered by the National Research Foundation, an agent of the DTI.
For more information, contact the National Research Foundation on Tel +27 (0)12 481-4000.
The Innovation Fund The Innovation Fund is a programme designed to support large scale science, engineering and technology (SET) innovation programmes. Statutory research and technology institutions, the higher education sector, the business and industrial community and non-governmental bodies are eligible to apply for assistance. The Innovation Fund is designed to encourage collaborative research and technology development programmes; a multi-disciplinary approach to problem-solving; and application-based research programmes.
Proposals are called for annually and should involve projects that generate products/processes for commercialisation or new methodologies for development programmes orientated towards service delivery. A minimum annual funding requirement of one million Rand and a maximum of five million Rand have been set for large, two to three-year collaborative projects aimed at technological innovation. The Innovation Fund was established by the National Department of Arts, Culture, Science and Technology (DACST) and is managed by the National Research Foundation (NRF).
For more information, contact Department of Arts, Culture, Science and Technology at Tel: +27 (0)12 337- 8000 or the National Research Foundation at Tel: +27 (0)12 481-4000.
Technology for Women in Business (TWIB)
TWIB is an initiative aimed at enhancing the accessibility of science and technology to women in business and in particular SMME’s. It is a national programme under the auspices of the DTI and administered by the CSIR. Activities include identifying technological needs of women in business in various sectors and addressing these needs in a project specific way; identifying and creating market and business opportunities and provision of support to learners in the fields of science and technology and exposure to international trends.
For more information, please contact the CSIR at Tel: +27 (0)12 841-4990.
The fund is a cost-sharing grant scheme administered by the DTI using funds sourced from the World Bank. It provides financial support for improving competitiveness of the private sector South African firms. The fund supports the introduction of technical and marketing expertise to firms. The scheme assists on a 50% contribution by the firm itself and grants are paid on a reimbursement basis. Funds are allocated on a first-come first-served basis. . Applications include a realistic plan for development of business activities.
For more information Tel: +27 (0)11 783-8600.
Sector Partnership Fund
The objective of the Sector Partnership Fund (SPF) is to promote collaborative projects that will enhance productivity and competitiveness of the manufacturing and agro-processing firms or industries. The fund is available to groups of five or more firms in preparation and execution of marketing and production related projects with the aim of improving competitiveness and productivity. The fund covers 65% of projects up to a maximum of R1,5 million. SPF is administered by DTI.
Industrial Development Zones
The objective of Industrial Development Zones (IDZ) is to encourage international competitiveness of South African based manufacturing sector. IDZ’s include quality infrastructure, expedited customs procedures and duty-free operating environments.
Work Place Challenge
The Work Place Challenge programme aims to improve the country’s competitiveness and employment creation. The programme enhances co-operation between workers and management to improve industrial performance and productivity.
Skills Support Programme
The Skills Support Programme encourages greater investment in training, improved industrial training systems and creates opportunities for introduction of new advanced skills. The SSP provides a cash grant to subsidise 50% of training costs with a ceiling of 30% of actual costs.
Critical Infrastructure Programme
A top-up grant of between 10% and 30% of actual costs is provided to supplement infrastructure developed by the public or private sectors or a public-private sector partnership. The CIP is administered by the DTI.
Strategic Investment Projects (SIP) (pending approval)
Strategic Investment Projects (SIP) is an incentive programme designed to encourage investments into South African operations from both local and foreign investors by providing industrial investment allowances, in the form of tax relief, to qualifying industrial projects. The key objective of the SIP programme is to attract industrial investments into South Africa that serve to upgrade South African industry and create employment opportunities. An amount of R3 billion was allocated in the form of tax allowances over a period of four years, starting from 01 August 2001. This allowance is intended to lower the cost of investing in critical industrial projects in South Africa.