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Businesses shy away from incentives

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Businesses shy away from incentives

by BuaNews Online
27 Oct 2010
BuaNews Online
BuaNews Online

South African businesses are still battling to recover from the effects of the recent recession, with the Department of Trade and Industry experiencing a marked decline in the number of applications by firms to its incentive schemes and lower than expected investments in its industrial development zones, the National Treasury revealed today.

Though the government has met its target of lending out R2 billion to small businesses, companies in distress and firms in special targeted growth sectors for 2010, figures from the 2010 Adjusted Estimates of National Expenditure show a lower than expected uptake by companies in the Department of Trade and Industry's various incentive schemes offered mostly to small and medium-sized businesses.

The number of companies assisted with the department's incentives was significantly lower than the estimate for the year as a whole. The National Treasury attributed this to the fewer than expected claims made to the department so far this year.

Just 12 companies received grant funding under the Enterprise Investment Programme against a target of 500 companies for the year, while only 73 received funding under the enterprise development programme, against a target of 600.

Added to this, only 286 businesses were assisted in the Black Business Supplier Development Programme, against a target of 1 830.

The number of jobs created also fell below target, with just 6 383 jobs created through the Enterprise Investment Programme against a target of 17 775, because of a lower number of investments through the scheme.

Added to this, just 606 jobs were created under the Business Process Outsourcing and Offshoring Incentive, against a target of 8 925. The National Treasury attributed this to the economic downturn in the UK.

A reviewed programme strategy would be carried out on the Business Process Outsourcing Scheme later this year.

Turning to Industrial Development Zones (IDZs), while the East London IDZ created over four times the number of jobs targeted, the Coega and Richards Bay IDZs had failed to add any new investments.

The East London IDZ created 2 223 jobs between April and September, against its target of 432 jobs, through R263 million in five investments - just below its target of R300 million in six investments.

While Coega only created 1 195 jobs in the same period, against a target of 3 000, no jobs were created at the Richards Bay IDZ, against a target of 400.

The Coega IDZ also did not meet its target of facilitating 15 new investments of a total of R7.5 billion, with no new investments being been.

The Proudly SA campaign's budget will increase over fivefold with an additional R20.5 million, while the Black Business Supplier Development Programme has been allocated R65 million more. This would lift the programme to R105.6 million.

The Export Market and Investment Assistance Programme has been assigned an extra R13 million, increasing its budget to just under R124 million.

The three IDZs will get an additional R457 million, taking its total allocation to R932 million, while the Small Enterprise Development Agency will get a further R15 million, to take its allocation from the department to R400 million. - BuaNews

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