The Department of Trade and Industry’s Agro-Processing Support Scheme aims to stimulate investment in the agro-processing sector, and black winemakers in particular are being urged to apply.
Small businesses in the agro-processing sector have until 31 January 2018 to apply for financial support from the Department of Trade and Industry’s (the dti’s) Agro-Processing Support Scheme (APSS), for the current application window.
The R1-billion grant, which was launched in June 2017 by Minister of Trade and Industry Rob Davies, aims to stimulate investment in South African agro-processing and beneficiation enterprises. From a national development perspective, the agro-processing sector is among the sectors identified by the Industrial Policy Action Plan (IPAP) and the National Development Plan (NDP) for its potential to spur growth and create jobs, due to its strong backward linkages with the primary agricultural sector.
The five sectors that can benefit from the scheme are food and beverage value addition and processing; furniture manufacturing; fibre processing; feed production; and fertilizer production.
In particular, the dti is urging black winemakers to apply to the APSS.
Giving black winemakers an opportunity to get financial support through this incentive is part of the objective of the dti to change the structure of the economy, said Chief Director: Strategic Partnerships and Customer Care at the dti, Tsepiso Makgothi. “The wine industry remains largely concentrated and entry and active participation [of black winemakers] is limited. They’re now given an opportunity to get into the mainstream of the economy, because the incentives are available as part of transformation.”
On why black winemakers did not have access to incentives previously, Makgothi said: “In the past [they] were left out due to barriers to entry, as well as because they were still too small to meet some of the stipulated requirements of the then manufacturing incentives.”
However, the APSS funds are not reserved for a single group or sector. “We don’t keep money for one certain group. What if we have money available only for black winemakers, but they don’t apply?”
The dti will be identifying specific focus areas annually to drive transformation, Makgothi added.
What is the APSS?
According to Minister Davies, the APSS “will be a cost-sharing grant towards funding agro-processing projects and it will be capped at R20 million over a two-year investment period, subject to availability of funds”.
The scheme will support brownfield and greenfield investments; encourage investment in both upstream and downstream support services; and provide for the expansion of infrastructure to be used by farmers and agro-processors.
Benefits of the scheme include:
- a 20% to a 30% cost-sharing grant to a maximum of R20 million over a two-year investment period, with the last claim to be submitted within six months after the final approved milestone;
- an additional 10% grant for projects that meet all economic benefit criteria such as employment, transformation, geographic spread and local procurement; and
- the maximum approved grant may be utilised on a combination of investment costs such as new machinery and equipment, tools and forklifts; new commercial vehicles; buildings and competitiveness improvement interventions, provided the applicant illustrates a sound business case for the proposed investment activities.
An applicant must submit a completed application form and business plan with detailed agro-processing/beneficiation activities, budget plans, and a projected income statement and balance sheet for a period of at least three years. The project/business must exhibit economic merit in terms of sustainability.
Creating an awareness of the scheme nationally is important to encourage applications.
The dti used the Africa Big Seven Food Forum and Saitex, which took place at the Gallagher Conference Centre in Johannesburg in June 2017, to launch the APSS. “We normally identify an activity [or event] that relates to the scheme to host the launch of a new programme. We then explain [the scheme] to the people to build an awareness,” Makgothi said.
“We have an awareness programme throughout the country,” Makgothi added. Thus far, she has travelled to the Free State and Mpumalanga to build awareness of the APSS, while other officials have travelled to other provinces.
“We work with officials of the Department of Economic Development in every province, together with those of other government departments and provincial agencies,” Makgothi explained. “They are based in the province and know companies that could benefit from the incentive scheme.”
Presentations are held by Makgothi and her team nationwide. This is part of the pre-application process aimed at helping companies with their applications. “The companies can ask us questions [during presentations].”
In addition, Makgothi said, companies have the opportunity to pitch during the pre-application process. “We correct them if they are wrong in some areas of their pitching; we provide pre-application support. After they have sent in their applications, we can no longer get involved until the application has been evaluated by an Adjudication Committee and a decision communicated to the company.”
One of the things the dti looks at during a pitch is the equipment a company has and the type of equipment required to be more competitive.
The dti team also “builds capacity within the programme so that [applicants] will have people within the province to assist them when we are not there”, Makgothi added. The department, which is based in Gauteng, has regional offices in the Eastern Cape, KwaZulu-Natal and the Western Cape.
Farming and the drought
Drought is an ever-present threat to the agriculture sector, so the APSS team works closely with the National Cleaner Production Centre South Africa (NCPS-SA).
The centre, an initiative of the dti, promotes the implementation of Resource Efficiency and Cleaner Production (RECP) methodologies to assist businesses to lower costs through reduced energy, water and materials usage and waste management. It then advises the companies on how they could reduce their cost of business, by implementing these competitiveness improvement interventions.
“When a company implements these activities, we can provide funding to them,” said Makgothi.
She gave an example of how water can be saved with technology: “Like if you clean vegetables with water, instead of throwing water away, there’s technology that can capture the water for it to be used again. Perhaps the water can be used for crops. Companies become more profitable.”
Makgothi said the dti can also give financial assistance to business owners to buy technology that will assist with saving water.
Makgothi brings a wealth of experience to her work and sees herself as an all-rounder. “Wherever I’ve gone, I’ve learned something new.”
Makgothi was employed in the pharmaceutical industry, working on product development, in Germany and quality assurance in Lesotho before coming back to South Africa.
In South Africa, she headed up the quality assurance division of Alliance Pharmaceuticals before being drawn back to product development at the dti’s The Enterprise Organisation TEO, now known as the Incentive Development and Administration Division. Three years later, she became Chief Operating Officer (COO) of TEO; six years later, she managed four different schemes as the Chief Director for the dti’s competitiveness cluster.
Makgothi began her current role when the last scheme came to an end in 2015 – and is passionate about growing small businesses, watching them get funding, expand their business and even enter the export sector.
“It’s very fulfilling when someone comes up to me with gratitude and says, ‘You may not remember me, but I’m so-and-so of this company. You helped my company grow.’”
For more information on the APSS and to apply for this incentive, visit the dti website www.thedti.gov.za.
Source: the dti
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