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An Overview of Performance of The Enterprise Organisation’s (TEO) Incentive Programmes. Presentation to Portfolio Committee on Trade and Industry 19 October 2011. the dti DELEGATION. BACKGROUND. Follow-up to the Portfolio Committee presentation in July this year
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An Overview of Performance of The Enterprise Organisation’s (TEO) Incentive Programmes Presentation to Portfolio Committee on Trade and Industry 19 October 2011
BACKGROUND • Follow-up to the Portfolio Committee presentation in July this year • TEOs understanding of the request is to provide incentive comprehensive report that includes the following; (a)The years/months since implementation (b) the number of projects approved (per Province) (c) the value of projects approved (d) the total cost to the fiscus = amount/claims paid (e) the number of direct jobs created as a result of the incentive programmes (projected/actual) (f)cost per job
CONTENT • TEO strategic overview • Incentive Programmes and estimated number of jobs • Broadening Participation Cluster • Manufacturing Investment Cluster • Services Investment Cluster • Competitiveness Investment Cluster • Infrastructure Support Cluster
DTI Support for Industry • DTI Incentives are focused on investment, job creation, competitiveness and broadening participation. • Five programmes accounted for most of the reported job creation; automotive support under AIS, enterprise support under EIP, infrastructure support under CIP and IDZs as well as export promotion support under EMIA.
BROADENING PARTICIPATION CLUSTER STRATEGIC FOCUS AIM • To promote broader economic participation in the economy through provision of incentive support measures OBJECTIVES • Increase participation in the economy by historically disadvantaged individuals • Stimulate economic activity in marginalized regions STRATEGY • Facilitate the development of cooperatives • Promote the growth and development of black-owned business • Promote the growth and sustainability SMMEs • Promote a wider geographic spread of economic activity INSTRUMENTS • Black Business Supplier Development Programme (BBSDP) • Co-operative Incentive Scheme (CIS)
Approval:5849 54% • Approvals: 1216 • 11% Approvals: 658 6% • Approval: 530 • 5% Approvals:139 1% • Approval: 606 • 6% BROADENING PARTICIPATION CLUSTER BLACK BUSINESS SUPPLIER DEVELOPMENT PROGRAMME: PERFORMANCE • 2002 to March 2011: • 10 761 projects approved across all nine provinces • R458,189,045 funds committed • R303,889,103 total cost to fiscus • Assessment of BBSDP in July 2010 showed that the incentive programme was successful in reaching its targeted beneficiaries: majority (82%) of sampled beneficiaries were small businesses (turnover less than R1million) • Majority of BBSDP enterprises employ between 8 & 20 employees. 67% of Network Facilitators employ less than 4 people. Service Providers employ more than 7 people per enterprise. • BBSDP assisted beneficiaries to improve service quality, increase revenue and turnover, leverage marketing opportunities, increasing the skills and competency of management and introduction of new products • Recommendations from the study have resulted in the following developments within the revised BBSDP which was launched in September 2010: • Cost-sharing of grant revised • Integrated Information Management System • Training for Network Facilitators compulsory • Monitoring and Evaluation framework developed • Approvals: 880 • 8% • Approvals: 497 • 5% • Approvals: 386 • 4%
BROADENING PARTICIPATION CLUSTER BLACK BUSINESS SUPPLIER DEVELOPMENT PROGRAMME: PERFORMANCE
BROADENING PARTICIPATION CLUSTER COOPERATIVES INCENTIVE SCHEME: PERFORMANCE Approvals:106 23% Approvals: 100 22% Approvals: 22 5% Approvals: 25 5% • 2005 to March 2011 • 455 projects approved over all nine provinces • R100,509,964 funds committed • R92,523,000 total cost to fiscus • A study commissioned in June 2011 aims to determine why the majority of co-operatives assisted by the CIS to date are still performing poorly and to investigate challenges faced by the co-operatives (being finalised). • 293 out of 360 co-operatives were interviewed implying that 81% of supported enterprises are still operating. • Interviewed co-operatives created 1 426 jobs. • Estimated average cost to the dti per job created is R64,883. Approvals:18 4% Approvals:69 15% Approvals: 5 1% Approvals: 35 8% Approvals: 75 16%
BROADENING PARTICIPATION CLUSTER COOPERATIVES INCENTIVE SCHEME: PERFORMANCE • Findings from the CIS Study includes: • 22% of co-operatives considered themselves as successful; 67% as Struggling/surviving; 1.7% as failing and 9.2 % Not yet Operating • Total Employment is 1 426 comprising 37 from those who consider themselves as successful, 1,029 from struggling and Surviving and 60 from Failing • Common activities: crop farming, sewing, vegetables, poultry, livestock, brick making, piggery and baking • Financial record keeping is weak, except for co-operatives categorised as successful • Customers vary from private individuals (highest %), private companies, supermarkets, schools and government • Strengths - Managing customers, Managing employees of the co-operatives, Technical skills, Managing credit, Negotiating discounts, Product pricing, Marketing the co-operatives’ products/ services • Weaknesses - Applying for tenders, Bookkeeping and budgeting, Managing the co-operative, Computer literacy, Marketing the co-operatives’ products/ services • 3 Main cost items – Raw material/inputs/transport costs and salaries and wages • Current problems - Lack of cash to buy raw materials/inputs and operate business effectively; No vehicle to transport goods; Lack of financial management and business skills; Do not have sound financial/business advice; Provision of resources and Inadequate industry knowledge & lack of basic essential resources • Recommendations from the study includes: MARKETING • Create awareness amongst co-ops on how the CIS grant works • Approach other organisations & institutions to assist co-ops with other requirements. MENTORING/TRAINING • Co-op Agency to assist with industry knowledge and skills development . • Assist co-ops in calculating the total amount they will require • Increase the grant and thus use a portion for industry related training ADMIN • Amalgamation of Co-ops - give opportunity for co-ops to gain information on other co-ops in order to create linkages • Lack of Business Plans after receiving the grant - the dti should ensure that co-ops keep a copy • Create a system where there is a reserve to cover unexpected changes in quotations • Selection process to focus on co-ops that are already in business and operating. • Co-ops should indicate the degree of importance for resources applied for. • Second Chance Assistance for failed co-ops • Continuous monitoring and evaluation of co-ops
BROADENING PARTICIPATION CLUSTER COOPERATIVES INCENTIVE SCHEME: CASE STUDY MakQs Marketing and Supply Primary Co-operative • Operate from Mthwalume under Umzumbe Municipality in Kwazulu Natal Province • 3 men and 2 women. • Water purification bottling and branding. • Employ extra 5 people • Approved = R 199 014 • .Supply hotels, catering companies, municipalities and supermarkets
BROADENING PARTICIPATION CLUSTER COOPERATIVES INCENTIVE SCHEME: CASE STUDY Dinatla Primary Co-operatives • Established in Galeshewe, Northern Cape • 6 Women • Bake bread and supply to local schools. • Approved = R244 985 • Baking equipment and delivery van.
BROADENING PARTICIPATION CLUSTER COOPERATIVES INCENTIVE SCHEME: CASE STUDY Marchand Primary Co-operative’s • 10 Co-operatives from Marchand, Northern Cape Province • 50 members • Compost manufacturing. • Approved = R2,7m • . Compost Turner Equipment, Landini Rex, Chip Machines and Digi Line platform Scale
MANUFACTURING INVESTMENT CLUSTERSTRATEGIC FOCUS AIM • To promote additional investment in the Manufacturing sector. OBJECTIVES • Job Creation • Value addition • Investment in additional capacity STRATEGY • Promotion of labour absorbing activities • Facilitation of increased value addition and beneficiation • Provision of world class and competitive infrastructure • Focus on priority sectors INSTRUMENTS • Manufacturing Investment Programme (MIP) • Foreign Investment Grant (FIG) • Automotive Investment Scheme (AIS) • Strategic Industrial Projects (SIP) • Investment and Training Allowance (12I)
MANUFACTURING INVESTMENT CLUSTER MANUFACTURING INVESTMENT PROGRAMME: PERFORMANCE Approvals:39 5% Approvals: 250 30% • 2008 to March 2011 • 846 projects approved over all nine provinces • R2,292,008,317 funds committed • R198,380,873 total cost to fiscus • 23 996 projected direct jobs • 2851 direct jobs supported • Average cost per job supported is R69,583 • MIP figures above includes the Foreign Investment Grant figures. • A macro-economic impact assessment of the EIP (MIP and TSP), was completed in January 2011 at the national and provincial levels using the Social Accounting Matrix model to measure the economic and socio-economic impact that will result from the EIP • A total of 623 projects analysed, 395 from MIP and 228 from TSP • The results summary presented on the next slide: Approvals: 18 2% Approvals: 28 3% Approvals:8 1% Approvals:163 19% Approvals: 15 2% Approvals: 227 27% Approvals: 98 12%
Overall National Macroeconomic Impact for the EIP (Constant 2009 prices), Total Approved Projects EIP IMPACT STUDY • The average annual impact of the EIP on SA’s GDP amounts to R68.4b. Thus each year R68.4b of GDP will be generated consisting of remuneration of employees, and returns on capital invested due to the construction and operation taking place with regards to EIP projects. • A R126b of capital is required on an annual basis to sustain all EIP projects. • The EIP sustains 304 108 job opportunities annually (41% of which is for semi-skilled labourers) • The total impact on household income amounts to R44.5b (17% of which goes to lower income households). • Annual fiscal impact amounts to approximately R20.9 billion per annum through direct and indirect taxes (which will be used to improve the quality of life of the average South African citizen.
MANUFACTURING INVESTMENT CLUSTERMANUFACTURING INVESTMENT PROGRAMME: PERFORMANCE PROVINCIAL IMPACT OF EIP STUDY GDP: R20899m 50.3% Labour: 126373 50.8% GDP: R2251m 5.4% Labour: 12171 4.9% GDP: R343m 0.8% Labour: 4639 1.9% GDP: R1096m 2.6% Labour: 4839 1.9% GDP: R107m 0.3% Labour: 1134 0.5% Provincially, EIP impacts the most on Gauteng’s GDP and Labour. GDP:R 5655m 13.6% Labour: 41578 16.7% GDP: R718m 1.7% Labour: 4007 1.6% GDP:R 6507m 15.7% Labour: 34431 13.8% GDP: R3952m 9.5% Labour: 19538 7.9%
MANUFACTURING INVESTMENT CLUSTERSMALL AND MEDIUM ENTERPRISE DEVELOPMENT PROGRAMME
MANUFACTURING INVESTMENT CLUSTER AUTOMOTIVE INVESTMENT SCHEME- : PERFORMANCE Approvals: 4 11% Approvals: 1 3% • July 2009 to March 2011 • 36 projects approved over all nine provinces • R2,155,688,982 funds committed • R 249,252,065 total cost to fiscus • 15014supported direct jobs • Average cost per projected job is R143,579. Approvals:8 22% Approvals: 6 17% Approvals: 17 47%
MANUFACTURING INVESTMENT CLUSTER STRATEGIC INDUSTRIAL PROJECTS : PERFORMANCE Approvals: 3 8% Approvals: 3 8% Approvals: 3 8% Approvals: 14 35% Approvals: 2 5% • July 2001 to July 2005 • 40 projects approved over all nine provinces • R15,559 million value of projects • R6.9 billion committed funds • R 2,529 million tax forgone • 7 977 supported direct jobs Approvals:9 23% Approvals: 2 5% Approvals: 4 10%
MANUFACTURING INVESTMENT CLUSTER STRATEGIC INDUSTRIAL PROJECTS AIS 25 25
MANUFACTURING INVESTMENT CLUSTER STRATEGIC INDUSTRIAL PROJECTS SIP STUDY PURPOSE OF THE STUDY - conducted in 2004 • The key strategic question that this evaluation sought to address was “ Is the programme attracting the right projects?”. • For the purpose of this study, right projects were defined by reviewing what constitutes a strategic project in the context of investment promotion and what are the objectives of the programme. • Consequently the right projects were viewed to be projects that upgrade local industries, enable the higher value manufacturing and generally improve the overall cluster competitiveness.
MANUFACTURING INVESTMENT CLUSTER STRATEGIC INDUSTRIAL PROJECTS KEY FINDINGS • There is a strong indication, that the level of awareness of the SIP programme and its complementary incentives is low amongst industrialists. • The awarding of the SIP allowance has played a decisive part in the investment decision for only a third of the respondents with approved projects. • The majority of the SIP-approved projects are forecasted to have positive impacts on their clusters. However, the level of direct job creation from the projects is forecasted to be low. • SIP is predominately attracting applications from existing companies who are expanding their South African operations. • The extra tax revenue enabled by the SIP incentive will more than pay for the cost of the incentive. • There is a paucity of applicants with focused labour intensive projects as well as a paucity of applications from foreign direct investors. • The key issue with regards to the administrative process is the time taken to process applications. LESSONS • Generally, South Africa is struggling to attract the mega-million Rand investments which are also labour-intensive, due to its inferior competitive advantages compared to other regions. • The present criteria and design of SIP have resulted in the Adjudication Committee approving projects which pass the criteria, but which are not necessarily aligned to the specific development of sector objectives. • The key weakness with the SIP administration processes is the long processing time for applications. Secondly the process followed to assess applications from foreign applicants needs to be streamlined SIP STUDY
MANUFACTURING INVESTMENT CLUSTERINVESTMENT AND TRAINING ALLOWANCE (12i) AIM • To promote industrial upgrading and new investments in manufacturing Objectives • Improved energy efficiency with emphasis on cleaner production technology • Innovative: focus on projects that will utilize processes of innovation, thereby changing pre-existing techniques and the use of plant, machinery or equipment and these processes will materially improve production time, reduce production costs, improve product quality or improve product longevity. • General business linkages: acquiring goods and services from small, medium or micro enterprises • Location in industrial development zone • Direct employment creation and Skills development Performance • Projects recommended by the Adjudication committee as of 31 march 2011: 4 • Total investment: R4.1 billion • Investment allowance: R1.3 billion • Training allowance: R13.3 million • Direct Jobs: 370
SERVICES INVESTMENT CLUSTERSTRATEGIC FOCUS AIM • To promote additional investment in the Services sectors. OBJECTIVES • Job Creation • Growth in tradeable services STRATEGY • Promotion of labour absorbing activities • Growth of new service sectors INSTRUMENTS • Business Process Outsourcing and Offshoring (BPO&O) • Film & TV Production Incentive Support Programme • Tourism support Programme (TSP)
SERVICES INVESTMENT CLUSTER BUSINESS PROCESS OUTSOURCING & OFFSHORING: PERFORMANCE Approvals:1 6% • December 2006 to March 2011: • 18 projects approved across all nine provinces • R362,788,365 funds committed • R260,743,329 total cost to fiscus • 7275 direct jobs supported • R35,851 average cost per job Approvals: 5 28% Approvals: 2 11% Approvals:1 6% Approvals:2 11% Approvals: 1 6% Approvals: 6 33%
SERVICES INVESTMENT CLUSTER BUSINESS PROCESS OUTSOURCING & OFFSHORING: PERFORMANCE BPO &O STUDY • A review and benchmarking of the government assistance and support (GAS) that is currently offered by the BPO sector was conducted in 2010. • The objective was to analyse performance of and benchmark SA incentives, and make future recommendations • SA’s current incentives were compared with established offshore locations’ (India and Philippines) and Tier 2 competitors (Egypt, Malaysia and Kenya) • A key finding was that countries attempt to address most elements of the BPO cost structure in their incentives and most provide significant incentives that address operational expenditure (opex) in addition to capital expenditure (capex). • The benchmarking also shows that the total value of incentive per Full Time Job Equivalent (FTE) provided by South Africa is comparable to established destinations but lesser than that of emerging destinations. • SA’s incentives should include opex and offered for new offshore jobs, in order ensure competitiveness and achieve maximum impact. • The dti should continue to market SA’s value proposition globally for foreign direct investments through missions. • Following the study, the dti launched a revised BPS incentive programme effective 1 January 2011. • the dti developed a targeted Value Proposition targeted to economic distress areas.
SERVICES INVESTMENT CLUSTER BUSINESS PROCESS SERVICES INCENTIVE: PERFORMANCE Approvals: 1 10% • January 2011 to March 2011: • 10 projects approved across all nine provinces • R157,760,000 funds committed • 3 944 projected direct jobs • R40 000 estimated average cost per job Approvals: 1 10% Approvals:3 30% Approvals: 5 50%
SERVICES INVESTMENT CLUSTER FILM & TELEVISION PRODUCTION INCENTIVE PROGRAMME: PERFORMANCE Shooting weeks: WC – 189 (59%) Gau – 94 (30%) Mpu – 0 (0%) NW – 0 (0%) KZN – 15 (5%) NC – 3 (1%) EC – 6 (2%) Limp – 5 (1.5%) FS – 5 (1.5%) • 169 films approved • R704,165,844 funds committed • R377,620,856 total cost to fiscus Various box office hits supported: • Spud, Invictus, Jock and Oh Shucks it’s 2010. • Chanda’s Secrets/Life - which was filmed in Limpopo and tells the story of a 12 year old girl whose family is struck by illness and she becomes the head of the family - was nominated within the best nine films for an Oscar. • Skoonheid won the Queer Palm award at the 2011 Cannes International Film Festival. • Winnie, Lucky, Skoonheid premiered at the Toronto International Film Festival 2011. • Liefling with a full South African cast was the first Afrikaans musical to be made in South Africa in more than 20 years. • The co-production, Judge Dredd with a budget of R263 million is the first film production to be made at the Cape Town Film Studio.
SERVICES INVESTMENT CLUSTERFILM & TELEVISION PRODUCTION INCENTIVE PROGRAMME: PERFORMANCE FILM AND TV STUDY • Findings of the study by the Independent Production Organization (IPO), The Production Alliance (TPA), Documentary Filmmakers Association (DFA) and the South African Screen Federation (SASFED) on the impact of the global financial crisis on foreign productions made in South Africa dated 25 June 2009. • QSAPE ratio – QSAPE attracted for each R1.00 of incentive paid • South African 4.21 • Co productions 3.39 • Foreign 7.91 • Economic multiplier of 2.5 • Fiscal returns – Report dated 2009 indicate that an amount of R338m in incentives generated taxes of R413m Challenges • Economic downturn- fewer movies, smaller budgets • Fierce competition between countries to attract film “dollars” Amendment to guidelines • Milestone payments for South African films • Removalof the capped incentive amount
SERVICES INVESTMENT CLUSTER TOURISM SUPPORT PROGRAMME: PERFORMANCE Approvals:40 10% Approvals: 105 26% Approvals:32 8% Approvals: 29 7% • 2008 to March 2011 • 401 projects approved over all nine provinces • R869,369,283 funds committed • R64,039,658 total cost to fiscus • 283 direct jobs supported • Average cost per job supported is R226,289 Approvals:15 4% Approvals:40 10% Approvals: 31 8% Approvals: 54 % Approvals: 55 14%
COMPETITIVENESS INVESTMENT CLUSTERSTRATEGIC FOCUS AIM • To promote industrial upgrading and the growth of South African export of goods and services in the global economy. OBJECTIVES • Increase exports and value addition STRATEGY • Promote access for South African goods and services to export markets • Promote quality and efficiency of South African goods & services INSTRUMENTS • Export Marketing & Investment Assistance (EMIA) • Sector Specific Assistance Scheme (SSAS) • Capital Projects Feasibility Programme (CPFP)
COMPETITIVENESS INVESTMENT CLUSTER EXPORT MARKETING & INVESTMENT ASSISTANCE: PERFORMANCE Approvals: 3573 49% Approvals: 30 0% • August 1997 to 31 March 2011 • 7295 projects approved across all nine provinces • R452,947,886 funds committed • R350,866,370 total cost to fiscus • 10 545 jobs supported • Average cost per job supported: R33,273 • Promote greater participation of smme, hdi and large companies • On-going training on export readiness • Focusing on exhibition , makert research, fdi and mission participation (local & international) • Eligible applicants are manufacturers and service oriented companies. Approvals: 63 1% Approvals: 159 2% Approvals: 26 0% Approvals: 954 13% Approvals: 112 2% Approvals: 2114 29% Approvals: 264 4%
HDIs and SSAS/Emerging Exporters HDIs & EE: % of Exporters Assisted by EMIA Period: 2002 - 2011
COMPETITIVENESS INVESTMENT CLUSTER:CAPITAL PROJECTS FEASIBILITY PROGRAMME PERFORMANCE • 22 Feasibility projects approved, 3 projects are bankable. • Total commitment: of R67,272,343 • Total cost to fiscus: R32,219,901 • Sectors: Agro-processing, mining & infrastructure.
INFRASTRUCTURE SUPPORT CLUSTERSTRATEGIC FOCUS AIM To promote additional investment in the Manufacturing sector. POLICY OBJECTIVES Reduce the costs of logistics and infrastructure Skills Development STRATEGY Promotion of labour absorbing activities Facilitation of increased value addition and beneficiation Provision of world class and competitive infrastructure Focus on priority sectors INSTRUMENTS • Critical Infrastructure Programme (CIP) • Industrial Development Zones (IDZs) 44
INFRASTRUCTURE SUPPORT CLUSTER CRITICAL INFRASTRUCTURE PROGRAMME • Critical Infrastructure Programme (CIP) is a 70:30 cost-sharing grant intended to leverage strategic investment projects (green- and brownfields) by financially supporting infrastructure critical to such projects, enabling them to establish. The programme was launched in August 2000. • Since inception, the programme supported 42 investment projects with an estimated investment value of R88,4 billion. • The grant has mainly supported investment mining, manufacturing, energy, chemicals, tourism and steel sectors. • The CIP grant disbursed to projects amounts to R1,147,054,564. • The approved projects will support an estimated 47 219 direct permanent jobs. • Total infrastructure development cost by all projects amounts to R5.3 billion.
INFRASTRUCTURE SUPPORT CLUSTER CRITICAL INFRASTRUCTURE PROGRAMME 9 investment projects worth R7,5bn Sector autom,manuf, chemicals, energy. 5700 direct jobs 3 Investment projects worth R12 bn Sector mining 1300 direct jobs • August 2000 to 31 March 2011 • 42 projects approved across all nine provinces • R1,670,781,624 funds committed • R1,147,054,564 total cost to fiscus • 47,219 projected direct jobs • 31778 jobs supported • R36,096 average cost per job 7 investment projects worth R15,3 bn Sector; mining, manuf. 9900 direct jobs 6 Investment projects worth R11,3 bn Sector; mining 6100 direct jobs 4 investment projects worth R15 bn Sector; mining 6300 direct jobs 10 Investment projects worth R21,9 bn Sector; manf., mining, chemicals, Energy, Steel 14000 direct perm jobs 1 investment project worth R1.1 bn Sector; Film 300 direct jobs 2 investment projects worth R3.1 bn Sector; Manuf, energy 3200 direct jobs
INFRASTRUCTURE SUPPORT CLUSTER CRITICAL INFRASTRUCTURE PROGRAMME Kalagadi Manganese (Pty) Ltd Kalagadi Manganese (Pty) Ltd is company owned by Kalahari Resources ( Women owned) , IDC and Acerlomittal. Critical Infrastructure Programme support The CIP contribution amounts to R50,2 million towards the following infrastructure items: • Bulk electrical infrastructure • Rail connection to the main Railway line • Access roads The project has estimated R4, 3 billion worth of investment and will consist of: • An ore preparation facility and sinter plant which will beneficiate the ore into 2.4 million tons per annum of a high grade sinter. • A smelter located in Coega that will produce 320 000 tons per annum of high carbon ferromanganese. • The smelter will consume some 700 000 tons per annum of the sinter leaving 1.7 million tons for export. • The project has already invested R6,1 billion in underground mine in the Northern Cape and further R4,2 billion will be invested towards the smelter at Coega in the Eastern Cape • Kalagadi Manganese project estimated to create 877 direct permanent job opportunities . • To date 56 direct permanent jobs were created
INFRASTRUCTURE SUPPORT CLUSTER CRITICAL INFRASTRUCTURE PROGRAMME Impact study of CIP IMPACT OF CIP TO THE ECONOMY (study done in 2009) • CIP is one of the most effective grant scheme in SA in terms of value for money. The long term value added to the wider economy for every R1 allocated to the scheme is considerable. • On average R67 worth of new capital investments is leveraged in the economy for every R1 CIP grant allocated to the project. • Compared with Municipal Infrastructure Grant (MIG) between 2005/06 to 2007/08, total MIG allocations totaled R5.4 bn and CIP R700m, but CIP has been able to leverage more than 50% of the total MIG funding allocated by National Treasury. • Compared with Agriculture, Transport and Government Services, CIP performs best in terms of output, leveraging investments to the economy and job creation.
INFRASTRUCTURE SUPPORT CLUSTER CRITICAL INFRASTRUCTURE PROGRAMME Impact study of CIP IMPACT OF CIP TO THE ECONOMY • 36 investments supported by CIP led to 3% increase in investments in the economy – translating into 1.14% increase in GDP and 2.8% increase in exports (2000 prices). • From inception to 2009, CIP created 23915 direct jobs abd 64615 construction job opportunities – leading to a 0.3% reduction in national unemployment rate. • CIP has benefited households, mainly in urban areas where CIP investment projects are located. CHALLENGES Subdued economic growth that has negative effect on investment demand SOLUTIONS Revised guidelines for CIP that will lead to accommodation of other sectors of the economy Improved marketing of the scheme to attract more applications
Background INFRASTRUCTURE SUPPORT CLUSTER INDUSTRIAL DEVELOPMENT ZONES (IDZs) • The South African government approved the Industrial Development Zones (IDZ) Programme in 2000. • The main aim of the programme was to improve South African competitiveness through attraction of foreign direct investments and export of value added commodities. This would in turn create jobs and promote linkages between zone and non-zone enterprises. • An Industrial Development Zone (IDZ) can be defined as a purpose-built industrial estate linked to an international port or seaport that leverages both domestic and foreign fixed direct investment in value-added and export-oriented manufacturing industries and services.