about mcep
Developing countries that have shown upward economic trends have relied on the manufacturing sector as their engine room for growth. The Manufacturing Competitiveness Enhancement Programme (MCEP), is a support scheme that offers production incentives and financial loan facilities to the manufacturing industry in South Africa.
MCEP aims to strengthen the South African economy, by supporting the manufacturing sector through 3 different funding initiatives
MCEP Fund
South Africa’s long-term growth and economic well-being depends, in part, on a vibrant manufacturing sector. Considering this sector employs some 1.7 million people and is vital in improving the country’s skills and infrastructure base, MCEP was initiated by the Department of Trade and Industry and the Industrial Development Corporation to act as a support scheme. This scheme offers manufacturing companies incentives to raise their competitiveness and retain jobs.
Distressed Business Fund
It is crucial for manufacturers to maintain a competitive advantage by investing in modern machinery and equipment. Expensive equipment can put immense financial strain on already struggling businesses. With that in mind, the Distressed Business Fund was set up to provide struggling manufacturers with a much needed helping hand.
MCEP Covid-19 Fund
In addition to the existing difficulties within the South African manufacturing industry, the COVID-19 pandemic has had an overwhelming effect on many businesses. MCEP has created specific funding initiatives to actively assist businesses through these turbulent times.
It is crucial for manufacturers to maintain a competitive advantage by investing in modern machinery and equipment. Expensive equipment can put immense financial strain on already struggling businesses. With that in mind, the Distressed Business Fund was set up to provide struggling manufacturers with a much needed helping hand.
MCEP provides funding for the following sectors:
MCEP key to reigniting local manufacturing
In recent times manufacturing in South Africa (SA), has shown a downward economic trend compared to the late 1970s, when the sector accounted for about 20% of gross domestic product (GDP).
However, it is encouraging that SA still has a sizeable, diversified and generally technologically-advanced industrial base. The manufacturing sector contributed 13.2% to gross domestic product (GDP) and employed 1.21 million people (11.8% of total formal non-agricultural employment) in 2019. The sector also accounted for 56.4% of overall merchandise exports in 2019.
Although diversified, the industrial base is dominated by the sub-sectors manufacturing food and beverages; chemicals, rubber and plastics; base metals and fabricated metal products; machinery and equipment; as well as transport equipment (including motor vehicles, parts and accessories), as illustrated in the accompanying chart.
While several sub-sectors of manufacturing largely serve the domestic market, others are heavily reliant on export markets. Either way, competitiveness is critical to their success as fierce competition prevails across the board. Numerous factors have affected their performance over time, including: domestic and/or external demand conditions; currency movements; access to and cost of capital; labour related issues (wages, productivity, industrial relations, legislation); other input costs and pricing practises; the extent of technological upgrading; policy support; power supply and escalating electricity costs; transport infrastructure and logistics support; regulatory aspects; tariff protection; as well as competition/concentration issues, among others.
The manufacturing sector benefits from substantial public sector support in various forms, such as incentive programmes, development finance assistance, as well as governmental and SOE procurement of, for example, input supplies for infrastructure development.
