Government is MCEPtively Vague on Industrial Support

If there is one thing that businessmen enjoy, even more than long lunches, it is certainty.   Whether it is with their own money, or with funds raised from elsewhere, they are more likely to go ahead with a project if they are sure that its finances are predictable, that any support they are receiving from government will be predictable and will be delivered. 

With this in mind, I attended the media launch of the dti’s latest industrial blueprint, the eighth Industrial Policy Action Plan (IPAP).  

Trade and Industry Minister Rob Davies gave an overview of the strategy, and there were some encouraging elements.   A new auto support programme is being drawn up in good time for 2020, when the existing one is due to expire.    It may be that the voice of the auto component sector is to be more closely heard than it was in previous exercises, and the aim is to provide the industry with continuity and certainty about future support.   Tens of billions of rand of taxpayers’ funds are being invested in auto production, so it is good that proper planning seems to be taking place.

There was also a confirmation by Rob Davies that the focus of government incentive support measures will be shifting from wider support schemes to sector-specific ones, such as those for films, auto, clothing, footwear and textiles and so on.

However, once again there was a slightly opaque response to questions about the main incentive scheme for manufacturing, the MCEP, which ran out of money last year and which would have been reignited around now if there had been fresh funds.

In a series of MCEPtively vague responses, Rob Davies and his DG Lionel October (who had erroneously been introduced as DG September) confirmed the shift from wide-ranging programmes to sector-specific ones, said MCEP has been a success, suggested there would be budget lines for MCEP for the next two years (without saying what funds, if any, are available).  He announced that there would be a smaller successor scheme in future which would again be applied across all industries, alongside the growing sector-specific array of grants.

There is logic in government’s approach.  However, I find it strange and irritating that the changes which are being planned have not been clearly outlined, with details such as funding and timing.  I understand that a number of applications were made before MCEP ground to a halt, but never processed, and the companies concerned must be baffled about what is going on.  

Let us hope that the often excellent communications of the dti can be stepped up to ensure that once important changes are decided, they are then communicated.

Government says frequently how important this country’s industrial base is to our growth, employment and exports, and the more detail on how it plans to support this, the better.

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