New loan window for competitive factories not enough
THE opening of a new window for working capital loans under the Department of Trade and Industry’s Manufacturing Competitiveness Enhancement Programme (MCEP) is not enough to allay the stress in the manufacturing sector.
The Manufacturing Circle, an industry body, said on Thursday that more was needed to balance the objectives of job creation, competitiveness and transformation in the sector.
The department suspended the programme in 2015 because it was "overcommitted".
"The issue is … about planning for a new intervention or a new project, and then not being able to implement this," Philippa Rodseth, executive director of the Manufacturing Circle, said.
This included not knowing when a grant would take place after expenses had been incurred by firms.
"This …. impacts on cash flows and requires juggling to find alternative sources to fund the interim shortfall that was not originally planned," she said.
The industry body also said that nothing had been communicated by the department about an associated production incentive programme under the MCEP, other than it was in discussions with the Treasury for additional investment support for manufacturing.
The MCEP comprised a production incentive programme administered by the department and an industrial financing loan facility administered by the Industrial Development Corporation. The latter applied to working capital loans, of which 78% had been disbursed.
"To be frank, in many cases the MCEP was going to come to an end," deputy director-general at the department Malebo Mabitje-Thompson said.
"It was never supposed to be perpetual support for the sector in that form," she said.
The MCEP had run for four years out of its five-year lifespan, but had become overcommitted, she said. The department was now talking to the Treasury about supporting the programme in some or other form. "But at this point we cannot say exactly what this is," she said.