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Incentives - Small Business Development


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The Standard Scheme provides cover up to R1m of the bank facility at 80% , with the fee payable at 3% p.a. in advance. The duration of the scheme is 36 months initially, but can be extended twice for periods of 12 months each time. Normal criteria apply.
The Land Reform Credit Facility is a wholesale finance facility at Khula Enterprise Finace Ltd, whose aim is to stimulate and encourage private sector participation and involvement in the Land Reform process. The LRCF is funded by the Department of Land Affairs and the European Union. The facility achieves its objective by incentivising commercial banks and other high credit rated institutions to invest in high value agricultural and ecotourism joint ventures, thereby unlocking private sector investment into the agricultural, agribusiness and ecotourism sector.

South Africa is a new market that is expanding rapidly. This provides opportunities for businesses to expand investments and trade relations. The Dutch Ministry of Foreign Affairs finances companies who wish to invest in South Africa, together with a local South-African company. These companies can receive a contribution of 50 percent of the total project costs.
South Africa is a new market that is expanding rapidly. This provides opportunities for businesses to expand investments and trade relations. The Dutch Ministry of Foreign Affairs finances companies who wish to invest in South Africa, together with a local South-African company. These companies can receive a contribution of 50 percent of the total project costs.

Not only in South-Africa
'PSOM' is the name of this business-incentive; the Dutch programme for cooperation with emerging markets. For South Africa, only Dutch companies (together with a South-African company) can apply for such a PSOM-grant.
But PSOM does not only stimulate investments in South Africa; it also stimulates Dutch investments in other African countries such as: Benin, Burkina Faso, Cape Verde, Egypt, Ethiopia, Ghana, Kenya, Mali, Mozambique, Rwanda, Senegal, Tanzania, Uganda and Zambia (See the website http://www.evd.nl/psom for the latest information on the countries on which PSOM is open).
To meet the criteria for a PSOM-grant, the investment has to be a Dutch initiative, in cooperation with a local counterpart. But for investments in Uganda or Mozambique, the situation is different: even companies based in an emerging market (such as South Africa) can apply for a PSOM-grant!

Criteria
To qualify, projects should at least meet the following criteria:

  • The project should stimulate the transfer of knowledge and have a positive impact on employment and income generation;
  • The project should aim at introducing a new, but elsewhere proven technology or product;
  • The project is initiated and implemented in cooperation with local South African counterparts;
  • The project has a maximum duration of 2 years.
    The PSOM-projects are selected on the basis of an open tender procedure.

PSOM-grant
The selected projects for South Africa receive a PSOM-contribution of 50 percent of the total project costs. The maximum total project costs is EUR 1.500.000; the average PSOM contribution is EUR 0,5 million.
A PSOM-project for Mozambique or Uganda receives 60 percent of the total project costs. The maximum total project costs is EUR 850.000; the average PSOM contribution is approximately EUR 500.000. The remainder of the project budget has to be provided by the participants themselves.

EVD
The final responsibility for PSOM lies with the EVD, while the Netherlands Embassy in Pretoria has an advisory role.

As part of the government’s national strategy of consolidating small enterprise support interventions across different government departments and government agencies, the dti has commenced its own process of streamlining its small enterprises support interventions. As part of this process, the dti and the Department of Science and Technology (DST) agreed to merge the Godisa trust with the National Transfer Centre (NTTC) and the Technology Advisory Centre (TAC). The three dti incubators, namely Mpumalanga Stainless Steel Initiative (MSI), Downstream Aluminium Centre for Technology (DACT) and Furntech, were also incorporated into stp.
stp was created to provide technology and business development support services to small enterprises as an integral part of its mandate to drive the national technology and business incubation agenda. stp contributes to South Africa's economic development through the creation and support of technology business centers, including incubators and technology demonstration centres. These centres provide a variety of business support services and office infrastructure to small enterprises. stp also provides a range of services that enable industry and in particular small enterprises in the second economy to access and transfer technology. There are two main areas in which stp provides support:

 

1. Technology Transfer Division

The Technology Transfer Division (TTD) is a division within stp that manages the Technology Transfer Fund (TTF). Its aim is to facilitate technology transfer and diffusion to SMMEs with a specific focus on the second economy. The TTD assists businesses in acquiring appropriate technologies through national and international networks and negotiating technology transfer agreements. The programme offers these services:

o Technology assessment
o Technology sourcing and evaluation
o Technology selection
o Negotiating and drafting of agreements
o Technology transfer education
o Technology transfer
o Project management
o Technology Advisory centre

TTD provides finance through the Technology Transfer Fund (TTF). The main purpose of the TTF is to specifically fund defined components of the process of transferring available technology to entrepreneurs, communities and existing South African businesses, focusing on the second economy.

The TTF will provide funding to enable technology transfer for the second economy as a grant with no payback up to a maximum of R500 000 per project.

 

2. Technology Business Incubation

Incubation aims to help grow small, medium and micro-sized enterprises in the country. It is designed to strengthen technology diffusion and harness the entrepreneurship of the science and technology community in South Africa. Incubation provides support to South African enterprise. This support directly helps inventors and new enterprises to use technology optimally in improving the competitiveness of their products and services. Furthermore, it improves business infrastructure, strategic guidance, financial and legal advice, and creates an environment of learning and sharing in which information, experience and ideas are freely exchanged. Incubation also assists enterprises to develop skills, knowledge and markets. These improvements are intended to lead to increased profitability and growth. Enterprises will be able to employ more people and enter new markets with cutting-edge products and services. Currently the Seda Technology Programme (stp) provides financial, strategic, technological and management support to the following incubators:

o Mpumalanga Stainless Initiative (MSI)
o The Down Stream Aluminium Centre for Technology (DACT)
o Furniture Technology Centre (FURNTECH)
o Acorn Technologies
o Chemin
o Egoli Bio Life Sciences
o Embizeni Innovation Support Centre
o Softstart - Bodibeng Technology (SoftStartBTI)
o Timbali Technology
o Zenzele Technology
o Essential Oils Incubation Centre
o Ekurhuleni Base Metal Incubator
o Platinum Incubator
o Bio-diesel Incubator
o AIDC