The Capital Projects Feasibility Programme (CPFP), implemented by the Department of Trade and Industry (DTI) is a cost-sharing grant that contributes to the cost of feasibility studies likely to lead to projects that will increase local exports and stimulate the market for South African capital goods and services. In many countries worldwide (both developed and developing), the capital goods sector has been identified as an appropriate sector to target due to the valuable contribution towards development that it can potentially make.
Capital Projects Feasibility Programme (CPFP)
The programme provides support to facilitate feasibility studies in the manufacturing and capital goods sector. It makes a contribution in the form of a cost-sharing grant payable according to agreed milestones; 50% of the total feasibility study costs for capital projects outside Africa and 55% of total feasibility study costs for capital projects in Africa, 50% of the total feasibility study costs for manufacturing projects with total assets above R30 million, and 70% of the total feasibility study costs for manufacturing projects with total assets below R30 million.
As part of the government’s continuous improvement of the country’s economy, a systematic review of the South African Capital Projects Feasibility Programme (CPFP) was conducted and concluded with various key capital goods and services sector and industry stakeholders, hence the provision of the revised Capital Projects Feasibility Programme guidelines.
Objectives of the Capital Projects Feasibility Programme
The Capital Projects Feasibility Programme makes targeted grants that contribute to the cost of feasibility studies into projects outside South Africa that are likely to increase local exports for South African capital goods and services.
The primary objectives of the programme is to facilitate feasibility studies that are likely to lead to high-impact projects which will stimulate value-adding economic activities in South Africa as this will have greater impact on the country’s industrial policy objectives.
The secondary objectives of the programme include:
- Attracting high levels of domestic and foreign investments;
- Strengthening international competitiveness of South African capital goods sector and allied industries;
- Creating sustainable jobs in South Africa;
- Creating a long-term demand for South African capital goods and services;
- Stimulating project development in Africa and in particular the Southern African Development Community (SADC) countries as well as support for the objectives of the New Partnership for Africa’s Development (Nepad);
- Promoting linkages with and development of small, medium and micro enterprises and black economic empowerment businesses.
Benefits of the Capital Projects Feasibility Programme
- The beneficiaries are South African registered companies conducting feasibility studies on projects outside SA, whether new, expansions or rehabilitation of existing projects.
- The grant is capped at R8 million to a maximum of 50% of the total costs of the feasibility study for projects outside Africa and 55% of the total costs of the feasibility study for projects in Africa.
- Depending on the nature of the proposed project, a period of more or less 18 months may be allowed for funds to be sourced for the project.
Eligible Enterprises for Capital Projects Feasibility Programme
To be eligible the study must be undertaken by a registered South African legal entity. In the case where a study is undertaken by a foreign applicant, it will only be eligible if it partnered with a South African entity, and the application is submitted by the South African entity. Applicants must be in compliance with the requirements of Broad-Based Black Economic Empowerment (B-BEEE) and submit a valid certificate.
Studies that fulfill the following non-financial criteria will be eligible to apply for a grant through the program:
- new projects, expansion of existing projects and the rehabilitation of existing projects;
- the programme that is anticipated to emerge from the feasibility study must fulfil the objectives of the programme;
- the minimum local content should be 50% for goods and 70% for professional services which remains at the discretion of the Adjudication Committee;
- projects can be situated anywhere in the world ( excluding South Africa);
- the project must have an adequate chance of being declared a success.
Additional evaluation criteria which can be considered as motivational factors about the project which may result in:
- A positive impact on other developmental aspects including job creation, skills development, linkages with small, medium and micro enterprises etc.
- A minimum of 10% of the total professional services involved during the feasibility study should be sub-contracted to South African black-owned professionals/entities;
- A clear detailed time period within which the project emanating from the feasibility study will be realised;
- Buy-in and other sources of funding from private and public sector organization(s) to realise the project.
A feasibility study will not qualify if it is:
- Expected to result in a project which is not of capital goods and services in nature
- Expected to result in a project which can be readily implemented without even conducting a feasibility study;
- Expected to result in a bankable document which cannot translate into an implementable project
- Receiving government’s funding for the same aspect of the same project.
Application for the Capital Projects Feasibility Programme
The applicant must submit the following documents to apply for the programme:
- completed application form,
- valid tax clearance certificate,
- audited and independently reviewed financial statements for existing projects or projected financial statements for new projects,
- curriculum vitae of the main study team,
- copy of the pre-feasibility study report, company references,
- company profile,
- copy of signed MoU,
- joint ventures and off-take agreements and company registration documents (CK1).
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