R2.2 billion shortfall and suspension of MCEP will lead to more job losses
29 October 2015
The announcement that the Manufacturing Competitiveness Enhancement Programme (MCEP) will not be accepting any more applications due to its R2.2 billion shortfall will effectively mean that companies in the manufacturing sector will be precluded from the programme and ultimately result in downsizing of companies and job losses.
The DA will therefore request the Minister of Trade and Industry, Rob Davies, brief the Portfolio Committee on what funds in his existing budget can be diverted to prioritise this crucial programme. With unemployment figures on the increase it is critical that opportunity is prioritised in departmental budgets.
The reason given by the DTI is that a very large number of applications across the manufacturing sectors now far exceed funds set aside for the programme.
The DA has consistently warned the Minister of this potential consequence of not reprioritising funds from his department’s existing budget to accommodate the growing number of companies seeking assistance.
A further R2.2 billion is needed to fund the shortfall as at March of this year. While the objective of the MCEP is to promote and enhance competitiveness to retain and create jobs within the sector, the DTI implemented a spending cap of R50 million for what it terms ‘cluster competitive improvement’.
A large percentage of manufacturing companies rely on this programme to continue operations and contribute to the economy of the country. Suspending the MCEP will consequently force a number of companies to either close down operation or lay-off a number of employees.
The programme is vital to ensuring that our manufacturing sector remains competitive, retains jobs and has the necessary space to create more jobs. Our current manufacturing sector is already in turmoil due to the ongoing electricity crisis, failing commodity prices and labour unrests. Effectively suspending intake into this crucial programme until April next year will cause a number of companies to shut their doors. Our economy cannot survive further business closures.
In addition to the suspension of the MCEP, the DTI reports in its latest annual report that it under-achieved dramatically with regards to the projected number of jobs to be retained from approved enterprises through the MCEP. The planned target of 99 600 jobs will under-achieved by 61 703 jobs, a staggering 62% less than expected.
The DA will continue fighting for the survival of our manufacturing sector and will not allow the lack of management and inappropriate prioritisation of funds to harm our economy.
Statement issued by Dean Macpherson MP, DA Shadow Deputy Minister for Trade and Industry, 29 October 2015
