Programme (SMMDPl
3.1. Introduction
A key tool in South Africa's Supply side policy is the implementation of incentives and subsidies made available to qualifying companies within the Republic of South Africa, under the direction of the Board for Manufacturing Development.
These incentive schemes are administered by the Department of Trade and Industry. Within the Department of Trade and Industry lies an administrative body known as The Enterprise Organisation. The Enterprise Organisation is the newest face of an old administrative system that has traditionally been responsible for the administration of capital based incentive schemes. Under the old structure this administrative function fell under the direction of the Chief Directorate: Manufacturing Development. This study is focussed on the Chief Directorate: Manufacturing Development.
The department is empowered by the Manufacturing Development Act, No 187 of 1993.
This Chapter outlines the establishment and composition of the Board for Manufacturing Development; it's powers, objectives and functions. The specific product implemented by the Board for Manufacturing Development in the governments quiver of supply side measures, is the SMMDP.
Background to the SMMDP is given, and the details of the programme are presented. This chapter also discusses requirements that are assessed in Chapter 4 in terms of their strategic importance, and their impact on the achievement of organisational objectives.
3.2. The Manufacturing Development Act, No 187 of 1993
The Manufacturing Development Act no 187 of 1993 provided for a Board for Manufacturing Development to be established to provide for the development of programmes for manufacturing development, and provide for all incidental matters related to the development of manufacturing.
The key points of the act that are pertinent to this study are outlined below:
3.2.1. Establishment and Composition of Board (s2(1) and (2))
The Manufacturing Development Board was established as a juristic person.
The members of the board are appointed by the minister and consist of:
• A chairperson designated by the minister,
• An official of the Department of Trade and Industry designated by the Minister,
• An official of the South African Revenue Service designated by the Director-General: South African Revenue Service,
• An official of the Department of State Expenditure designated by the Director-General: State Expenditure,
• An official of the Department of Finance designated by the Director- General: Finance
• Nine members designated by the minister who in his or her opinion have adequate expertise, knowledge or experience with regard to trade, industry or the economy, as well as the developmental problems and potential of the Republic, to represent and promote the interest of the inhabitants of the Republic
• Three members designated by the Minister, one of whom has adequate expertise, knowledge or experience with regard to tax matters, one of whom has adequate expertise, knowledge or experience in small, micro and medium manufacturing enterprises,
and one of whom has adequate expertise, knowledge or experience in labour an employment matters.
3.2.2. Executive Committee (s3)
The Board may appoint an executive committee consisting of the Chairperson and not more than two members designated by the Board from the nine economic and industry representatives above, to perform functions on behalf of the Board. Decisions taken by this committee are subject to ratification by the Board at the next Board Meeting.
3.2.3. Objectives of the Board
The objective of the Board is (SMMDP Annual Report, 1998):
"To promote manufacturing Growth by way ofincentives or concessions with regard to requirements within the framework of the economic policy of the republic. "
3.2.4. Functions, Powers and Duties of the Board
The Board has the power to formulate recommendations on policy in respect of manufacturing development programmes to the Minister for approval (s5(2)).
The board has the responsibility to develop, manage, administer, and implement any manufacturing development programme established in terms of the act (s5(2a)).
The board determines:
• The acts in respect of which incentives or concessions may be granted in terms of a programme (s5(2f)).
• The basis on which incentive or concessions may be paid in terms of a programme (s5(2h)).
• The prerequisites for assistance in terms of a programme.
The Board is obligated in terms of section 3(c) to constantly monitor every programme in order to evaluate whether the objects of such programme are being achieved.
3.2.5. Programmes for Regional Industrial Development (s10)
Section 10(2) states: "The minister may ... set out the objects of the programme; and in general, make provision for any other matter which in his opinion or her opinion is necessary or expedient in order to promote or attain the objects of the programme ... "
The act further states "the Regional Industrial Development Programme of 1982, the Regional Industrial Development Programme of 1991 and the Simplified Regional Industrial Development Programme of 1993 shall be deemed to have been instituted under the Provisions of the Manufacturing Development Act, and be in force as such."
This provision grants power to the Board to govern the administration of contracts still in force that were instituted under the provisions and guidelines of these past incentive schemes. The last contracts approved under the Regional and Simplified Regional Industrial Development Programme will be valid until 2003.
3.3. Structure of Administrative Bodies
Under the direction of the Board for Manufacturing Development, the Chief Directorate: Manufacturing Development of the Department of Trade and Industry was responsible for the day to day administration and implementation of the decisions made by the Board for Manufacturing Development.
In 2000, the Chief Directorate: Manufacturing Development of the Department of Trade and Industry was restructured in line with an attempt to make the department more outwardly oriented. The restructuring of the Chief Directorate coincided with the implementation of the revised incentive programme, which was to replace the Tax Holiday and SMMDP. The new programme is known as the Small Medium Enterprise Development
Programme. The new administrative body is called The Enterprise Organisation, and is headed up by a Chief Executive Officer.