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Cluster Development Programme (CDP)

Notice on the Suspension of the CDP

the dti will be suspending new applications for the Cluster Development Programme with effect from 01 April 2018. This is necessitated by the fact that the first face of the Programme was rolled out as a Pilot, where assistance was targeted at a limited number of clusters,  that were selected to make a case for potential success of Cluster Development in South Africa.

Work has already been commissioned by the Department to understand the impact of the Pilot Programme. Recommendations from the study are expected during the course of the 2018/19 financial year.

the dti will continue to honour all approved applications. All other incentives of the department will continue as normal.



Objective


The Cluster Development Programme (CDP) is an incentive programme that aims to promote industrialisation, sustainable economic growth and job creation needs of South Africa through cluster development and industrial parks.

Its objective is to enhance competitiveness of enterprises within a cluster or Industrial Parks. This is to be implemented through defined collaborative projects that address production, productivity and marketing. The first phase of the programme will be rolled out as a pilot where assistance will be targeted at a limited number of clusters that will be selected to make a case for potential success of cluster development in South Africa. Assistance will also be prioritised for Industrial Parks in former homeland areas and/or townships.

Cluster Development Programme Components

  • Shared Infrastructure

The shared infrastructure grant is a non-taxable cash matching grant towards investment in assets such as buildings, machinery, equipment, tools, jigs, dies and commercial vehicles. The grant is of up to 80% of the qualifying investment to a maximum grant of R10 million per cluster.

  • Business Development Services

The objective of the incentive is to support business development services initiatives of the cluster such as conformity assessments (standards accreditation), financial management, Information Technology services, logistics management, professional services, Human Resource Management, benchmarking exercises, market research, feasibility studies, etc. It is a non-taxable cash matching grant of up to 80% of the investment to a maximum grant of R5 million per cluster.

  • Cluster Management Organisation (CMO) Funding

This component is aimed at supporting strong dynamics amongst enterprises and other stakeholders in the cluster.  The CMO purpose is to manage core operation and delivery by the cluster. The CMO Funding is a non-taxable cash matching grant  of up to 80% of the costs payable at the establishment of the CMO to a maximum grant of R5 million per Cluster

Grant Calculation

  • CDP offers a cost-sharing grant of up to 80% for the first approved business plan of the costs of the cluster activities, to be payable at acquisition of assets or the completion of the activities or milestones up to a maximum grant of R10 million for the three components of the programme combined.
  • Where a cost sharing component will be provided by a government funded entity including local, provincial or agencies this contribution can only be considered up to 15% of the co-funding
  • The grant is provided directly to approved clusters based on actual qualifying costs incurred and subject to collective jobs being retained by the individual cluster member companies.
  • For Clusters that have been in existence for a period of less than three (3) years, an advance payment of up to twenty five percent (25%) of the approved business plan for the financial year, may be paid to the SPV/ Cluster account application upon application approval

Eligible Clusters

  • An eligible cluster should have five or more members who are registered tax paying entities or non-profit organisations. At least 20% of the membership of the cluster should be made up of 51% black owned entities in the first year (i.e. the pilot stage).
  • In case of industrial parks, preference will be given to parks located in areas where there are high levels of unemployment (townships or rural areas), the majority of tenants must be involved in manufacturing or supply based firms.

Contact

Joe Sekhobela  MSekhobela@thedti.gov.za  012 394-1593
Zanele Kobue  ZKobue@thedti.gov.za  012 394-1067