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Export Incentive Case Study - Uzenzele blog

Export Incentive Case Study

EMIA (Export Marketing and Investment Assistance administered by the Department of Trade and Industry) supports existing South African manufacturers or traders of South African goods to exhibit at up to 6 foreign (international) trade shows per annum, on a rebate

 

The purpose being to assist manufacturers or traders of locally manufactured goods to market their products for export.

 

EMIA is available to all S.A. manufacturers and traders with a track record of 1-year.

 

The EMIA process and cash flows work as follows:

  1. A business identifies a relevant exhibition and submits an application to the DTI to support it in exhibiting at a show.
  2. Upon approval of the application, the business pays all the costs related to the show.
  3. Upon its return, the business requests the DTI to rebate the funds expended in line with the approved application.
  4. Repeat.

 

I was recently asked by a client to explain whether going on foreign trade shows using EMIA is worthwhile.

 

A business case would be the best way to explain this, so I took out the applications of our clients to run the numbers.

 

Let’s look at 2 examples:

Business 1:         Manufacturer of cosmetics products

  • Turning over R60 million per annum
  • 270 employees
  • 100% black ownership
  • Level 1 B-BBEE compliance
  • EMIA calls this an “other sized business”

 

Business 2:       Manufacturer of haircare products

  • Turning over R8 million per annum
  • 15 employees
  • 100% white ownership
  • Level 4 B-BBEE compliance
  • EMIA calls this an “SMME”

 

Both these businesses will qualify for the incentive, with the value of support granted based on the size of their business.

 

Let’s look at what each business was able to claim from the DTI for participating in an industry exhibition in Nigeria:

Export Trade Show Finance Case Study

As you can see, both businesses benefited greatly with significant costs for the exhibition being covered. Differences in the costs of each business relate to fluctuations in airfare, accommodation chosen and meals.

Business 1: 60% of their costs were covered by the DTI and their net expense was only R45,538

Business 2: 87% of their costs were covered by the DTI and their net expense was only R13,943

 

Furthermore, these businesses were able to attract new customers in those markets and have created opportunities for access to significant new foreign markets for their businesses.

 

Multiply this by up to 6 exhibitions every year and the possibilities and opportunities for business growth is massive.

 

Exports have the potential to grow business volume and enhance profits.

 

In 2016, the DTI supported 35 companies to take part in the Gulfood Exhibition (the largest food and beverage fair in the region), which resulted in export sales of more than R220 million.

 

Exports contributed to 30% of South Africa’s GDP, yet many South African businesses are unaware of the benefits of exporting - read my blog “4 reasons you need to be exporting”.

 

Do you have a marketing budget and export goals? Uzenzele’s ETF administrative and project management service offering can help you achieve these.