Global Trade Alert

The Department of Trade and Industry, South Africa, has made available loans to distressed companies in manufacturing sectors identified in the National Economic Development and Labour Council (Nedlac) Framework Agreement. The sectors identified as distressed because of the global economic crisis are: Automotives, Clothing and Textiles, Capital Equipment, Transport Equipment and Metals Fabrication.
 
Since April 2009 the Industrial Development Corporation (IDC) can make 6 billion rand available over two years to a number of firms in different sectors. IDC has approved loans to 11 companies to the value of 644 million rand and is evaluating another 49 applications.
 
In addition to these loans other financial measures to benefits firms in internationally-tradeable sectors have been announced, including: 
i)Assistance from the IDC to assist with cashflow constraints in the automobile sector to ensure that investments are not jeopardized.
ii) Extension of the validity period of the Import Rebate Credit Certificates "on a case-by case basis" to assist with cashflow constraints.
iii) Discussions between the Department of Trade and Industry and the National Treasury to help with investment support.
iv) Discussions with the National Treasury on deferment of the shift from ad-valorem to CO2 taxes on vehicles pending a comprehensive roadmap for the oil industry to produce and supply cleaner fuel in South Africa.
 
The application of the loans given appears selective and thus may generate discrimination between producers located in the relevant sectors of the South African economy. The case-by-case basis for determining import rebate credits signals selectivity, which may harm certain foreign commercial interests. For these reasons, this initiative is classified red in the GTA database.