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BPO incentives pay off

SA's business processing sector last year facilitated the creation of a potential 2 690 jobs, as part of government's bid to grow the sector.

Trade and industry director-general, Lionel October, recently told a select committee on trade and international relations that R4 billion was invested in the sector last year, which led to the creation of 2 690 potential new jobs.

Last year, umbrella body Business Process enabling SA (BPeSA) said about 30 000 jobs should be created in the sector by 2016. In January 2011, the industry employed about 10 000 people.

BPO was meant to be one of the country's key economic drivers when the Accelerated and Shared Growth Initiative for SA was launched more than five years ago, with the aim of halving unemployment and poverty by 2014. It has since been replaced with the New Growth Plan, which is targeting five million jobs by 2021.

However, SA's BPO sector has battled to aid government's targets as it has faced constraints such as rising electricity prices, the high cost of communications, and an insufficient pool of skilled workers.

Making inroads

The Department of Trade and Industry (DTI) launched a new incentive scheme last January, which aimed to trim operating costs by up to 20%. Government's incentives mean investors will be paid R112 000 for each full-time job created and maintained.

Gareth Pritchard, CEO of BPeSA Western Cape, says the incentives are “proving to hit the sweet spot with investors”. He says three new investments from UK companies have recently been won in the Western Cape.

Local and foreign investors, registered as legal entities in SA, will be eligible for the programme if they create a minimum of 10 jobs.

Pritchard says there is also a strong pipeline of investors and potential job growth is about 2 000. The Western Cape's aim is to create about 5 000 jobs over the next three years, he adds.

In September last year, trade and industry minister Rob Davies said the department had approved grants worth R157.8 million for the sector. These would cover 10 projects over a three-year period and were expected to create more than 11 000 jobs.

The DTI's incentives are paid out in instalments of R40 000 for the first two years and R32 000 in the final year. Its plan replaced its Government Assistance and Support (GAS) initiative, which paid out R688 million between July 2007 and March 2010.

GAS was criticised because of the amount of red tape involved in accessing the funds.

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