State to Offer R1bn Lure for Call Centres in South Africa

Mergers, Acquisitions and Financial Results

Government has earmarked R1bn in investment incentives over the next five years to lure international business services to SA to boost job creation and increase foreign direct investment. The plan, launched by Trade and Industry Minister Mandisi Mpahlwa in Pretoria last week, was lauded by industry players.

Business process outsourcing is the subject of the first of a series of sector strategies drafted by the department as part of a broad industrial policy framework which is still to be officially launched.

The sector strategies are key to government's accelerated and shared growth initiative, which aims to boost economic growth to 6% and halve unemployment by 2014. Mpahwla said the plan was an important "test run" for the type of interventions government was planning.

The department estimates the plan will translate into 100000 new jobs by 2009 and draw about $175m in foreign direct investment, which could push the sector's contribution to gross domestic product (GDP) up to 1,36% by 2009, from the current 0,92%.

SA has had success with call centres, with the sub-sector growing 8% a year over the past four years. It now employs 54,000 call centre agents and government hopes to emulate that success through interventions in the rest of the sector.

Apart from investment incentives and training support grants, a range of other ambitious interventions are also on the cards to boost the sector's competitiveness. These could see investors having access to cheaper telecommunication services and virtually rent-free office space in some areas.

Negotiations with Telkom and the communications department were at an advanced stage to secure more attractive telecommunications pricing packages for businesses operating in the industry, Mpahlwa said.

The department was also in talks with local governments in more remote areas to identify office space that could be refurbished and provided with interconnectivity, free of charge, in a bid to attract investors to cities outside main hubs, such as Bloemfontein, Pietermaritzburg and Mafikeng, where unemployment was high.

The investment incentives, the first sweetener, are on a par with a global benchmark in providing grants equal to half of the salary of each job created and a skill-training grant. Depending on the size of the investment and the number of jobs created, companies can claim grants of up to R60,000 per "seat", where a seat would provide jobs for one to three people, depending on whether the firm operates shifts.

A firm employing 200 to 499 people, with an investment expenditure of at least R74,000 a seat, would qualify for a grant of R37,000 to R44,600, while a company employing more than 500 people with qualifying investment of R89200 a seat, could receive up to R52,000. Funding is provided by the departments of trade and industry, and labour, while the Business Trust has contributed R100m to the plan.

Business Day