The impact of manufacturing incentives in the clothing and textile industry in KwaZulu-Natal : a case study of Durban

Abstract

The clothing and textile industry has been important to the expansion of the manufacturing sector in South Africa. The industry, however, faces significant challenges; domestic firms are under pressure to improve efficiency and product quality levels when compared to the BRICS (Brazil, Russia, India, China, and South Africa) and other developing countries. Due to the ongoing lack of government support, including capital, technology and innovation challenges, many clothing manufacturers, especially in Durban, have relocated to other countries such as Botswana, and Lesotho, while others have closed down and some have adopted a form of production which is less capital intensive. This study aims at establishing the level of awareness of business owners and managers in regard to the existence of tax incentives in Durban. This study used a questionnaire to gather primary data. A sample of 50 companies formed the subject of this study. To analyse the data, this study used a descriptive approach. This approach was crucial in allowing for gathering more in-depth information on the study. It also allowed the researcher to present the data in a meaningful form, helped in analysing the data, and offer ideas to further research. This study revealed that the overall majority of owners were unaware of the existence of tax incentives within the clothing and textile sector; the respondents were also of the opinion that there is a lack of engagement between government and investors in renegotiating the terms of tax incentives. This study recommends that South Africa should urgently tackle its industrial policy reforms and the implementation of tax incentives in a manner so that it is made available, easy and transparent to applicants who apply for the incentives on offer, bearing in mind that a successful administration of tax incentives would also require the use of well-trained officials, sufficient information technology as well as a clear policy for achieving planned goals by using such incentives.