9 April 2014

South Africa: SA Economy 'Needs Structural Shift to Grow'

The latest version of South Africa's Industrial Policy Action Plan (IPAP) is grounded in the imperative of "smart re-industrialisation", with a focus on growing the country's manufacturing sector, says Trade and Industry Minister Rob Davies.

Speaking at the unveiling of the sixth iteration of the IPAP in Pretoria on Monday, Davies said the South African economy needed to undergo a structural shift, away from exporting mining commodities to producing value-added products, if it was to create jobs and growth.

"Industrialisation is critical to this," Davies said. "It's not just critical to South Africa, but critical to the future of the African continent. If Africa has enjoyed a growth spurt up to now, it is not going to sustain this unless we move up the value chain and start producing value-added products."

Making value-added products, he said, was a significant generator of jobs, not only within manufacturing, but also in up-stream and down-stream industries.

In recent years, the IPAP has helped to stabilise South Africa's manufacturing sector, to grow important parts of it and to prevent de-industrialisation. It has done so by putting in place mechanisms to leverage public procurement for the competitive manufacture of inputs into major areas of public infrastructure, including rail rolling stock, clothing and textiles.

Progress under the IPAP

Davies said that while the IPAP had significantly strengthened the country's industrial policy in the most "difficult of times", he was far from content with what has been achieved to date. Nonetheless, the IPAP has seen significant progress.

Over the past four years, the Industrial Development Corporation (IDC) - which provides finance for industrial development projects - has invested R45-billion in equity or loans, helping to create new job opportunities in manufacturing, the green economy, infrastructure development and the services sector.

Since 2010, the 12i Tax Incentive has offered R20-billion in tax breaks for compliant manufacturing projects, enabling the Department of Trade and Industry (DTI) to leverage R32-billion in actual and projected new investments over the 2010/15 period.

The 12i Tax Incentive is designed to support both "greenfield investments" (new industrial projects that use only new and unused manufacturing assets) as well as "brownfield investments" ( expansions or upgrades of existing industrial projects). The new incentive offers support for both capital investment and training.

Since its inception in May 2012, the Manufacturing Competitiveness Enhancement Programme (MCEP) has approved funding for 413 entities and R2.8-billion has been committed to support manufacturers, with a total investment value of R12.4-billion. This has helped to sustain 110 977 jobs.

Since its commencement in 2008, the Manufacturing Investment Programme (MIP) has approved 1 856 projects with a total incentive value of R4.9-billion.

These are projected to secure investments amounting to R35.4-billion and create 43 570 jobs. The top three sectors for project approval were agro processing, metals and chemicals.

In the creative industries, 66 film and TV productions were supported by the DTI between April and December 2013, with an estimated total investment of R1.8-billion.

And a joint initiative between the Cape Craft and Design Institute and the National Treasury's Jobs Fund programme - implemented by the Development Bank of Southern Africa - saw the creation of 104 new long-term jobs in the Western Cape's craft and design sector between September 2012 and October 2013.

- SAnews.gov.za

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