May 2013

Manufacturing set to fuel economic growth in SA

Written by Thomas Thale
Government is taking steps to build a competitive manufacturing sector in South Africa, with a strong growth and employment capacity.

Government’s Industrial Policy Action Plan will give a major boost to a number of industries, with the aim to make them more competitive and create jobs.Through the Industrial Policy Action Plan (IPAP) 2013/2014, government is seeking to boost and diversify the manufacturing sector.

Unveiled by Trade and Industry Minister Rob Davies in April, the plan outlines specific actions and time lines for stimulating various industries and making them internationally competitive.

The plan aims to promote labour-absorbing industrialisation, broaden economic participation and raise South Africa’s competitiveness.

From this year, the Department of Trade and Industry (dti) and other partners will deepen support programmes for industries such as furniture manufacturing, automotive, metals, agro-processing, small-scale farming, clothing, footwear, textiles, crocodile leather, biofuels, crafts, cosmetics, sawmilling, pharmaceuticals, fruit and vegetable canning, forestry and paper.

Minister Davies said that government had also designated certain sectors to boost local content through government procurement. These included railway equipment, transmission lines, uniforms and medicine used in public health institutions.

Minister Davies said that IPAP “is based on the need for sustainable long-term development that is underpinned by higher growth, exports and labour-intensive, value-adding economic activity in the production sectors, led by manufacturing”.

Although the country has experienced growth in recent years, he said, it was still battling high levels of unemployment. “If we want to make a dent on unemployment we need to boost the productive sector of the economy.”

Director-general of the dti Lionel October described IPAP as “a roadmap of industrial development for the other departments that actively partner with the dti in delivering on all areas where there is shared responsibility for important programmes of national government”.

IPAP is aligned to the country’s National Development Plan and forms one of the principal pillars of the National Growth Plan.

The dti will offer incentives, allowances and training to boost and protect specific industries. For example, to increase production and job creation in the automotive sector, the plan provides for car manufacturers to be given incentives including a Production Incentive and an Automotive Investment Allowance.

The allowance provides a return on investment in new plant and machinery. Import duty rates for these were also frozen at 20 per cent and 25 per cent respectively from 1 January 2013.

The aim of IPAP is to reduce South Africa’s over reliance on the services sector and anchor economic development on manufacturing.

Minister Davies said that services jobs are only secure if they are rooted in a strong manufacturing sector.

“Even if we have jobs in the services sector, those jobs are more secure and stronger in quality if they are underpinned by a strong value added manufacturing sector.”

In services, the plan provides for the stimulation of the call centre and film making industries. The plan aims to increase the number of people employed in the business process services from the current level of 14 000 to 40 000 by 2015.

Film-makers and television producers stand to benefit from incentives proposed in the revised Film and Television Sector Strategy and design of Key Action Plans.

Minister Davies said since the launch of the first IPAP in 2010, government had ensured that policy interventions supported deep localisation of procurement to support local industries and job creation.

“These interventions include growing our manufacturing, boosting exports and beefing up our competition policies. We think despite the challenges that we are experiencing in our economy, we can highlight a number of achievements in the implementation of our IPAP in the past few years.”

The Minister said the South African economy had to create new export markets, particularly in Africa, improve innovation and technology and align skills development with its industrial policy.

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