SA ‘making gains in industrial funding’

9 October 2013

The Industrial Development Corporation (IDC) made record high industrial funding disbursements in 2012/13, saving around 4 000 jobs while creating over 18 000 new ones, Economic Development Minister Ebrahim Patel said in Cape Town on Tuesday.

Presenting the Economic Development Department’s annual report to Parliament, Patel said that, despite “difficult global and domestic economic circumstances, government was able to invest strongly in infrastructure, with about R200-billion invested in energy, transport and other key infrastructure.

“The economy created 199 000 new jobs. The GDP reached R3.2-trillion in value. These achievements are significant, when many of our key trading partners were still languishing in recessions or weak economic recoveries.”

Patel highlighted a number of gains made in the past year by public entities reporting to the Economic Development Department.

These included R16-billion worth of disbursements made by the IDC to partner companies in the economy, which were approved and transferred to investor partners. This represented an increase of 87 percent over the previous year.

Small business funding approvals doubled compared the previous year, rising to R432-million, as the Small Enterprise Finance Agency (Sefa) completed its first year of operation and extended its footprint across the country.

Fines and penalties totalling R731-million were imposed by the competition authorities in actions against cartels and price-fixing in the economy. This was not counting the large penalties, finalised after the end of the financial year, that were imposed on the construction industry.

Patel also reported that there had been a sustained increase in the capacity of the state to spend voted and allocated finds for infrastructure development, with around R820-billion having been spent on economic and social infrastructure since 2009.

Successes recorded

Patel said South Africa had recorded a number of successes in its drive to industrialise the economy.

In 2009, he said, all mini-bus taxis and large buses used by the country’s municipalities were imported. “Today, 38 percent of new minibus taxis sold in South Africa are assembled locally, and all new buses used by Joburg and Cape Town’s public transport systems are now being assembled in local factories.

“This is the start of a determined effort in partnership with the private sector to reclaim the domestic market,” he said.

Other efforts include the opening of a new television and fridge factory in Atlantis on the West Coast and construction of a soya crushing plant in Standerton in Mpumalanga.

“I am pleased that the IDC co-funded Long Walk to Freedom, the biography of ex-president Nelson Mandela, and in the process helped to ensure a world-class movie was made locally, creating jobs in South Africa.”

The IDC had also invested R3.8-billion in 40 green energy projects, helping to create significant solar and wind energy generating capacity in the country as a contribution to reducing carbon emissions and protecting the environment. This was now Africa’s biggest green energy programme, Patel noted.

Tackling unemployment

Patel acknowledged, however, that South Africa’s overall challenges of unemployment, poverty and inequality remained serious.

“We cannot be complacent in the midst of an unemployment rate that results in a quarter of the labour force being without jobs, yet willing and able to work. Trade unions and businesses must be more focused on creating new jobs. Government must step up actions to increase the labour absorption capacity of the economy.”

Patel said support for African regional development was the key to the long-term growth of South Africa’ smarkets and was one of the best investments that the country’s private and public sectors could undertake.

“We have made solid progress on regional diplomacy and now need to strengthen the hard elements of regional economic integration, including logistics, trade regulations and supply-chain development in and with neighbouring countries.”

This, as well as investment in the country’s infrastructure, education and skills development, and support for small businesses, were key ways in which the government could scale up job creation in South Africa, he said.