8 December 2006
South Africa’s Cabinet has given the go-ahead for plans to develop the country’s biofuels and business process outsourcing industries, which will see billions of rands being pumped into these sectors in a bid to accelerate economic growth and create jobs.
Biofuels and business process outsourcing, along with tourism, have been identified as key high-growth potential areas in the government’s Accelerated and Shared Growth Initiative for South Africa (Asgi-SA), which seeks to raise the country’s economic growth rate to 6% and halve poverty and unemployment by 2014.
Business process outsourcing
In a statement issued after its meeting in Pretoria this week, the Cabinet said it had approved a state incentive scheme for business process outsourcing (BPO) – which includes the processing of accounts and claims, as well as front office activities such as call centres.
The scheme, formulated in partnership with the private sector, includes “marketing, easy entry into SA for the expansion of existing BPO operations, skills development, simplifying administrative procedures and other investment incentives.”
According to Business Day, indications are that the state could pump R2-billion into the scheme over the next three years.
Trade and Industry Minister Mandisi Mpahlwa said recently that the government was hoping to get the “buy-in” of state telecoms firm Telkom as it sought to lower the cost of telecommunications in SA – seen as a barrier to the country’s becoming a major international location for the burgeoning international call centre industry.
At the same time, a model of “developmental pricing” in telecommunications, similar to that developed for the electricity market, was being explored which could see a system of favourable pricing for large-scale investments being introduced, Mpahlwa said.
The government believes that business process outsourcing has the potential to create up to 100 000 jobs over the next five years.
The Cabinet has also approved a draft industrial strategy for developing South Africa’s biofuels industry that could see the state and the private sector pumping R6-billion worth of capital investment into the sector.
According to the Cabinet, the industry has the potential to contribute up to 75% of the country’s renewable energy by 2013 “without negatively impacting on food security or requiring excessive support” – in the process creating 55 000 agricultural jobs, contributing to reducing greenhouse gases and promoting a cleaner environment.
This could be achieved, the Cabinet said, “by using excess crop production and expanding production on under-utilised arable land, particularly that of emerging farmers.”
A task team has been set up to conduct further research and consultation on the strategy before bringing the strategy back to the Cabinet in May 2007.
Trade and Industry Deputy Director-General Lionel October, speaking to journalists after Wednesday’s Cabinet meeting, said the Department of Trade and Industry’s broad industrial strategy framework had also been approved in principle.
In terms of this strategy, the department had been tasked with doing further work on potential high-growth sectors in SA – including forestry, aerospace, capital goods and advanced manufacturing – before reporting back to the Cabinet in January.