18 February 2010
Trade and Industry Minister Rob Davies has unveiled South Africa’s new Industrial Policy Action Plan, which will focus on key areas to boost the country’s industrial capacity and create up to 2.4-million jobs by 2020.
Briefing the media in Cape Town this week, Davies said the plan, which comes into effect in April, will focus on strengthening the Industrial Development Corporation (IDC), revising procurement legislation, deploying trade policies more strategically, and targeting anti-competitive practices.
Scaling up existing interventions
The plan will look at scaling up existing interventions that were identified in the first Industrial Policy Action Plan. These sectors included the automotive components sector, downstream mineral beneficiation, pharmaceuticals, tourism, business process services, and the clothing and textiles sector.
Davies said support would be sharpened around the clothing and textiles sector, while the South African Revenue Service would continue to crack down on illegal imports.
The government would move away from the duty credit certificate model, to a system based on credits that can then use the IDC for accessing finance.
Davies said the action plan also aimed to boost sectors such as metals fabrication, capital and transport equipment, “green” and energy-saving industries, and agro-processing linked to food security and contributing to rural development.
It would also look at promoting long-term sectors to develop capabilities such as aerospace, nuclear and advanced materials.
Increasing development finance
Davies said the example of Brazil’s development bank BNDES had shown that capital at the IDC was relatively expensive – at an average of about 8% compared to less than 1% for the Brazilian organisation.
The Brazilian development bank was also recapitalised regularly, while the IDC had last received recapitalisation in the 1950s. The lesson, he said, was that the Brazilian example was able to leverage much more finance.
The Industrial Policy Action Plan would also help the country to leverage more local procurement to raise domestic production by overhauling the Preferential Policy Framework Act and assigning points in the tender process to those firms that procure locally.
Davies said procurement was done on a more ad hoc basis, meaning it was harder to build local production because often goods had to be imported at the last minute. To rectify this, more planning and strategising would go into the procurement of goods, he said.
Through the release of long-term procurement plans, investors would be better informed on what goods were in demand by the government, and this would in turn help promote jobs at home.
Davies said eight to 10 products, such as railway equipment, would be identified to form part of the long-term procurement plan.
Added to this, the Proudly SA campaign would be revived, he said.
The government would also look at cracking down on anti-competitive practices, particularly those that affected labour-absorbing downstream sectors, as well as consumer goods to low-income households.
Davies noted that though the first Industrial Policy Action Plan, released in 2007, had recorded some successes, such as strengthening competition legislation and lowering some tariffs, it had unwittingly fallen short by tackling the easier-to-do things.
The new action plan would be a three-year rolling one and would be updated in 2011.