Local production of quality capital goods, to overcome the “historic” South African problem of over-reliance on imports during crucial phases of economic growth, is a priority for the government.
Brand South Africa Reporter
Local production of quality capital goods, to overcome the “historic” South African problem of over-reliance on imports during crucial phases of economic growth, is a priority for the government as it moves to ensure continued expansion of the economy, says President Thabo Mbeki.
This, he said, was among a number of initiatives that would be treated as “apex priorities” as the government moves to accelerate service delivery, improve the performance of the economy, reduce poverty, strengthen state capacity and address the challenge of skills.
The establishment of a series of priorities – numbering around 24 – for immediate action by the government followed last week’s mid-year Cabinet meeting.
At a media briefing on Sunday, the President indicated that many of these priorities would involve “customised sector interventions” in various sectors of the economy.
The mission to increase the supply of quality capital goods rather than continue to rely heavily on imports was already under way, through such initiatives as the Department of Public Enterprises’ competitive supplier development programme.
However, further intervention by the state would be required to ensure that such goods are of the requisite quality, which would also boost the export potential of these products, Mbeki said.
The issue of boosting exports to key markets such as China was also discussed by the Cabinet, Mbeki added, as was encouraging Chinese firms to at least match or exceed the levels of investment in China by South African firms.
Another issue up for discussion was that of reducing or eliminating tariffs on imports of goods to which value could be added by South African firms, such as the chemicals, plastics and pharmaceuticals. This would allow the final “upstream” products to be more competitively priced.
There was, however, no one-size-fits-all plan in the government’s industrial policy, but rather a focus on micro-level interventions in areas of the economy that were either stagnating or had the potential for much faster growth.
One important sector, with the potential to create far more jobs than it was currently, was South Africa’s large agricultural sector, Mbeki said, adding that the government was examining ways of boosting agricultural exports.
For the telecommunications and information technology sector – another key sector that includes business process outsourcing and offshoring – the government would be moving to reduce the costs of communications.
One way of achieving this would be via the soon-to-be established state-owned enterprise Infraco, which will boost the availability of broadband supply between key economic centres, Mbeki said.
State signal provider Sentech would continue to focus on providing wireless services, and both Sentech and Infraco would boost the potential for the country’s universities to be linked up with hospitals, allow for better sharing of skills and knowledge.
Linked to this, Mbeki said, was the question of further broadband supply from the laying of submarine fibreoptic cables.
One such cable was already planned for the east coast of Africa, while the government is currently considering laying down another cable on the west side of the country.
The question remained, Mbeki said, whether such a cable – which would boost South Africa’s broadband capacity way beyond that provided by Telkom’s Sat-3 cable on the west coast – would best be “landed” at data routing hubs in the United Kingdom or in Brazil.
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