As the annual meeting of the World Economic Forum in Davos begins this week, South Africa will present a positive message of robust growth for the country, including details of the nine-point plan for economic recovery first disclosed in the 2015 State of the Nation address.
In February 2015, in his State of the Nation address for the year, President Jacob Zuma unveiled a nine-point plan for economic recovery and growth in South Africa. During the course of the year, progress reports from the various government departments detailing the development of the plan were presented.
Now, these reports will form part of South Africa’s key message to the rest of the world at the World Economic Forum (WEF) in Davos, Switzerland. The annual international gathering is taking place between 20 and 23 January this year. The overriding message that South Africa wants to convey to thousands of business, finance and government leaders from around the world is that the country is open for business for manufacturing, investment and trade.
The theme in Davos this year is “Mastering the Fourth Industrial Revolution”, in an atmosphere of an increasingly challenging global economy.
South Africa is determined to show the world that the country is serious about meeting those challenges, while sustaining a strong economic relationship with the rest of the world.
As a country, it wants to achieve the critical targets set by its National Development Plan (NDP), namely: attaining a real gross domestic product growth of 5%, a crucial reduction of the unemployment rate from 25% to 6%, and the reduction of income inequality. These are all to be achieved by the year 2030.
Resolving the energy challenge
Much has been happening in the energy sector. In December 2015, the Department of Energy published a determination on the nuclear programme, whereby 9 600 megawatts (MW) should be generated from nuclear energy.
The Medupi Power Station Unit 6 went online in August 2015, producing an additional 794MW to the total installed grid capacity of 45 000MW.
The R2-billion Coega Wind Farm project was officially opened in September 2015.
Eskom has signed short-term power purchase agreements to secure additional electricity during peak periods, while a further 800MW will be added to the grid through co-generation.
Energy-efficiency programmes have resulted in savings of 450MW.
Various renewable energy projects under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) currently supply 1 800MW to the grid.
In October 2015, the minister of energy announced the 10 preferred bidders in the small projects REIPPPP.
The department’s State of Renewable Energy in South Africa report revealed that the renewables sector had attracted R192.6-billion in investment, had contributed more than 109 000 construction jobs and had cut the equivalent of 4.4 million tons of carbon dioxide.
Revitalising agriculture and the agro-processing value chain
Similarly, work has been ongoing in agriculture, with 43 agri-park sites identified by August and one agri-park already launched in North West. The programme aims to create 300 000 new small-scale producers and 145 000 new agro-processing jobs by 2020.
The number of jobs in agriculture increased by 183 000 between 2014 and 2015, reaching a total of 891 000.
Through the Agricultural Policy Action Plan, 24 162 hectares and the commodities on these were acquired, which were allocated to smallholder farmers.
Fruit production for the year to date increased by R685-million, adding 1 868 jobs.
Aquaculture growth over the last five years resulted in production increasing fivefold, to 20 000 tons. Growth between 2013 and 2014 was 25%, exceeding the average global growth rate of 7%, and contributing almost R3-billion to the national economy.
Advancing beneficiation or adding value to our mineral wealth
Regarding mining, draft amendments to South Africa’s Mineral and Petroleum Resources Development Act which would give provisions to stimulate local beneficiation, are currently with Parliament for consideration.
The Department of Trade and Industry (DTI) is developing a Mineral Beneficiation Action Plan, which will be incorporated into the general national Industrial Action Policy Plan (Ipap).
In addition, the country’s rich platinum deposits are being used in the development of hydrogen fuel cells.
More effective implementation of a higher impact Ipap
The seventh iteration of Ipap, which is aimed at raising the impact of government interventions to support industrial development and re-industrialise the country, was launched in May 2015.
The DTI has designated 16 sectors, subsectors and products for local procurement, including transformers, power-line hardware and structures, steel conveyance pipes, mining and construction vehicles, and building and construction. In 645 infrastructure projects across the country valued at R3.6-trillion, the state procures these products from local manufacturers.
The Black Industrialist Programme, designed to transform the manufacturing sector and unlock the potential of black entrepreneurs, secured initial funding of R1- billion from the DTI for the 2015 financial year. A further R23-billion from the Industrial Development Corporation (IDC) will be made available for the programme over the next three financial years.
The IDC established a new industries unit earlier in 2015, focused on supporting and funding the entire value chain of emerging innovative sectors.
Rail and ship manufacturing is been revitalised with ships for the South African Navy and locomotives for long-haul rail transport being manufactured in South Africa.
Encouraging private sector investment
A DTI investment clearing house was set up in August 2015 to support local and international investment. In addition to identifying process bottlenecks, removing administrative barriers and reducing regulatory inefficiencies, the function of the clearing house is also to set up norms and standards and improve turnaround times, as well as to co-ordinate and fast-track investment enquiries.
In the past financial year, the DTI helped to facilitate an investment pipeline of more than R43-billion.
As of August 2015, South Africa was handling 116 foreign direct investment (FDI) projects. South Africa registered an FDI inflow of R43.3-billion from January to July 2015, creating 5 037 jobs.
Six industrial development zones around the country attracted R10-billion in investment during 2015.
Regulations for special economic zones (SEZs) are being finalised. With an SEZ board and supporting secretariat being established and approved, the DTI is close to completing the feasibility studies for eight new SEZs.
The Promotion and Protection of Investment Bill that clarifies investor protection and ensures more open foreign investment was tabled in Parliament in 2015.
A feasibility study for an initiative aimed at supporting increased investment to meet the needs of the National Development Plan is currently in process.
Moderating workplace conflict
Under the leadership of Deputy President Cyril Ramaphosa, a continuous and special dialogue between business and labour is under way to improve labour relations. Specialist research and exploration teams are currently working on the nature of labour disputes and on finding solutions to the issue of wage inequality.
A consensus on a working definition of a national minimum wage has been reached at the National Economic Development and Labour Council.
Unlocking the potential of SMMEs, co-operatives, and township and rural enterprises
The Department of Small Business Development continues to pilot its informal sector support policy, including the provision of business training, grants and co- funding. The department’s partnership with municipalities is continuing to revamp factory and business premises infrastructure.
The Department of Planning, Monitoring and Evaluation has set up a unit to investigate late or non-payment of suppliers. And Minister Jeff Radebe, the minister in The Presidency responsible for planning, monitoring and evaluation, presented a comparative analysis of national departments between 2013 and 2014 that showed – despite delays in payment remaining a major problem – that there had been improvement in the average number of invoices paid within 30 days.
Provincial departments for the same period also revealed an improvement of 5% in the average number of invoices paid within 30 days.
State reform and boosting the role of state-owned companies; ICT infrastructure or broadband roll-out; water, sanitation; and transport infrastructure
In addition, work has been ongoing in getting the country connected. The government rolled out 41 351 kilometres of fibre optic cables for broadband coverage during January to August 2015.
Telkom has a whole sale division, Openserve, that is aimed at facilitating the entry of new internet service providers, particularly black-owned companies.
In line with stipulations by the Independent Communications Authority of South Africa’s universal service obligations, 623 schools around the country have been connected to the internet.
The Universal Service and Access Agency of South Africa connectivity project is currently under way in the Vhembe and Gert Sibande districts.
In October 2015, the Department of Water and Sanitation, together with Umgeni Water and the Ugu District Municipality, announced the completion of the Mhlabatshane Dam in Umzumbe in KwaZulu-Natal. It will provide about 100 000 people with potable water.
Water was supplied to 19 119 households in the 27 priority district municipalities.
In addition, 11 waste water treatment works have been refurbished.
More than 75 projects involving the maintenance and upgrading of existing water infrastructure are under construction.
The government is intervening to stop water leaks, which cost the country R7- billion a year. The Department of Water and Sanitation is training 15 000 artisans and plumbers to fix water leaks in their communities; the first 3 000 people were recruited during 2015/2016.
Operation Phakisa, aimed at growing the ocean economy and other sectors
Small harbour upgrades are being undertaken in Saldanha Bay, Struisbaai, Gansbaai, Gordon’s Bay and Lamberts Bay, in Western Cape.
In addition, nine catalyst projects are in progress, and 10 fish farms have been supported. The industry has invested R305-million and the government R105-million and 521 new jobs have been created.
Operation Phakisa has also resulted in decisions to expand the domestic shipbuilding sector and the development of Saldanha Bay as an oil and gas hub.
A Mining Phakisa, aimed at replicating the ongoing success of the ocean economy plan in the mineral sector, was launched towards the end of 2015.
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