THE sixth iteration of South Africa’s Industrial Policy Action Plan (Ipap) was a “transition” to a “higher impact” scheme that would focus on “smart industrialisation”, Trade and Industry Minister Rob Davies said on Monday.
Unveiling the 2016-17 plan at a low-key event at the Industrial Development Corporation (IDC) in Sandton, Mr Davies said it heralded a “structural shift” away from exporting mining commodities to making value-added products. Further, it would pay greater attention to regional integration of trade.
“This economy needs to undergo a very significant structural change if we are to create jobs,” Mr Davies said. A rapid industrialisation was “critical” to this shift, both in South Africa and on the African continent.
“We need to move up the value chain. We are setting out to achieve a much more ambitious set of industrial policies.”
Among other measures, special economic zones would be set up.
Manufacturing Circle chairman Mike Arnold lauded the Department of Trade and Industry’s co-ordinated approach to support manufacturing in South Africa, including creating better funding mechanisms and incentives. The latter were “timeous”, although industry realised they would “not last forever”.
Local manufacturers had faced “imploding demand” since the start of the global financial crisis in late 2008, Mr Arnold said. Further, high labour costs and margin squeeze had made inputs “unaffordable”.
In addition, Mr Arnold said South Africa’s competitors in the Brics (Brazil, Russia, China and South Africa) bloc often had access to local markets, while still protecting their own industries.
Mr Davies said news of Nigeria’s ascension to being the largest economy in Africa was an opportunity for South African industry. The West African state was keen to revive its automotive industry and South African companies were involved.
Shakeel Meer, divisional executive of corporate strategy at the IDC, said while South Africa was a “developing state”, there was a need to “crowd-in the private sector to achieve industrial policy outcomes”.
The private sector was participating in South Africa’s renewable energy programme, which along with the localisation of content, saw the government spending billions of rand, including on railway infrastructure.
But the Department of Trade and Industry acknowledged in its latest Ipap “there is an urgent need for government to step up its efforts across departments to develop a methodology for establishing more rational and consistent administered prices”. It said this especially related to electricity prices and port charges. The latter had recently risen 9.25% across the board.
A group of Port Elizabeth companies — including metals foundries that serve the automotive, mining and general industries, and also Coca-Cola and poultry firm Crown Chickens — is challenging municipal electricity tariffs in court.
David Mertens, executive director of litigant Autocast, said this month the group did not expect its case to be heard before the end of the year. “Similar cases are being prepared … in other municipalities .”