Wiseman Khuzwayo
A TOTAL of 3 384 private sector enterprises were provided with incentives and other support in 2014 to the value of R13.6 billion as part of the government’s Industrial Policy Action Plan (Ipap), which is aimed at sustained industrialisation, Trade and Industry Minister Rob Davies said yesterday.
Launching the seventh iteration of the programme, he said the launch coincides with a set of global economic conditions which are complex and volatile, and which could impact on South Africa’s economy and its manufacturing sector, in particular.
Ipap provides the targeted actions and rolling implementation framework for sustained and deepening industrialisation.
Its path is to create jobs through manufacturing in a bid to steer the economy from commodities.
Davies said: “While the fall in the price of oil will certainly benefit South Africa, the fall in price of a range of other commodities will place our mining sector under further stress, with knock-on effects for the manufacturing sector.”
He said the key components of successful industrialisation were the provision of coherent and consistent measures to manufacturing companies that enabled them to develop new capabilities and grew South Africa’s exports, while at the same time setting and securing compliance with a range of conditions designed to achieve increasing levels of competitiveness, especially the ability to compete effectively in export markets.
Ipap targets specific industries for rapid development, particularly labour-intensive value-adding sectors, where South Africa enjoys potentially decisive competitive advantages, notably in mineral resources and agriculture.
The Industrial Development Corporation (IDC) provides funding aimed at increasing industrial capacity.
Over the past six years, it has approved funding of close to R36bn to businesses operating in the Ipap priority sectors.
The largest portion went to the renewable energy sector, where the IDC played a catalytic role in the establishment of the industry through its project development and funding activities.
Local production
The development finance institution also provides funding for manufacturers setting up local production facilities to manufacture components for the renewable energy programme.
The Department of Trade and Industry (DTI) said the National Development Plan sets the overall vision for South Africa’s economy and society on the road to 2030. “It is important to stress that the Ipap is not, as is sometimes incorrectly suggested, an “annual change of industrial policy”.
Framed by the National Industrial Policy Framework, it is, as its name indicates, an annual action plan, which builds on the work defined and initiated in previous iterations.
“It seeks to continuously strengthen industrial policy instruments, built upon previous plans and jettison any programmes which have in practice been found not to work.”
It said it was also important to note the Ipap was not the plan of a single government department. It was a joint venture of economic sectors, including employment infrastructure development, of government.
The DTI said industrial theory, policy and practice was frequently misunderstood and sometimes maligned in South Africa, where it is often negatively and mechanically counter-posed to “market imperatives” and asked to accommodate “one-size-fits-all” policy prescriptions.