Rob Davies the minister of trade and industry of South Africa speaks about the role of the IDC in the country at a presentation in Sandton on Monday. Picture: Timothy Bernard 07.04.2014

Johannesburg - Manufacturing was a key driver that would put the South African economy on a growth path, Trade and Industry Minister Rob Davies said yesterday as he unveiled new policies and programmes to ramp up competition in the production and services sectors.

“We have been supporting industrialisation because it is key to the economy.

“We have learnt from other emerging economies that industrialisation has to involve active participation by the state,” he said.

The sixth iteration of the Industrial Policy Action Plan (Ipap) is part of the long-term vision of the National Development Plan and Davies said it was government policy and not that of the Department of Trade and Industry (dti) alone.

The Ipap that was launched is for 2014/15 to 2016/17.

It is aimed at developing the innovative, competitive, knowledge-based, tech-savvy initiatives that are needed to create a revitalised export sector.

At the same time it advances the capacity to integrate national infrastructure and support the labour-intensive, value-adding sectors that are best placed to stimulate domestic demand and deliver long-term, sustainable growth in employment.

In its 158-page document, the dti says the programmes set out in Ipap 2014 reflect a continuing process of response and readjustment to the shifting demands and opportunities that must be confronted.

There is a much closer alignment of Ipap priorities, with the National Infrastructure Plan being implemented under the guidance of the Presidential Infrastructure Co-ordinating Committee (Picc).

“Successive iterations of Ipap have consistently sought to articulate a deeper, more comprehensive and integrated set of solutions to the major fault-lines of South Africa’s economic structure, an orientation that necessarily implies a fundamental shift of policy emphasis in favour of the productive sectors of the economy,” says the dti.

It says that in order to deliver on these objectives, the following key areas of intervention will be energetically pursued throughout the 2014 to 2016 period and into the medium- and longer-term future:

- Pursuit of a stronger articulation of macro- and micro-economic policies, greater policy coherence and better implementation;

- Stronger alignment of industrial policies and programmes with investment and export-promoting programmes such as the National Exporter Development Programme, focused on widening and balancing South Africa’s exporter base; and

- Better policy alignment, both in general and in relation to specific sector strategies, focused particularly, but not exclusively, on those sectors in which the domestic economy enjoys global competitive advantages.

The dti says that while the commodity-heavy bias of South Africa’s exports to China is glaringly apparent, so too is the reverse pattern of import penetration.

“South Africa’s trade deficit with China increased from R36 billion in 2012 to R38bn last year. Over 90 percent of South Africa’s top 10 exports to China were in raw materials, while 100 percent of our top imports from China were manufactured products. In joint consultation, however, both countries have recognised that this is not sustainable,” says the dti.

It says there has been a general increase in gross fixed capital formation by the government and public corporations over the period from 2000 to 2012.

Indications are that public investment has picked up and is set for significant increases, driven by Picc.

The dti says the bulk of fixed investment is by consumption-related sectors, rather than the manufacturing sector. This points to the need to urgently upscale gross fixed capital formation within the manufacturing sector if the country is to make a significant dent in the performance of these sectors. - Business Report