The latest version of the state’s Industrial Policy Action Plan will see the Industrial Development Corporation (IDC) investing R102-billion in targeted South African manufacturing sectors over the next five years, says Trade and Industry Minister Rob Davies.
“Our experience in the implementation of the plan demonstrates that industrial policy works, provided it is well designed, adequately resourced and informed by robust and constructive stakeholder dialogue and partnerships – this has been demonstrated in a number of sectors,” Davies told reporters at the launch of the 2012/13 version of the plan in Pretoria on Monday.
Positive state intervention
The Industrial Policy Action Plan (IPAP), introduced five years ago, has been hailed as a robust formula that allows for positive state intervention to assist industrial development in volatile global markets.
Under the plan, the IDC has provided funding amounting to more than R12-billion to manufacturing ventures in the “green” sector as well as the automotive, agro-processing, textiles and other priority industries since 2010.
Davies accepted that the plan had been carried out in the face of severe global and domestic economic difficulties. The slowdown in the global economy had led to a drop in export demand from two of South Africa’s traditional markets – Europe and the United States.
Despite this, the latest version envisaged new gains as the economy was starting to stabilise in some sectors, Davies said.
Automotive sector leads the way
Over the last year, the automotive sector had emerged as one of South Africa’s strongest manufacturing industries, committing more than R15-billion in recent investments in the country from both assemblers and component suppliers.
This has been accompanied by large increases in vehicle assembly volumes, with recent investment interests including a US$100-million joint trucks and car assembly facility.
Davies said the implementation of successive versions of the IPAP had resulted in significant achievements and ongoing scaling up of interventions to retain, grow and diversify South Africa’s industrial base.
A major achievement has been the conclusion of work to amend regulations of the Preferential Procurement Policy Framework Act to enable the Department of Trade and Industry (DTI) to designate industries for local procurement, including procurement by state-owned enterprises.
The first batch of sectors designated in 2011 included buses, rail, textile, food industries, and television set-top boxes for conversion of digital broadcast signals.
“So while the road ahead may be a difficult one, a strong foundation has been laid,” Davies said.
“This makes it possible to arrest the threat of de-industrialisation and grow value addition and jobs in the manufacturing sectors of the economy, thereby underpinning economic growth and employment creation in the rest of the economy.”