New Page 2
New Page 2

Economic Empowerment
Industrial Development
Trade, Export and Investment
Financial Assistance
Legislation and Business Regulation

Media Statements

Minister Davies Launched the 10th Iteration of the Industrial Policy Action Plan

The Minister of Trade and industry, Dr Rob Davies launched the tenth iteration of the Industrial Policy Action Plan (IPAP) at the Imbizo Media Centre in Parliament.

IPAP 2018/19 is the tenth (10th) iteration of a rolling annual action plan aligned to successive three year cycles of government planning.

Key achievement / highlights

Automotives: Exports have doubled over the period; and the industry has seen R45 bn worth of investment flowing in from some of the world’s leading global vehicle manufacturers – for example, Mercedes Benz, Toyota, VW, BMW, Ford, BAIC, BAW, Isuzu and others.

As part of the ongoing effort to sustain SA’s competitive capabilities in this sector the dti has developed an Automotive Masterplan 2020, working together with the automotive companies, component suppliers and labour.

The aim is to ensure that SA retains and grows its automotive sector, is able to continue to compete with other national jurisdictions for production platforms, and that it grows its exports and secures higher levels of localisation and empowerment. In consultation with the NT the final work is being done on the plan and once it has been adopted by Cabinet it will be announced in the near future.

Clothing, textiles, leather and footwear: This sector has been under intense pressure for over 20 years.

But government responded robustly; and over the past decade the sector has been saved from extinction and, indeed, substantially stabilised. Through the conditional support measures offered under the Clothing and Textile Competitiveness Programme, the Clothing Textile Leather and Footwear (CTLF) sector currently employs around 95,000 workers, contributing 8% to manufacturing GDP and 2.9% to overall GDP.  In the leather sector 22 new factories have been opened, supporting 2,200 jobs.

the dti has recently launched a wide-ranging collaborative study with all the relevant sectoral players in the textiles, clothing, leather and footwear and retail value chain. This will in the course of 2018 result in the adoption of a CTFL Masterplan to deal with new and rising threats to the domestic industry, raise competitiveness, deepen localisation and support job creation across the entire retail value chain. This study is now very close to completion.

Agro-processing: Since 2009, the dti has supported agro-processing industries to the tune of R1.2 billion through various incentive schemes. The sector also benefitted from total investments of around R7 billion, both by multinationals and local players. The next step – as a direct response to the 9-Point Plan – was taken in 2017, with the launch of R1 billion Agro-Processing Support Scheme (APSS), aimed at further ramping up investment and value-addition across the sector.

Metal fabrication, capital & rail transport equipment: The National Foundry Technology Network (NFTN) umbrella, a total of 44 foundries have so far been assisted through the Competitive Improvement Initiatives (CII) Programme, with interventions ranging from baseline assessments to technology-transfer, lean manufacturing and energy management. 32 foundries were also assisted with technical and regulatory support interventions.

The other major area of IPAP intervention in the sector has been the leveraging of procurement for both freight and passenger rolling stock through designation of systems and products under the PPPFA.

On the back of these designations, PRASA issued a tender for the procurement of 3,600 new coaches (600 train-sets) in 2012. The contract is ultimately expected to deliver 5,256 coaches to satisfy existing rail passenger demand on the current network until the year 2020; 456 vehicles to satisfy growth in rail passenger demand to the year 2030 – also on the existing network - and a possible further 1,512 vehicles to satisfy long-term rolling stock needs on new corridors.

In 2013, Transnet Freight Rail issued a tender for the procurement of 1,064 locomotives, with the contract being split in 2014 between four OEMS. The contracts stipulate minimum local production and content thresholds of 55% for diesel locomotives; 60% for electric locomotives; and 65% for passenger coaches.

Over 60 companies in the sector are currently benefiting from the Transnet Flight Rail (TFR) & PRASA contracts, either directly (in the case of OEMs) or indirectly (in the case of Tier-1 suppliers).

The steel industry:
Government’s response was based on its longer-term vision of an optimal 'end state' for steel: a viable, competitive and sustainable industry, balancing support as equitably as possible between the interests of both upstream and downstream players.
The first support measures put in place were 1) increasing the general rate of customs duty on primary steel products to 10%; 2) increasing the tariff on a range of downstream products; and 3) the deployment of various rebates. A Steel Development Fund of R1.5 bn was also established to support key downstream steel sectors and sub-sectors.

On the back of detailed research and collaborative work, South Africa is now well poised to assume a globally competitive role in the hydrogen economy and energy storage space - with a number of key projects already being implemented by government, the IDC and the industry and significant investments in the fuel cell industry already announced or set to go.

Mining capital equipment:  The key stand-out Programme in this sector was to create the conditions for a strong rebound in mining R&D capability.

This resulted in the establishment of the Mandela Mining Precinct, which is a partnership between the Chamber of Mines and government (the DST, the dti and the DPME). Its task is to formally manage the implementation of the South African Mining Extraction Research Development and Innovation Programme (SAMERDI).

The Mandela Mining Precinct has been allocated an operational and capital expenditure budget for the next 3 years until it is self-sustaining, coupled with a significant contribution from industry. The Precinct started operating in May 2016 and the CSIR moved its mining scientists to the facility, along with representatives from the Chamber of Mines, Mining Equipment Manufacturers of South Africa and the dti.

Business Process Services:  Over the 10-Year Report period, South Africa has positioned itself as a leading offshoring destination, expanding into broader BPO services and winning international recognition as a preferred customer service location. The international industry is now complemented by a thriving local market.

Over the period, the domestic market has grown at an average of 10.7% per annum since 2002, while the offshore/International market has grown at 26.7%.

Over the past 5 years, South Africa has received numerous international awards in recognition of its excellence in the BPS field.

The key instrument in leveraging achievements has been the BPS Incentive Programme. This was recently revised to include a condition that binds grant recipients to achieve 80% youth representation in their overall staff complement.

In addition to the BPS incentive, the dti has also partnered with industry, the National Skills Fund and the Jobs Fund to prepare unemployed youth to work in the industry through the Monyetla Work Readiness Programme. This has provided training grants to the industry and helped over 16,000 young people across the country to gain skills through a model which guarantees commitment by the industry to employ learner’s post- training.

Film sector: the dti has been supporting the film sector since 2004 through two complementary programmes - the South African Film and Television Co-Production Incentive and the Foreign Film and Television Post-Production Incentive.

Since 2011/12, the dti has approved 574 productions (113 foreign, 461 local) under the Film Incentive Scheme, with a projected spend of R13 billion and the total value of claims paid by the dti standing at R2.1 billion. 249,641 direct jobs and 22,960 full time equivalent jobs have been created.

In 2014/15, the dti launched the newly-developed R1 million threshold South African Emerging Black Film-Makers Incentive Programme. The objective of the programme is evident from its title - support emerging black filmmakers to nurture and grow their talent from small movies to big productions, thus further contributing to skilled employment creation in the sector.

Green industries:   A major and widely recognised highlight of the Report period was government’s strong move to develop the country’s renewable energy sector.

In 2012, government introduced the Renewable Energy Independent Power Producer Procurement Programme or REIPPPP.  

Commitments by IPPs amounted to R67.1 billion, or 45% of the total project value of R147.6 billion for all the bid windows. Actual local content spending - where construction has already started - amounts to R38.1 billion. There is also an important policy lesson which arises from this process. A failure, until very recently, to sign off on the latest rounds of the REIPP (with the result that demand tailed off significantly) led to the closure of some of the component manufacturing companies which had been set-up on the back of the REIPP programme. This underlines the absolute necessity of policy coherence and continuity in government’s industrial policy across departments.

IPAP2018 focuses on the following 10 key themes which inform the work of the dti and act as a roadmap for the wider industrial effort:

1.    Grow the economy. Working closely with the private sector, government must secure and support investment in a modernised and competitive manufacturing and export sector. Investment must wherever possible focus on the labour-intensive value chains that link the primary and secondary sectors of the economy: agro-processing; clothing, textiles, leather and footwear; component manufacturing for the automotive and metal fabrication industries; and so forth.

Most importantly, ensure that economic and industrial growth and higher levels of investment secure, strengthen and build black management, ownership and control in the economy and that empowerment is enabled and advanced through the creation of decent employment.

2.    Strengthen efforts to raise aggregate domestic demand – mainly through localisation of public procurement and intensified efforts to persuade the private sector to support localisation and local supplier development. Very choppy waters in the global trading regime taken together with over-supply in critical sectors will lead increasingly to aggressive and even cut-throat import penetration of the domestic market. Taken together with illegal imports this represents a significant threat to the domestic economy.

Both the letter and spirit of the BEE codes (to which I will refer in my budget speech tomorrow) do not mean that importers who are black owned should trump locally manufactured goods. As we point out in IPAP 2018 – if a supply chain is not localised there will be no empowerment, no local job creation, no building of local industrial and technology capabilities and so forth.

3.    Step up South Africa’s export effort - with a focus on key existing exporters, emerging export-ready firms and strong support for new black industrial entrepreneurs with a geographic focus on new emerging markets especially on the African continent.

4.    Create and reinforce policy certainty and programme alignment. This requires intensified efforts to secure a streamlined, inter-departmental ‘clearing house’ to steer policy and programme alignment, deal with bottlenecks and ensure that all departments, SOCs and agencies are pulling in the same direction and supporting the industrialisation effort.

5.    Strengthen ongoing efforts to build a less concentrated, more competitive economic and manufacturing environment in which barriers to entry for new entrants are lowered.

6.    Build a stronger system of industrial finance and incentives to support and secure higher levels of private sector investment in the productive sectors of the economy and grow exports. The IPAP Chapter on incentives points to some of the proposals in ongoing work in this regard.

7.    Press ahead with technology-intensive, value-adding beneficiation projects which fully leverage SA’s comparative resource endowment advantage into a global competitive advantage. IPAP 2018 updates this work, with a strong emphasis on the increasingly significant opportunities emerging in fuel-cell manufacture.

8.    Optimise technology transfer and diffusion and, working closely with the Department of Science and Technology, further ramp up the effort to commercialise ‘home-grown’ R&D in key sectors.

9.    Support the further strengthening of energy-efficient production and carbon mitigation efforts and measures in a manner that allows for sustainable adaptation by all the energy-intensive sectors of the economy. This requires careful, intra-governmental collaboration to shift both energy and all other forms of production to a less carbon-intensive and sustainable platform which is globally competitive and does not lead to job losses. It must also allow for systematic retraining and ‘switching’; and it must ensure that agriculture, mining and manufacturing (especially in renewable energy) do not fall behind the sustainable production and technology curve.

10.    Tenth, and finally: Understand, grasp and prepare for the foreseeable effects of the Digital Industrial Revolution and emergent disruptive technologies, collaboratively adapting SA’s productive and services sectors to meet the challenges, including those relating to employment displacement. For example we are currently engaged in an urgent effort to develop an appropriate policy and regulatory framework for e-commerce – the rapid of expansion of which presents both important opportunities and potential threats to the domestic economy.

The full IPAP document can be accessed through the link below:

Sidwell Medupe-Departmental Spokesperson
Tel: (012) 394 1650
Mobile: 079 492 1774
Issued by: The Department of Trade and Industry
Follow us on Twitter: @the_dti