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Industrial Development

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Industrial Development

The National Development Plan (NDP) calls for the development of a more competitive and diversified economy with a higher share of global products and domestic linkages. The NDP also encourages sophistication of South Africa's overall exports which will be a shift from the country's dependence on a commodity-based economy. It also advocates for deepening of the productive base in mining, agriculture, manufacturing and services and strengthening of conditions to support labour-absorbing activities.

The Medium-term Strategic Framework (MTSF) 2014-2019 positions the Industrial Policy Action Plan (IPAP) as one of the key pillars of radical transformation in South Africa, based on inclusive growth in the productive sectors of the economy.

The overriding aim of the IPAP is to achieve higher levels of inclusive sustainable economic growth and radical transformation. IPAP seeks to bring about a structural change in the economy through breaking out of commodity dependence and moving towards a diversified, knowledge economy in which increasing value-addition and export intensity, define South Africa's growth trajectory. Prioritisation of labour intensive sectors with the view to increase job opportunities; increasing their participation in global value chains and broadening economic participation are critical for radical economic transformation.

The IPAP is a product of the Economic Sectors, Employment and Infrastructure Development (ESEID) cluster. The responsibility for its implementation lies with Government as a whole and a wide range of entities, including SOCs.

IPAP 2016/17-2108/19

Key Focal Areas

  • Public procurement- greatly enhanced and enforced compliance with localisation targets set for government departments and SOCs.
  • A strong focus on spill-over and labour-intensive sectors - in particular: agro-processing; the CTLF sector; the component manufacturing and sub-assembly sub-sectors in automotives; rail, light manufacturing and engineering in the metals sector; plastics and associated sub-sectors; electro-technical assembly, sub-assembly and component manufacturing; downstream timber and pulp products, including furniture and boatbuilding.
  • Carefully targeted Industrial financing and incentives - including a) much stronger export credit and export credit insurance support, in combination with a wide range of sector-specific incentives; and b) energetic implementation of the recently launched Black Industrialists Incentive.
  • Leveraging the devaluation of the Rand to make South African manufactured products more globally competitive and create opportunities for the expansion and further development of SA's domestic manufacturing capabilities.
  • Growing exports: there are four main pillars to the IPAP export strategy:
    • Building partnerships with global Original Equipment Manufacturers (OEMs) focused on transferring technologies and growing our exports in OEM value chains; partnering with national export champions to catalyse increased national technology absorption for the development of high value exports.
    • Strengthening existing Industry Associations and Export Councils; including establishing a dedicated new Export Council for Africa.
    • Developing export-orientated production hubs in SEZs and Regional Clusters and fostering industrial decentralisation.
  • Automotives: the dti has established a team of technical experts to develop a post-2020 Automotives Master Plan.

    The mandate of the team is to examine the entire automotive sector and not just the existing Automotive Policy Development Plan (APDP) - which means that it will now include light, medium and heavy vehicles and motorcycles.

    The purpose of this work will be to ensure that in the context of long term policy certainty a post-2020 Master Plan will create a framework to secure even higher levels of investment and production, higher exports, deepening localisation and expanding employment.

  • Gas-based industrialisation: IPAP 2016 introduces a medium term programme to ensure that gas-based industrialisation increasingly develops into one of the spines of our industrial strategy - leveraging natural gas as both a source of power generation and a driver of industrial diversification.
  • Minimising red tape: to open up space for much more streamlined and business-friendly governance processes. These efforts will include:
    • Establishment of an inter-Ministerial Committee (IMC) on Investment to tighten up the intra-governmental coordination required to underpin South Africa's new One-Stop Investment Centres.
    • A rapidly expanding partnership between the CIPC (Companies and Intellectual Property Commission) and all the major banks to provide official company registration facilities within their branches and online.

Overcoming constraints - moving forward

IPAP 2016 will be renewing its efforts to overcome lingering structural obstacles to development and industrialisation, focussing on:

  • Working to stabilise electricity supply constraints, whilst creating an enabling environment for own- and co-generation and fuel cell technology development;
  • Continuing efforts to secure port and rail network reforms in order to overcome inefficiencies and associated high costs and robustly support exports; and
  • Concerted intra-governmental efforts to address deep-seated and serious skills deficits and mismatches that impact on the capacity of the economy to grow faster and diversify more effectively.

  Industrial Policy Action Plan 2016