SA invests R2.3 billion to develop industries

Delivering his State of the Nation Address at the opening of Parliament on Friday, President Thabo Mbeki explained that government – as part of its objective to further accelerate economic growth – will implement the Industrial Policy Action Plan (IPAP).

“In this regard, R2.3 billion has been budgeted for industrial policy initiatives and a further R5 billion in tax incentives over three years will support industrial policy,” said the President.

The Department of Trade and Industry (dti) finalised the IPAP and it was endorsed in July 2007.

The policy focuses on unlocking South African industrial development in a sustainable manner by identifying strategic industrial interventions.

The Action Plan ensures the fast track implementation of development in the four lead sectors of the South African economy namely capital/transport equipment and metals; automotives and components; chemicals, plastic fabrication and pharmaceuticals; and forestry, pulp and paper, and furniture.

Maintaining the momentum of certain sectors identified within the Accelerated and Shared Growth Initiative of South Africa (AsgiSA) such as Business Process Outsourcing and Offshoring (BPO&O), tourism and biofuels is also a component of the IPAP.

AsgiSA aims to achieve 6% annual economic growth by 2010 and halve poverty and unemployment by 2014 in the country.

Mbeki said government will develop as urgently as possible, key action plans in sectors where such plans do not exist, such as mining and minerals beneficiation, consumer durables, retail with a focus on improving support to small enterprises, construction, agriculture and agro-processing.

“I would like to emphasise that we remain determined to support the automotive sector and will therefore ensure that the support given to this sector through the Motor Industry Development Programme is maintained.

“At the macro-economic level, we will continue to maintain a fiscal posture that supports continued economic growth and development and reducing our external vulnerability,” he said.

To speed up the process of building infrastructure in the country, government has planned the finalisation of an integrated infrastructure plan, paying particular attention to energy efficiency in the wake of the electricity shortage affecting the country at the moment.

South Africa has introduced a number of industrial policies since 1994; however, the cabinet adoption of the National Industrial Policy Framework (NIPF) in January 2007 signalled government's renewed commitment to industrialisation.

According to the dti, the major weaknesses identified in South Africa's long-term industrialisation – which the NIPF and IPAP will look to address – is the decline in the share of employment in the country's traditional tradable sectors of mining and agriculture.

The main objective of the NIPF is therefore to facilitate diversification beyond South Africa's current reliance in traditional commodities and non-tradable services.

Article published courtesy of BuaNews