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New IPAP to push for radical economic transformation: Minister Davies

MAY 8, 2017
New IPAP to push for radical economic transformation: Minister Davies

South Africa’s newly launched Industrial Policy Action Plan (IPAP) is intended to contribute to radical economic transformation, Trade and Industry Minister Rob Davies said on Monday.

“Let me start off by saying without any ambiguity that IPAP is intended to contribute to radical economic transformation. I want to say that at its simplest this means that IPAP must contribute to the achievement of two components simultaneously that being of bringing about radical change in the structure of our economy in particular to contribute to bringing about structural change that reduces our dependence on the industries and sectors that were designed under colonialism,” said Minister Davies.

Speaking at the launch of the ninth iteration of the IPAP, Minister Davies said the current 2017/18 plan like other iterations in the past is not a vision document.

“The main content of the IPAP is not another vision document or another policy document. It is an implementation plan. It is about time bound actions that will have to be conducted by different entities of government to give effect to industrial policy over a time frame,” said Minister Davies at the launch held at the Industrial Development Corporation (IDC).

Among the key themes of the ninth iteration is the focus on contributing to higher levels of inclusive growth, including working with the private sector.

The Minister added that government is working with all stakeholders in the development of a master plan for the motor industry that will support the motor industry after the expiry of the current Automotive Production Development Programme in 2020.

Discussions on this matter were ongoing in order to ensure certainty in the future.

Localisation is also an area that the IPAP zeroes in on.

“We will have to strengthen efforts to raise aggregate domestic demands in particular through our localisation public procurement. Public procurement is one of the key tools of promoting industrial policy,” said the Minister.

In the last few years government has introduced a number of designations whereby organs of state are required to follow practice notes issued by National Treasury which say that certain proportions of all products have to be sourced from local manufacturers. This, said the Minister, is an important tool, adding that there will be further rollout of localisation determination.

“We will this year also reflect on what has worked or not.”

Exports

The document also looks at the importance of South Africa stepping up its export efforts with a focus on key existing exporters and emerging export ready firms.

“We need to step up our export efforts,” said the Minister, adding that government welcomes the African continent’s ambition to industrialise.

“This export effort will support the development of black owned enterprises. We have a number of programmes to draw in black industrialists into exporting.”

Among the other 15 key themes of the IPAP is beneficiation with ongoing efforts to secure technology-intensive, value adding production capabilities to utilise South Africa’s comparative resource endowment advantage.

Industrialisation

The Minister said that if South Africa is going to be able to move progressively towards a future where there will be more opportunity for productive employment for more people, the first thing the country will have to do is to move into more value added activities. This means that the country has to industrialise.

The Minister also spoke of the importance of promoting greater inclusivity into the economy. In addition, the country has to promote more involvement of more South Africans particularly those who were excluded in the past in roles of ownership, leadership and participation in the productive economy.

“As we industrialise its incumbent on us to address the question of actively working to draw more historically disadvantaged people into leadership roles within the manufacturing space.”

He said the dti has started to apply a conditionality for all incentives that it deploys. This is a conditionality that those who benefit from those incentives in line with the requirements of the BEE Act of 2013 that they would be required to contribute a particular level of BEE.

“In particular we have been looking at larger companies working around enterprise and supplier development programmes so that we can bring in more black owned companies into value chains as component manufacturers that could lead to them becoming a more significant larger companies as well.”

Manufacturing as contributor to employment

In addition, government is seeking for the manufacturing sector to be a contributor to employment. The Minister added that while circumstances may not be easy for the sector, government is giving attention to the most labour absorbing parts of manufacturing including agro-processing, the clothing and textile industry, as well as component manufacturing among others.

“I believe that IPAP is a critical and indispensable component of our collective efforts to promote economic development and growth in South Africa and to contribute to the National Development Plan and efforts to promote radical economic transformation,” he said.

Meanwhile, Divisional Executive at the IDC, Shakeel Meer, said the industrial policy is critical for the functioning of the IDC.

“It is also important for local and international investors. There’s an ongoing partnership between the Department of Trade and Industry (dti) and the IDC. Through its policies like the IPAP, the dti sets the context for the IDC to operate,” said Meer.

The development finance institutions, among others, manages some funds of the dti like the Manufacturing Competitiveness Enhancement Programme (MCEP).

SAnews.gov.za