Background
When the IPAP2 2010/11 - 2012/13 was launched in March 2010, government stated that it represented a quantum leap forward in efforts to help build South Africa’s industrial base in critical sectors of production and value-added manufacturing and would contribute to the reduction of chronic unemployment. IPAP2 was characterised as a three year rolling industrial development road-map which was the product of the Economic Cluster of Ministers and Departments. Both in terms of the breadth of the interventions outlined and the requirement of intergovernmental coordination and multi-stakeholder involvement, IPAP 2 was a first of its kind in South Africa.
Progress highlights
At the time of the launch of the revised IPAP2 for 2011/12 – 2013/14 we can also reflect significant progress highlights in implementation since April 2010. These highlights, spelt out in greater detail in the document itself, include the following:
Cabinet approval of the amendments to the regulations of the Preferential Procurement Policy Framework Act (PPPFA) that will provide a significant boost to governments’ procurement policy. The amendments fast track governments’ localisation and employment creation drive and allow for the designation of sectors for local production and alignment with B-BBEE codes.
Proof of the efficacy of this type of policy instrument is illustrated in the recent R4.2 billion anti-retroviral (ARV) government tender, 72% by value of which went to SA manufacturers with significant price reductions relative to the 2008 ARV tender. The first phase of mobilisation within State Owned Enterprises (SOEs) to introduce localisation and supplier development into their approach to procurement has resulted in the introduction of new policies, processes, systems and capacity building to embed supplier procurement leverage more systematically.
A DTI study into a more strategic evolution of the National Industrial Participation Policy (NIPP) is ongoing. Monitoring and evaluation of the NIPP demonstrates that more than 220 projects have been implemented with a cumulative estimated 25 000 direct jobs and 85, 000 total jobs, since its inception in 1997.
The IDCs industrial financing commitment of R66 billion over the next five years is geared towards relatively more labour intensive sectors identified by the New Growth Path (NGP) and IPAP2 and ensures that effective concessional financing measures are in place pending further policy interventions to secure long term concessional industrial financing.
Significant progress with respect to competition policy and developmental trade policies has been registered as set out in the IPAP document. The latter includes the launch of an early warning system to identify technical barriers to SA’s exports and the development by the South African Bureau of Standards (SABS) of a range of enabling standards for various industries and products.
The finalisation of the Automotive Investment Scheme (AIS) has catalysed commitments by the automotive industry to the value of R14 billion which it is conservatively estimated will create a minimum of 12, 000 jobs. In the clothing and textile sector 171 companies benefited from government support under the new Clothing and Textiles Competitive Programme (CTCP) and the Production Incentive (PI) programme. 40,591 jobs were supported or saved and at least 1,111 new jobs were created.
With respect to renewable energy production, saving and local manufacture it is encouraging that the finalisation of a number of critical building and product standards has been completed. A particular highlight is the mandatory installation of Solar Water Heaters (SWH’s) in new buildings. Significant progress has been made with respect to remaining regulatory matters including the renewable energy feed in tariff or REFiT. Progress with respect to leveraging international climate finance to supplement domestic three funding sources for renewable energy production, linked to domestic manufacturing through the South African Renewable Initiative, is also cause for optimism.
In the Business Process Services sector R40 million investment was made and 950 jobs created in the 2010/11 financial year. In addition R42 million new investment commitments were approved linked to 806 jobs. 3,400 young trainees are being trained under the Monyetla II Programme, of which 70% are guaranteed employment by the BPO consortium.
Challenges and constraints
Work to speed up difficult regulatory and operational intra-governmental effort continues to be a priority. External challenges to the IPAP remain a concern. These include: the slow recovery in the global economy and in key traditional export markets, the Rand’s continued appreciation and volatility, the slowdown in public and private fixed investment and the decline in manufacturing employment.
IPAP2 2011/12 - 2013/14
IPAP2 2011/12-2013/14 represents a consolidation and strengthening of plans and programmes outlined in the previous version of the document. Key Action Plans (KAPs) have been upgraded to augment government’s intervention to support industrial development and employment creation. Concrete interventions in two new transversal interventions, namely skills for the economy and innovation and technology, have been added to the four transversal interventions in IPAP2 2010/11-2012/13.
Skills for the economy
A key structural constraint to sustainable industrialisation in South Africa has been the absence of sector-specific skills strategies and programmes aligned with key industrial sector strategies under IPAP. Future close collaboration between the Department of Higher Education and Training and the dti, as reflected in a set of KAP’s in the IPAP 2 document, will seek to build on the existing skills system to strengthen demand-side skills planning and provision for priority sectors.
Innovation
Since the launch of IPAP2 it has become apparent that there is an urgent need for greater emphasis on innovation and the commercialisation of new technologies. South Africa develops intellectual property but this is seldom commercialised. This necessitates amongst others, continued and increasing support for research and development and measures to support the rapid commercialisation of new domestic innovations. It is for this reason that IPAP2 2011 includes new policy interventions and financial instruments to support commercialisation and the application of new product development, processes and prototyping including a ‘window ‘ in the IDC administered, Support Programme for Industrial Innovation (SPII).
Conclusion
I am confident that significant progress has been registered since the publication of IPAP2 in 2010. Plans laid out in the 2011/12 iteration of IPAP2 will deepen and strengthen this work. It is anticipated that these interventions will lead to 43 000 direct jobs and 86 000 indirect jobs over the course of the next financial year.
The implementation of IPAP2 is the subject of regular reports to the Executive and Parliament. In addition we have reported regularly to the leaders of business and labour through NEDLAC. This practice will be continued. Amongst other considerations it is imperative that the difficult process of implementing an industrial policy action plan which cuts across a wide range of departments and requires the ongoing support of business and labour, is owned and supported by all. We cannot consign the responsibility of ensuring that we stem the tide of industrial decline, strengthen our labour intensive and strategically important production and manufacturing sectors and create employment, to any one single entity, authority or sector of society. It is a responsibility which falls to business, labour and government.
Source: Department of Trade and Industry
