Discussions
The change in sectoral clusters in the Industrial Policy Action Plan (IPAP) 2013/2014 – 2015/2016
Willemien Viljoen, tralac Researcher, discusses the change in sectoral clusters in South Africa’s Industrial Policy Action Plan (IPAP) 2013/2014 – 2015/2016
On 4 April 2013 the South African Minister of Trade and Industry, Dr Rob Davies launched South Africa’s Industrial Policy Action Plan (IPAP) for the years 2013/2014 – 2015/2016, being the fifth iteration of the IPAP2. According to the Minister the overriding goal of the IPAP, given the linkages between the Industrial Policy Action Plan and the National Development Plan (NDP), the New Growth Path (NGP) and the National Industrial Policy Framework (NIPF), ‘is to prevent industrial decline and support the growth and diversification of South Africa’s manufacturing sector.’
The IPAP 2013/2014 – 2015/2016 consists of the following two main sections:
-
The major achievements of the previous IPAP; and
-
The areas of intervention on key action programmes which consist of IPAP transversal interventions, IPAP sectoral interventions 1 (scale up and broaden interventions in sectors which have been supported since 2007), IPAP sectoral interventions 2 (qualitatively new areas of interventions) and IPAP sectoral interventions 3 (sectors requiring the development of long term advanced capabilities).
According to the IPAP some of the key action programmes have been successful in achieving significant results in a number of the sectors identified for intervention. The Clothing and Textiles Competitiveness Programme (CTCP) has contributed to the stabilisation of production and employment in the clothing and textiles industry, with a significant decrease in the number of job losses in the sector; the Agro-Competitiveness Investment Fund has contributed to a substantial increase in investment and employment creation in agro-processing; while the Industrial Development Corporation (IDC) has approved funding for two manufacturers of solar water heaters with further investments to follow in the domestic production of wind and solar energy.
A slight adjustment has been made to the composition of some of the sectoral clusters identified for policy intervention in the latest IPAP document. However, Cluster 3, those sectors requiring the development of long term capabilities are the same as in the IPAP 2012/2013 – 2014/2015, namely nuclear, advanced materials (including titanium and nanotechnology), aerospace and defence and electro-technical and software.
Although green- and energy-saving industries, upstream oil and gas services and equipment and boatbuilding are still included in Cluster 2, downstream mineral beneficiation has now also been identified as a new area of intervention under this cluster. However, previously this sector was included under Cluster 1 as a sector already supported by Industrial Policy intervention.
The goal of downstream mineral beneficiation is to improve upstream and downstream beneficiation by removing structural weaknesses in the certain mineral value-chains. In order to address these weaknesses a research project has been launched to improve backward and forward beneficiation in key value-chains in ferrous metals, the platinum group of metals, titanium and pigments, polymers and mining inputs. The two key action programmes identified under downstream mineral beneficiation are the Mineral Value-Chain Strategy (MVS) and the Iron and Steel Value Chain. The primary goal of the MVS is to develop strategies to develop the backward and forward linkages and address infrastructure constraints in the mineral industries. It is hoped that the research project will provide options to increase local content and value-addition in the South African minerals sector to enhance job creation in the manufacturing industries. The action programme in the Iron and Steel Value Chain include the utilisation of a set of inter-related policy instruments to ensure the long term sustainability of the iron ore and steel value chain to increase value addition to enhance the competitiveness of the South African industry, amendments to the Competition Act to improve price monitoring, regulation and enhanced action against collusion and other anti-competitive practices in the sector and the introduction of a price preference system to increase export controls and preserve the supply of scrap metal to domestic mills.
Cluster 1, the sectors which have been supported in the past, requiring only scaled up and broader interventions, still include clothing, textiles, footwear and leather; the automotive industry; plastics and pharmaceuticals; biofuels; forestry, timber, paper, pulp and furniture; business process services and creative industries. However, two sectors, agro-processing and metal fabrication, capital and rail transport equipment, have now moved from being new focus areas under Cluster 2 to being sectors requiring broader interventions under Cluster 1.
The metal fabrication, capital and rail transport equipment cluster consist of the following sectors: primary iron and steel, primary non-ferrous metals (including aluminium and copper), metal products, capital equipment and machinery, rail transport equipment, jewellery and engineering and allied services. To provide on-going support to this sector the key action programme, leveraging government capital and operational expenditure programmes for the sector, has been added to the already existent programmes of the National Tooling Initiative (NTI) and the National Foundry Technology Network.
There has been quite a significant change in the programmes under agro-processing as a means to provide on-going and broader intervention to the sector. Previous key action programmes that are still applicable under the latest IPAP are the development of a food processing strategy and action plan, the development of a soybean strategy action plan, the development of the organic food sector, the development of the small-scale milling industry and the enhancement of the competitiveness of the domestic fruit and vegetable canning industry. There are also three programmes from the previous IPAP that were not included in the latest IPAP, these are the implementation of the water efficiency programme for the sugar sector, the promotion of Rooibos and Honeybush exports and the development of a strategy and action plan for the beverage industry. Although aquaculture was included under agro-processing in the IPAP 2012/2013 – 2014/2015, this sector has now been included as a separate and independent sector for on-going and increased intervention. The only new programme which has been included in agro-processing is that of supporting the public-private partnership for food security. The primary goal of this programme is to increase the participation of smallholder farmers in the formal agro-processing sector by giving these farmers access to the retail sector, government procurement and small-scale processing opportunities.
Source:
IPAP 2013/2014 – 2015/2016. Available at: http://www.tralac.org/images/Resources/South%20Africa/IPAP%202013-2016.pdf