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IPAP is critical to radical economic transformation – Minister Davies


IPAP is critical to radical economic transformation – Minister Davies

IPAP is critical to radical economic transformation – Minister Davies
Photo credit: GCIS

The Minister of Trade and Industry, Dr Rob Davies says the Industrial Policy Action Plan (IPAP) is critical to achieving Radical Economic Transformation. Minister Davies was speaking at the launch of the ninth iteration of IPAP which took place in Sandton yesterday.

IPAP is firmly entrenched in government’s overall policy and plans to address the key challenges of economic and industrial growth and race based poverty, inequality and unemployment. The plan, which is a key component of the Nine Point Plan, aims to develop a more competitive and diversified economy with a higher global share of products.

Emphasising the importance that government attaches to Radical Economic Transformation and inclusive growth for the SA economy, Minister Davies outlined new initiatives that are part of concerted efforts to shift the productive base of the economy in order to create decent and sustainable jobs.

“In the simplest terms, Radical Economic Transformation means putting coherent initiatives together that can begin to shift the productive base of our economy away from the inherited colonial division of labour and create decent sustainable jobs – particularly for the most marginalised and vulnerable groups in our society. It means unequivocal and urgent support for programmes such as the Black Industrialists Programme, which are increasingly being strengthened and deepened, to ensure that ownership, management and control of the economy is increasingly in the hands of black people,” said Minister Davies.

He added unless South Africa secured the necessary steps towards structural change in the economy and secure much higher levels of investment in the productive sectors of the economy, Radical Economic Transformation may become a hollow phrase and a moveable feast for any manner of ill-considered economic recipes.

“Radical Economic Transformation is essential. But it is not about quick fixes and big bangs. It is hard, painstaking work. It needs pragmatism. It requires dialogue. It requires policy certainty and programme alignment. It requires a collaborative effort with the private sector. It needs a willingness to accept trade-offs and sacrifices that can deliver social consent and stability,” said Minister Davies.

He identified Radical Economic Transformation as one of the focus areas and key priorities of IPAP 2017/18-2019/20. This will comprise of upscaled efforts to secure shared and inclusive growth with respect to transformation of ownership and management control; empowerment through decent jobs, especially in labour-intensive sectors.

Minister Davies also stressed the need for a step-change to secure a higher impact, lazer-focussed industrial strategy which can secure much higher levels of investment, especially in manufacturing, to lead the country’s economy out of its current trajectory and to address poverty, unemployment and inequality.

He added that IPAP 2017/18-2019/20 will focus on the following key themes which inform the work both of the Department of Trade and Industry (the dti) and act as a roadmap in general for the industrial effort:

  • Growing the economy by working closely with the private sector to secure and support investment in a modernised and competitive manufacturing and export sector.

  • Strengthening efforts to raise aggregate domestic demand, mainly through localisation of public procurement and intensified efforts to persuade the private sector to support localisation and local supplier development.  

  • Stepping up South Africa’s export effort, with a focus on key existing exporters, emerging export-ready firms and strong support for new black industrial entrepreneurs.

  • Strengthening ongoing efforts to build a less concentrated, more competitive economic and manufacturing structure in which barriers to entry for new entrants are lowered.  

  • Pressing ahead with technology-intensive, value-adding beneficiation projects which fully leverage SA’s comparative resource endowment advantage into a global competitive advantage.  

  • Optimising technology transfer and diffusion and a greater effort, working closely with the Department of Science and Technology to commercialise ‘home-grown’ R&D in key sectors.     

  • Supporting the further strengthening of energy-efficient production and carbon mitigation efforts and measures in a manner that allows for sustainable adaptation by all the energy-intensive sectors of the economy.  

  • Ensuring that the foreseeable effects of the Fourth Industrial Revolution and emergent disruptive technologies are understood, and adapt SA’s productive and services sectors to meet the challenges, including those relating to employment displacement.

Download the Industrial Policy Action Plan (IPAP) 2017/18-2019/20:

pdf IPAP 2017-2020 Part 1 (1.49 MB) A Brief Overview (1.49 MB)

pdf IPAP 2017-2020 Part 2 (4.43 MB) pdf (4.43 MB) The Engine Room of Change (4.43 MB)

Selected IPAP Achievement Highlights For 2016/17

  • Localisation

  • Instruction notes for the designation of products were issued for products such as steel products, rail signalling equipment and transformers and associated equipment. 

    • Steel industry – primary steel was undeemed in order to be sourced locally going forward.

    • Local production of buses – MyCiTi bus service will be extended with 10 new electric buses which will be assembled in Cape Town.

      • SA’s efforts to up-scale our industrial capacities and capabilities in the manufacture of rail transport and components were boosted by the launch of several new facilities:

      • Bombardier Transportation Propulsion and Control facility launched in Elandsfontein with 100 people employed

      • AVK Valves, in partnership with Premier Valves, launched a R200m new plant in Benoni

      • MTU South Africa unveiled its newly-upgraded workshop facility to assemble the diesel engines for the 232 diesel locomotives for China North Rail

      • The Department of Science and Technology (DST) has provided funding to the value of R9 million for the Bombardier locomotive building project

  • Automotive sector investments

  • Through the APDP incentive, R7.8 billion has been disbursed which unlocked R28.5 billion in private investments. For example:

    • Beijing Automobile International Corporation (R11 billion)

    • Toyota SA (R6.1 billion)

    • Ford SA (R11.5 million)

    • Volkswagen SA (R120 million)

    • Mercedes-Benz and Government (R130 million)

These investments are expected to create approximately 4 720 direct jobs 

  • Agro-processing

    • Close to R15 billion private sector investment leveraged through projects by Nestle, AB Inbev, GWK Farm Foods and Citrus and Deciduous Fruit industries

    • R100 million tomato processing Dursots-All Joy plant launched in Tzaneen, to employ 300 people

    • Two Agri-parks are operating while 6 are under construction; Clover, Tiger Brands, McCain and Distell have initiatives to improve market access for small farm

  • Clothing, textiles, leather and footwear sector

    • Since inception of the Clothing and Textile Competitiveness Programme, which is a partnership between the dti and IDC, the sector has been supported to the value of R4.2 billion in incentives where 70 000 jobs have been saved and 9 550 jobs have been created.

    • the dti approved R824 million to establish one national and four sub-national clusters which resulted in capacity expansions by many manufacturers.

    • 28 new companies established; creation of 2 200  jobs; growth in exports
    • Production of footwear grew by over 2 million pairs in 2016

  • Business Process Services: ongoing effort to build this globally competitive and labour-intensive sector

    • 6 new projects approved, 5-year projected export revenue R4.5 billion. R193.3 million disbursed, 10,466 jobs sustained

    • Call Centres – EXL call centre in Cape Town plans to create  6,000 jobs

    • SA secured 2 projects to provide tutor services to learners in Asia via online platform, 688 jobs created

    • Since inception of the Monyetla Work Readiness Programme, has seen provision of training opportunities to over 16,000 unemployed youth, with the placement rate well over 70%

  • Ocean economy: Ship and boat building

    • Two domestic companies, Southern African Shipyards and Damen Shipyards are preferred bidders to supply vessels to the Navy as part of Project Biro and Hotel.

    • A R290 million new Durban floating dock was launched on the back of support by the dti to the value of R160 million.

  • Electro-Technical

    • Government incentives and tariff reviews contributed to enhancing South Africa’s Value Proposition as an investment destination

    • OEM investments by Hisense, Defy and Samsung in the television and White Goods sub-sector

    • Zero Medical SURE – a new off-grid vaccine refrigerator technology – launched

    • Yangtze Optics Africa Company (YOAC) – R150m Optic fibre plant at Dube Trade Port

    • Designation of two-way radio terminals and associated equipment

  • Green industry investments

    • The Renewable Energy Independent Power Producers Programme (REIPPPP) attracted total investments to the value of R194 billion, it generated R256 million in socio-economic development contributions and R80 million in enterprise development contributions.

    • All projects from the first two bid windows under REIPPPP are now operational and a total of 2 738 megawatt of electricity generation capacity from 51 Independent Power Producer projects have been connected to the national grid.

    • Supply side measures include:

      • The National Cleaner Production Centre (NCPC), working with Unido, assisted 160 companies

      • R1.7 billion saved in energy costs, 1,744 jobs created/preserved

  • Fuel cells

    • As part of its hydrogen fuel strategy, Implats will build two fuel cell plants

    • In collaboration with Hydrogen South Africa Infrastructure, Anglo Platinum is developing fuel cell-powered mining equipment for its own operations.

    • Isondo Fuel Cell plant launched in Cape Town

  • Technology Localisation Programme

    • Since 2013, the Technology Innovation Agency (TIA) has disbursed more than R1 billion in funding for various technology development projects.

    • Approximately 70 technologies funded by TIA have reached demonstration stage, and 23 technologies were commersialised.

  • InvestSA

    • Government has established a national investment One Stop Shop and will open provincial centres in KZN, GP and WC; thus securing a streamlined, inter-departmental ‘clearing house’ system

    • InvestSA, was awarded the Global Investment Promotion Agency (IPA) Award for excellence

    • In 2016, South Africa FDI inflows increased at 38% year-on-year

    • Investments by Nestle, Beijing Automotive International Corporation, ACWA Power, Ford, Toyota, Sumitomo Rubber, Cipla, Johnson & Johnson, 3M, amongst others, have reaffirmed South Africa as a regional manufacturing hub

  • Selected dti incentive schemes

    • 27 projects were approved under the Black Industrialist Scheme, to the value of R577 million, with a projected investment of R2.5 billion and the creation of a further 5 235 direct jobs and 1 228 indirect jobs.

    • Under the Manufacturing Competitiveness Enhancement Programme, 270 projects were supported, supporting R3.3 billion in investments which sustained 62 235 jobs.

  • Export support

    • During the previous 2 years a total of 1 473 companies benefitted from the advanced Global Exporter Passport Programme

    • A support package of R90 million under the export assistance scheme resulted in export sales of R4 billion


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