South African government outlines bold steps to grow industrial output and support greater economic inclusion
A bold set of actions to grow industrial output and support greater economic inclusion was announced today by Minister of Trade, Industry and Competition, Minister Ebrahim Patel in Parliament, during his Department’s Budget Vote.
It included a timeframe for a draft law to provide for worker participation in company boards, steps to achieve higher levels of local industrialisation, a draft roadmap for producing electric vehicles and working on green hydrogen opportunities, boosting investment levels, and strengthening export platforms through the new Africa-wide trade agreement.
Speaking at a press conference today with Deputy Ministers Nomalungelo Gina and Fikile Majola, Minister Patel unpacked the action plans of the Department for the next 12 months.
Key work that the Department will do are to finalise:
Two new Companies Amendment Bills, dealing with worker representation on corporate boards; and with wage gaps in companies and transparency on disclosure of information;
The development of a roadmap for electric vehicles in South Africa;
A Social and Solidarity Economy policy, which can assist with the rebuilding of the economy in the wake of the number of formal businesses that have been devastated and to support township and rural enterprises;
The development of two new sector growth strategies drawn from the portfolio of work covering among others global business services, film animation, the chemical and plastic sectors, green industry, medical products and capital goods
The establishment of a panel of CEO champions to drive localisation and a fund to appoint technical experts to drive localisation, bringing together industrial engineers, supply-chain managers, experts in dealing with illegal imports, and project managers;
A dtic investment target of R100 billion over the next year, which together with other efforts in the state, can help to achieve the goal for the next Investment Conference;
The appointment of a panel to finalise a report on the practical actions to be taken to realise Green Hydrogen opportunities for SA;
The appointment of an expert panel to review the current BEE Framework in order to address these legitimate public concerns on the extent of transformation and reporting by firms;
Support the competition Market Inquiry into online platforms, like e-commerce market places; and
Further engagements with major trading partners to build export markets and address illegal imports.
Minister Ebrahim Patel outlined a series of key strategies to speed up economic recovery and ‘build back better’ in the wake of the COVID-19 pandemic. In doing so, deeper integration of efforts to galvanise inclusive growth and build local industrial capacity has been identified as key strategic focuses in achieving this.
“We will achieve this by: uniting growth with transformation; boosting local production; growing exports; securing new investment, and expanding the green economy,” said Minister Patel.
He highlighted the importance of building a new model of growth and economic inclusion that unites South Africans in the economy and promotes transformation, including a focus on worker ownership arrangements, particularly those accompanied by mechanisms for worker representation on company boards.
He announced the publication today of a Practice Note under the B-BBEE Act to provide guidance to regulators and clarity in the market on the treatment of broad-based empowerment vehicles, so that worker ownership schemes, community trusts and union investment vehicles are properly recognised for BEE ownership purposes.
Another key component of the department’s strategy for growth in the period ahead centres around localisation.
“South Africa’s import to GDP ratio is too high for an economy that desperately needs more jobs. We import goods worth 25% of our GDP – our propensity to import is out of line with peer countries and developed economies and more can sensibly and sustainably be produced locally. Our economy needs a production boost. Our deeper integration strategy recognises that we must build local industrial capability, both for the domestic and export markets,” Minister Patel said.
“The local industrial effort – what we call localisation for shorthand – must be rooted in building both dynamic firms and an inclusive economy. Competitiveness and industrial agility are critical to longer-run localisation efforts. Sector master plans developed and implemented in partnership with business and unions contain the details of how to do this. We also need practical steps to promote, where sustainable, a greater level of beneficiation of our natural resources here in SA,” he said.
As part of the Budget Vote in Parliament, his department today released a policy statement on Localisation for Jobs and Industrial Growth, outlining the strategy for building local industrial capacity for the domestic market and for export markets.
To support economic growth and industrial development in the face of climate change, Minister Patel noted the importance of expanding efforts to green the economy and position South Africa as a centre for advanced green manufacturing.
“Climate change will impact on industrial development as well as human development and security, in a number of ways: through new opportunities for industrial processes and products, constraints to access to export markets and capital markets; and through disruptions to existing business-models based on carbon-intensive technologies,” said Minister Patel.
“We must step up efforts to build full electric vehicles in SA, to maintain our capacity to export to key markets such as the EU and UK, both of which have set new targets and deadlines to reduce the number of fossil fuel reliant vehicles on their roads,” he said.
Deputy Minister Gina provided details on the department’s work on Furniture, Sugar and R-CTFL Master Plans, Special Economic Zones and Industrial Parks, the District Development Model, Consumer Protection Work and Transformation.
“We are on a path to reconstruct our economy. We might have taken a knock but our economy has proven to be resilient, and this becomes an important aspect to build on. The setback notwithstanding, our head as a country has remained above the parapet. We are calling for the private sector to join hands with government and cooperate in reigniting growth in our economy. South Africa is a country of enormous resilience and we are confident that we will weather the storm.” said Deputy Minister Gina.
Deputy Minister Majola provided details on the department’s work in response to the COVID-19 pandemic, Steel, Poultry and Auto Masterplans, the Black Industrialist programme, Localisation and the implementation of African Continental Free Trade Area.
“The AfCFTA provides opportunities for South Africa/SACU to export to North, West and East Africa. Intra-African trade is largely in value-added manufactured products and over three quarters of intra-African trade takes place within regional trading blocs. South Africa will benefit from the opening of trade in east, west and north Africa as a result of the operationalisation of the AfCFTA.” said Deputy Minister Majola.
Links to speeches tabled today may be found at:
Links to policy papers tabled today may be found at:
pdf Auto Green Paper on the advancement of new energy vehicles in South Africa (649 KB)
pdf Policy statement on Localisation for Jobs and Industrial Growth (421 KB) ; and