Implementation of Government’s1.2 The Cabinet Lekgotla of July 2007 endorsed the Industrial Policy...

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Implementation of Government’sNational Industrial Policy Framework:

Industrial Policy Action PlanAugust 2007

ISBN 1-920106-11-1

Introduction 2

Our Industrial Policy Approach 2

Industrial Policy Action for immediate implemntation 3

Glossary 43

TABLE OF CONTENTS

2Industrial Policy Action Plan

INTRODUCTION1

1.1 South Africa has implemented a number of industrial policy initiatives since 1994. However, it has notuntil now produced a comprehensive statement of government’s approach to industrialisation and industrialpolicy. Cabinet adopted the National Industrial Policy Framework (NIPF) in January 2007. The NIPF setsout government’s broad approach to industrialisation in the context of the Accelerated and Shared GrowthInitiative for South Africa (ASGI-SA) and its targets of halving unemployment and poverty by 2014 throughaccelerated growth of at least 6 per cent from 2010.

1.2 The Cabinet Lekgotla of July 2007 endorsed the Industrial Policy Action Plan (IPAP) that sets out indetail key actions and timeframes for the implementation of our initial round of industrial policy.

1.3 South Africa has achieved stable economic growth since 1994, with acceleration to 5 per-cent in 2005and 2006. The major weakness identified in South Africa’s long term industrialisation process has beenthat the decline in the share of employment in our traditional tradable sectors – notably mining andagriculture – has not been adequately offset by a sufficiently large increase in the share of relativelylabour-intensive employment in non-traditional tradable goods and services – particularly in manufacturing.Therefore the main objectives of the NIPF are:

To facilitate diversification beyond our current reliance on traditional commodities and non-tradable services. This requires the promotion of increased value-addition characterised particularly by movement into non-traditional tradable goods and services that compete in export markets as well as against imports.The long-term intensification of South Africa’s industrialisation process and movement towardsa knowledge economy.The promotion of a more labour-absorbing industrialisation path with a particular emphasis on tradable labour-absorbing goods and services and economic linkages that catalyse employment creation.The promotion of a broader-based industrialisation path characterised by increased participationof historically disadvantaged people and marginalised regions in the mainstream of the industrialeconomy.Contributing to industrial development on the African continent with a strong emphasis on building its productive capabilities.

1.4 South Africa’s key industrialisation challenge is therefore to grow and diversify manufacturing exportsand tradable services (such as Business Process Outsourcing and Offshoring and Tourism). There isalso unexplored high-value potential in agriculture and mining.

1.5 South Africa’s industrialisation process faces a number of constraints that have resulted in low manufacturingprofitability. This in turn has lead to low investment, low output, and poor export and employmentperformance particularly in low-and-medium skill manufacturing industries. These constraints include:

The level and volatility of the exchange rate.Relatively small market size coupled with relatively costly and unreliable infrastructure and high logistics systems, particularly freight and commuter transport.The monopolistic pricing of key intermediate inputs into the manufacturing sector.Challenges with respect to skills development and training.An intensely competitive global environment.Inadequate state support for investment, upgrading, innovation and technology.

1.6 This has resulted in low manufacturing profitability which in turn led to low investment, low output andpoor export and employment performance, particularly in low-and medium-skill industries.

2

2.1 South Africa has a relatively diversified and complex economic base that needs ongoing consolidationand renewal. This implies that government will always have to engage across substantial parts of themanufacturing, services and primary sectors of the economy. Ongoing self-discovery processes with theprivate sector and other stakeholders will assist in identifying opportunities to grow and diversifymanufacturing and services, and associated constraints.

2.2 Three of the four manufacturing and tradable services sectors which government has actively supportedsince 1994 have become leading sectors:The Automotives sector has become our leading manufacturing sector predominantly through the MotorIndustry Development Programme.A range of resource-processing industries including carbon and stainless steel; chemicals and aluminiumsectors have restructured for global competitiveness supported substantially by various tax instrumentsand highly beneficial restructuring arrangements, in addition to prior state support. However, this supportwas insufficiently linked to the pricing behaviour of these industries in the domestic economy.

OUR INDUSTRIAL POLICY APPROACH

The Tourism sector has massively expanded foreign arrivals on the back of major internationalmarketing efforts through institutions such as South Africa Tourism.The Clothing and textiles sector, as in most developed and developing countries, has been under severe strain from intense global competition. The Duty Credit Certificate Scheme hasbeen partially successful but the industry requires a different support environment for long-term sustainability.

2.3 Notwithstanding these important industrial policy successes, the manufacturing sector in particular hasnot reached its full potential. Therefore, government will single out sectors for particular focus, basedon substantial:

growth and employment potential;potential for the diversification and growth of exports; andresearch and self-discovery processes having been completed.

2.4 Once such sectors have been identified, active use of a range of appropriate policy instruments to upscalethese industries to their full potential will be of critical importance, particularly:

Supporting investment to update ageing machinery and equipment stock through appropriatetargeting and scale;Industrial upgrading to deepen manufacturing capabilities;Support for industry and Economic Cluster specific infrastructure; and Addressingmonopoly pricing.

3. INDUSTRIAL POLICY ACTIONS FOR IMMEDIATE IMPLEMENTATION

3.1 The Industrial Policy Action Plan reflects work that has recently been undertaken by the dti and other government departments and is mostly ready for implementation. It has three main components.

3.2 A range of sectoral actions, including:Fast-track implementation of the four lead sectors that have emerged from research and intensive interactions with stakeholders:o Capital/Transport equipment and Metals; o Automotives and Components;

Chemicals, Plastic fabrication and Pharmaceuticals;o Forestry, Pulp and paper, and Furniture.Maintaining momentum on implementation of ASGI-SA sector priorities: Business Process Outsourcing & Offshoring (BPO&O), Tourism and Biofuels,Implementation of other substantive sector projects in: Diamond beneficiation and jewellery;Agro-processing; Film and Crafts.Further strategy work needs to be developed in a range of other sectors including: Mining andmineral beneficiation; Agriculture /Agro-processing; ICT (services and products) and CreativeIndustries and White Goods.

3.3 A set of cross-cutting actions of particular importance for industrial policy.The design and implementation of an Industrial Upgrading Programme to deepen manufacturingcapabilities.A revised suite of Industrial financing instruments to support the industrial policy.Reducing input costs through competition policy and the review of import duties on a range of intermediate inputs into manufacturing.In addition a range of industrial policy related cross-cutting imperatives are being implementedas set out in Government’s Programme of Action.

3.4 Measures to improve government’s organisation and capacity to implement industrial policy.

3.5 SECTOR INTERVENTIONS

3.5.1 Lead SectorsThe following are the four lead sectors that currently form the central focus for the implementation of the NIPF.

Capital/Transport equipment and MetalsThis presents a major opportunity to stimulate manufacturing through reducing import leakage of the publicCapex programme and capitalising on the current mining and mineral-processing boom. It also offers a platformto position these sectors as major future exporters into the rest of the continent and beyond.

Automotive assembly and ComponentsThis is South Africa’s leading manufacturing sector, generating strong backward linkages from other sectors,particularly metals, leather, textiles and plastics. There is a major opportunity to double current vehicle productionto 1.2 million units by 2020 with a corresponding deepening of local content.



Chemicals, Plastic fabrication and PharmaceuticalsMajor opportunities to increase local beneficiation of polymers, particularly for automotive and packagingappl icat ions and leverage state procurement for local product ion of pharmaceut icals exist .

Forestry, Pulp and paper, and FurnitureThe sector has the potential to bring jobs and income to poor rural communities. Increasing plantations in ECand KZN in the next 10 years will contribute to the provinces’ growth and employment and stimulate processingactivities, such as sawmilling and furniture.

Capital / Transport Equipment and Metal FabricationThe South African capital equipment, metal fabrication and transport equipment sectors accounted for 11 percent of manufacturing value added (MVA) and contribute 18 per cent of manufacturing jobs, 216,263 jobs in2005. Additional value addition and jobs are contributed through services associated with a range of capitalgoods sub-sectors. The cluster contributes about 2 per cent to GDP.

These sectors have developed important capabilities based on South Africa’s fairly diversified industrial baseand long history of industrialisation. Technological leadership has been achieved in a range of niche areasrelated to capital equipment for the mining sector, such as valves and pumps. However, in general these sectorshave underperformed for a variety of reasons. These included low levels of expenditure on public infrastructureover the last three decades, uncompetitive pricing of raw material inputs and lower than optimal mining investment.

There is a major opportunity to grow these industries on the back of the public expenditure programme in energyand transport as well as the current mining and mineral processing boom. This requires a coordinated effort tomatch public investment and operational expenditure requirements to the upgrading of domestic suppliers. Asmuch as possible of this opportunity will be leveraged while ensuring without compromising the cost or qualityof public investments. Mining and mineral processing investments and replacement expenditure also representa major opportunity to grow these industries. Here the focus must be on building and strengthening capabilitiesfor technological leadership. The long-term trajectory for these industries is to further strengthen their exportcapabilities on the back of domestic and regional investments.

These sectors face a number of constraints that need to be addressed. Input prices of raw material inputs suchas steel, aluminium and scrap are often far from being suitably competitive. In addition, shortages may beemerging with respects to certain grades of steel. Due to low levels of demand in a number of areas, productioncapabilities have been eroded. Firms therefore need to upgrade aged capital equipment in certain importantsegments. Firms generally need to adopt more efficient production systems. A systematic drive to develop boththe scale and depth of skills across these sectors is required. Important supportive technological infrastructuresuch as tooling and casting facilities are needed. Systems to support longer term product development, innovationand research and development must be strengthened. Stronger coordination is required in order to matchproduction capabil i t ies to major planned investments, part icularly in infrastructure and mining.


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Automotives and ComponentsContributing 7.4 per-cent to GDP during 2005, the automotive industry is South Africa’s leading manufacturingsector and the largest attractor of foreign direct investment in manufacturing.. Annual FDI between 2000 and2005 more than doubled from R1.5 billion to R3.6 billion. The industry directly employed 107,981 people in 2005in vehicle and component manufacturing with further employment stimulated in related manufacturing sectorsas well as in the retail automotive market. Our vision for 2020 is to double production levels to 1.2 million unitswith much stronger development of the local component manufacturing.

Driven by the Motor Industry Development Programme (MIDP), the sector has restructured, rationalised andalmost doubled in growth between 1995 and 2006 from 388,000 to around 580,000 units. It has moved from anegligible competitive position in terms of the global automotive industry in 1995 to a ranking of 19th in the world(0.7 per-cent of global market share) in 2005. Over this period exports grew exponentially from 16,000 to 180,000units.

Due to its synergies with several sectors such as metals, leather, textiles and plastics, the automotive sectorhas a strong linkage effect with the broader manufacturing sector. There has been significant growth in importantcomponent sectors such as leather seat covers, si lencers, exhausts and catalyt ic converters.

While the industry has achieved substantial rationalisation and productivity growth it faces a number of challenges.Higher productivity growth needs to be achieved to match the growth rates of some of our key competitors.There is currently insufficient local content particularly at the component end of the value chain. High levels ofimport penetration imply that the industry needs to shift to greater growth based on both domestic and exportmarkets. While the basic architecture and level of support should continue, adjustments need to be made withrespect to increasing local content, raising levels of productivity and making the programme consistent withinternational trade obligations. All of these factors imply important changes to the nature of a future developmentprogramme for the industry aimed at raising levels of productivity, local content and supply for the domestic,regional and broader export markets. In addition an appropriate Black Economic Empowerment plan for thesector must be developed by the industry.


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Chemicals, Plastic Fabrication and PharmaceuticalsThe South African chemical sector is diverse and complex. On the one hand it comprises a well-developedupstream industry – Basic Chemicals and Other Chemicals – with the former being highly capital intensive. Onthe other is the more labour-intensive downstream Plastics industry. Collectively all three industries combinedcontributed R28 billion or 2.8 per cent of GDP in 2006. Basic and Other Chemicals employ 64,285 people, plasticfab r i ca to rs emp loy 39 ,893 wh i l e t he pha rmaceu t i ca l s i ndus t r y emp loys abou t 10 ,000 .

The chemicals sector is the fourth-largest employer in manufacturing, behind food products, motor vehicles,parts and accessories, and metal products (based on 2005 figures). It invests around R2 billion annually inupgrades, with less than 1 per-cent of sales being spent on R&D. Products of the chemicals and metals sectorsare the basis for almost every manufacturing activity. It is thus a crucial industry from the perspective of SouthA f r i c a ’ s o n g o i n g g r o w t h p a t h f o r a d v a n c i n g s o c i o - e c o n o m i c d e v e l o p m e n t o b j e c t i v e s .

The development of the chemicals sector has two major elements: firstly, to promote beneficiation of mineralsinto primary products for exports and also to provide feedstock into higher value-adding manufacturing activities;and secondly, to promote downstream fabrication of polymers, thereby creating more jobs and adding significantvalue. Primary beneficiation faces constraints such as the risks and coordination problems associated with largecapital-intensive projects. Downstream plastics fabrications requires far more competitive pricing of polymerinputs, skills development, support for firm and industry level technical capabilities such as R&D, tooling andstronger matching of final product demand patterns to intermediate plastic inputs. The pharmaceuticals industryis threatened by high-levels of import penetration. The industry faces coordination and regulatory challengeswith regards to state procurement demand, medicine licensing procedures, and price administration.


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Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Red

uce

the

cost

s of

inpu

tsin

to d

owns

tream

act

iviti

es

Incr

ease

d co

nsum

ptio

n of

poly

prop

ylen

e in

dow

nstr

eam

act

iviti

esw

here

ther

e is

hig

h jo

bcr

eatio

n po

tent

ial

Incr

ease

d flu

oro-

chem

ical

indu

stry

in S

outh

Afri

ca b

ybu

ildin

g a

wor

ld-c

lass

,hi

gh v

alue

add

ed fl

uorin

e-ba

sed

indu

stry

with

asso

ciat

ed d

owns

trea

mfin

e ch

emic

al s

ynth

esis

oper

atio

ns

Incr

ease

d do

mes

ticpr

oduc

tion

thro

ugh

leve

ragi

ng th

e A

RV te

nder

With

ITA

C, i

dent

ifyun

nece

ssar

y im

port

dutie

s an

dre

mov

e th

em

Fina

lise

FRID

GE

stud

y to

iden

tify

prod

ucts

and

mar

ket

oppo

rtun

ities

Com

plet

ion

of E

IA a

ndfe

asib

ility

stu

dy a

ndid

entif

icat

ion

of a

ppro

pria

tela

nd fo

r pro

ject

Task

Tea

m a

lread

y fo

rmul

ated

to lo

ok a

t inc

reas

edlo

calis

atio

n of

AR

V te

nder

ITA

C, P

resi

denc

y, N

T

DST

DM

E, D

ST, I

DC

, NEC

SA

DO

H, P

resi

denc

y, D

ST

Mar

ch 2

008

Febr

uary

200

8

Com

men

ce E

IA a

ndfe

asib

ility

stu

dy in

Aug

ust

2007

Mar

ch 2

008

Rem

oval

of t

he im

port

dut

ies

whe

re it

is n

eces

sary

Bus

ines

s C

ase

to id

entif

ypo

tent

ial i

nves

tmen

t

Envi

ronm

enta

l im

pact

asse

ssm

ent a

nd fe

asib

ility

stud

ies

com

plet

ed

Leve

rage

AR

V te

nder

toex

pand

loca

l cap

abili

ties

Key

act

ions

to b

e le

d by

the

dti


Forestry, Pulp and Paper, and FurnitureThe forestry sector has an annual turnover of R32 billion with a value adding contribution to the South Africaeconomy of some R14 billion in 2006. It is estimated that the sector employs 170,000 This estimate coversplantations, pulp and paper mills, woodchip exports, sawmilling, timberboard, mining timber, treated polesand charcoal people (based on 2003 figures). Because forestry and the primary processing activities take place largelyin rural areas, i t has the potential to increase jobs and income in poor rural communit ies.

The following specific challenges also need to be addressed. Currently, the small players in the forestry valuechain do not participate in value-added activities. If the regional economies are to grow, efforts must be madeto encourage processing and attract investment in the areas closer to plantations. The forestry sector strategyprovides for the afforestation of 100,000 hectare net increase in planted area over the next ten years in theEastern Cape (EC) and 40,000 hectare in KwaZulu Natal (KZN). This represents an investment in forestryin excess of R1,5 billion, with further substantial investments in downstream processing enterprises. It isestimated that the new afforestation has the potential to contribute R215 million to GDP and create 26,000jobs in plantation level and 1,700 at primary processing level in EC; while the areas in KZN will contributeR500 million to GDP and create 15,000 jobs in plantation level and 429 at primary processing level It isrecognised that most of the increase in new plantations in KZN or those areas of EC closer to KZN couldsupply the existing pulp mills in KZN but those in the EC further from KZN should stimulate the developmentof more processing activities in the area..

In order to realise growth in this sector, government has committed itself to expediting the afforestationlicensing process, the confirmation of land rights for land holding communities, technical and financial supportto emerging small growers and improvements to transport infrastructure.

1. This estimate covers plantations, pulp and paper mills, woodchip exports, sawmilling, timberboard, mining timber, treated poles and charcoal

2. It is recognised that most of the increase in new plantations in KZN or those areas of EC closer to KZN could supply the existing pulp millsin KZN but those in the EC further from KZN should stimulate the development of more processing activities in the area.


Fast

-trac

k th

e is

suin

g of

wat

er li

cens

es fo

r pro

duce

rs

Dev

elop

a p

rogr

amm

e fo

rsk

ills tr

ansf

er a

nd to

upg

rade

the

tech

nolo

gica

l equ

ipm

ent

for s

mal

l saw

mille

rs (b

egin

with

a p

ilot p

roje

ct in

Chr

isH

ani D

istri

ct m

unic

ipal

ity)

Expa

nsio

n of

furn

iture

indu

stry

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Impr

oved

and

fast

-trac

ked

proc

edur

es fo

r the

issu

ing

ofth

e lic

ense

s

Impr

oved

cap

acity

of s

mal

lsa

w m

illers

to e

nabl

e gr

eate

rpa

rtici

pate

in th

e va

lue

chai

n

Com

petit

ive fu

rnitu

re in

dust

ryde

velo

ped

in S

outh

Afri

ca

DW

AF to

dev

elop

and

impl

emen

tpr

opos

als

on fa

st-tr

acki

ng w

ater

licen

sing

for p

rodu

cers

with

rele

vant

dep

artm

ents

Map

ping

of g

eogr

aphi

c po

sitio

ns,

skills

and

tech

nolo

gyre

quire

men

ts o

f sm

all m

illers

Secu

re o

f fun

ding

for t

hein

cuba

tor p

roje

ct

the

dti,

Pres

iden

cy, E

C a

ndKZ

N p

rovin

cial g

over

nmen

t, N

T

Pres

iden

cy, E

C p

rovi

ncia

lgo

vern

men

t, N

T

OR

Ntin

ga D

evel

opm

ent

Agen

cy, E

CD

C, E

C p

rovi

ncia

lgo

vern

men

t

Ong

oing

Mar

ch 2

008

Mar

ch 2

008

Agre

emen

ts o

n fa

st-tr

acki

ngw

ater

lice

nsin

g fo

r sm

allh

olde

rfo

rest

ry p

rodu

ctio

n

A co

mpl

eted

feas

ibilit

y st

udy,

busi

ness

and

impl

emen

tatio

npl

an

Esta

blis

hmen

t of a

dditi

onal

furn

iture

incu

bato

r in

EC

Expl

ore

the

pote

ntia

l of f

urni

ture

sect

or o

utsi

de th

e EC

and

KZN

Key

act

ions

to b

e le

d by

the

dti a

nd D

WA

F


3..5.2 MAINTAING MOMETUM ON ASGI-SA SECTOR PRIORITIES

In the context of ASGI-SA priorities, three sectors were identified for immediate and special attention: BusinessProcess Outsourcing and Offshoring (BPO&O); Tourism; and Biofuels. What these industries have in commonis that they are relatively labour-intensive, rapidly growing sectors worldwide, suited to South Africancircumstances, and open to opportunities for Broad-Based Black Economic Empowerment (B-BBEE) andsmall business development.

Business Process Outsourcing and Offshoring (BPO&O)The global BPO&O industry is forecast to grow at 50 per-cent per annum (equivalent to growth of between$90bn and $100bn) over the next 4-5 years. A window of opportunity exists for South Africa to become asignificant global player in the industry through an appropriate value-proposition based on a high-quality yetcost-effective offering. It is estimated that the sector has the potential to contribute up to R7.9bn in grossdomestic product (GDP) by 2009 and create up to 100,000 new jobs in South Africa (25,000 direct and 75,000indirect) by 2014.

To capture this opportunity, South Africa must move quickly to overcome constraints including hightelecommunication costs relative to other BPO destinations, an inadequate skills base, and it must alsoincrease its profile and reputation amongst potential global investors.

What has been achieved?A five-year strategy approved by Cabinet in December 2006, identified the main constraintsto the establishment of a significant BPO&O sector in South Africa as high telecommunicationscosts, the need for skills development, and competition for foreign investment on the basisof initial incentives.In late 2006, Telkom agreed to benchmark its prices against South Africa’s relevant main competitors. The introduction of a developmental telecommunications pricing model, to giveeffect to this commitment, must be finalised urgently.National Treasury has allocated funds for an initial incentive for investors in BPO&O in the2006/7 Medium Term Expenditure Framework (MTEF).The Department of Labour (DoL) has allocated R17.1 million to fund the pilot skills developmentprogramme to be rolled-out in 2007.A national business association, the South African Contact Centre Community (SACCOM),has been established.A Rural Call Centre Support Programme has been developed with partial funding, and 13 sites have been identified.


Key

act

ions

to b

e le

d by

the

dti

Impl

emen

t a d

evel

opm

enta

lte

leco

mm

unic

atio

ns p

ricin

gm

odel

Rol

l-out

of e

xist

ing

ince

ntiv

esc

hem

e

Impl

emen

t the

tale

ntde

velo

pmen

t pro

gram

me:

the

Mon

yetla

Wor

k R

eadi

ness

Prog

ram

me

Stra

tegi

c an

d ta

rget

edm

arke

ting

to e

nsur

e th

eat

tract

ion

of k

ey in

vest

ors

toSo

uth

Afric

a

Form

ulat

e ne

w s

uppo

rtm

easu

res

aim

ed a

t the

deve

lopm

ent o

f SM

Es a

ndco

ntac

t cen

tres

in le

ssde

velo

ped

desi

gnat

ed a

reas

Dev

elop

qua

lity s

tand

ards

for

the

sect

or

Esta

blis

h ca

ll ce

ntre

s in

desi

gnat

ed le

ss d

evel

oped

area

s

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Enco

urag

e FD

I thr

ough

pric

es th

at a

re d

emon

stra

bly

com

petit

ive

with

rele

vant

coun

tries

Incr

ease

inve

stm

ents

and

job

crea

tion

in th

e BP

O&O

sect

or, t

hrou

gh a

ttrac

ting

pote

ntia

l inv

esto

rs

Incr

ease

ski

lls d

evel

opm

ent

and

train

ing

for t

he s

ecto

r

Incr

ease

inve

stm

ents

and

job

crea

tion

in th

e BP

O&O

Incr

ease

inve

stm

ents

and

job

crea

tion

in th

e BP

Ose

ctor

, thr

ough

incr

ease

dsu

ppor

t for

SM

Es a

ndin

crea

sed

econ

omic

act

ivity

in d

esig

nate

d ar

eas

Prom

ote

best

pra

ctic

e, b

yad

optin

g st

anda

rds

that

are

in lin

e w

ith th

e gl

obal

BPO

&Ose

ctor

Cre

ate

jobs

and

stim

ulat

eec

onom

ic a

ctiv

ity in

depr

esse

d to

wns

Fina

lise

nego

tiatio

ns w

ith T

elko

mM

arke

ting

of S

A BP

O&O

sec

tor

and

supp

ort m

easu

res

of th

e dt

ian

d pr

ivat

e se

ctor

Adm

inis

tratio

n of

app

licat

ions

thro

ugh

the

dti

Fina

lise

agre

emen

t with

DoL

on

2007

/8 tr

aini

ng p

rogr

amm

e an

dfu

ndin

g m

echa

nism

s

Appo

int a

ccre

dite

d tra

inin

gpr

ovid

ers,

who

will

also

dev

elop

train

ing

man

uals

for 2

007/

8 an

dsu

bseq

uent

yea

rs

Exhi

bitio

n, tr

ade

mis

sion

s an

don

e-on

-one

con

sulta

tion

with

inve

stor

s

Enga

ge w

ith N

T an

d ot

her

stak

ehol

ders

on

the

form

ulat

ion

of p

rogr

amm

e gu

idel

ines

Con

tinuo

us e

ngag

emen

tsbe

twee

n SA

BS a

nd in

dust

ryFi

nalis

e pr

ovin

cial B

PO s

trate

gies

Fina

lise

agre

emen

ts w

ithm

unici

paliti

es a

nd D

OE

to p

rovid

eth

e ne

cess

ary

infra

stru

ctur

e

DO

C, P

resi

denc

y

NT

DO

L

Busi

ness

Tru

st, i

ndus

tryas

soci

atio

n

NT,

Bus

ines

s Tr

ust

SABS

Prov

inci

al d

epar

tmen

ts,

mun

icip

aliti

es, D

OE,

DO

C,

DPL

G

Augu

st 2

007

Mar

ch 2

008

Appo

int t

rain

ing

prov

ider

s by

June

200

7

1000

lear

ners

trai

ned

byM

arch

200

8

On-

goin

g

Fina

lise

new

pro

gram

me

guid

elin

es b

y M

arch

200

8

Mar

ch 2

008

Augu

st 2

007

An a

gree

men

t with

Tel

kom

on

a de

velo

pmen

tal p

ricin

g m

odel

for t

he s

ecto

r

Rol

l-out

of i

ncen

tive

sche

me

Trai

ning

pro

gram

me

for 2

007/

8de

velo

ped

1,00

0 le

arne

rs tr

aine

d in

the

Mon

yetla

pilo

t pro

ject

Agre

emen

t on

prog

ram

mes

for

subs

eque

nt y

ears

Impl

emen

tatio

n of

exi

stin

gm

arke

ting

stra

tegy

New

sup

port

mea

sure

sap

prov

ed b

y C

abin

et

Publ

icat

ion

of s

tand

ards

Firs

t Cal

l Cen

tre to

go

live

inAu

gust

200

7


TourismTourism is one of the largest sectors in the world accounting for 842 million international arrivals in 2006 –a 4,5 per-cent growth on 2005. Total annual arrivals to South Africa in 2006 increased by 13,9 per-cent to8,395,833. The sector is also a major contributor to the South African economy at an estimated 8,8 per-centof GDP and 8 per-cent of total employment in 2005. Investment levels in the tourism industry are expectedto continue to rise, boosted by South Africa’s hosting of the 2010 FIFA Soccer World Cup. Government hasthe target of increasing foreign tourist arrivals to 10 million per annum, thereby creating an additional 400,000direct and indirect jobs by 2014.

In order to ensure that this growth and job creation is realised, certain key constraints need to be addressed.These include: enhancing the marketing of South African destinations, improving tourist transportation (bothairlift and ground transport), improving collection of statistical information for decision-making, improving skillsdevelopment and training, ensuring tourist safety and security, increasing investment and business developmentand transformation of the tourism industry.

What has been achieved?Progress has been made in developing a communication strategy to reassure tourists of their safetyand security. In addition Tourism Safety and Security Forums have been established in KwaZulu-Natal, the Western Cape, Gauteng and Mpumalanga. However, provinces need to allocate more personnel to develop and implement safety and security strategies for tourists.DEAT and the Business Trust have provided additional funds to the Tourism Enterprise Programme.The programme focuses on training to ensure small and medium tourism enterprises benefit from 2010. To date over 250 enterprises have been assisted.The number of inbound aircraft seats, mostly from Mozambique, France, Oman and the UAE, has increased by 700,000. However, the Airports Company of South Africa (ACSA) still lacks adequatesystems to track traffic on different routes, making it difficult to respond to changing demand.A Tourism BEE Charter has been signed and a charter council to drive implementation has been established.In response to the Deputy President’s call for partnerships in developing foreign language capacityfor the tourism sector, several foreign embassies have offered language training. Some tour guideshave already been trained in Chinese languages.


Key

act

ions

to b

e le

d by

DEA

T an

d th

e dt

i

Rev

ise

and

final

ise

the

Tour

ism

Sec

tor S

kills

Pla

n

Des

ign

cust

omis

ed in

cent

ive

for t

he s

ecto

r

Impl

emen

t Nat

iona

l Tou

rism

Safe

ty a

nd A

war

enes

sSt

rate

gy

Impr

ove

tour

ism

rese

arch

and

stat

istic

s

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Trai

ning

and

ski

llsde

velo

pmen

t pro

gram

mes

base

d on

sca

rce

and

criti

cal

skills

Incr

ease

inve

stm

ents

and

job

crea

tion

in ru

ral a

nd p

eri-

urba

n ar

eas

Incr

ease

d sa

fety

and

sec

urity

for t

ouris

ts in

pro

vinc

es

Impr

ove

tour

ism

dat

a an

dst

atis

tics

thro

ugh

the

deve

lopm

ent o

f the

Tou

rism

Sate

llite

Acco

unt (

TSA)

by

2009

Rev

ise

the

Tour

ism

Sec

tor S

kills

Plan

Dev

elop

an

info

rmat

ion

gene

ratio

n an

d sh

arin

g sy

stem

Iden

tify

gaps

in c

urre

nt to

uris

mcu

rricu

lum

and

cur

rent

accr

edita

tion

syst

em

Achi

eve

buy-

in w

ith s

take

hold

ers

Des

ign

ince

ntiv

e pr

otoc

ols

Enga

ge N

T on

the

budg

etar

yim

plic

atio

ns

Dis

cuss

ions

with

the

dti,

SAP

S

Inte

grat

ion

of th

e st

rate

gy in

toth

e br

oade

r law

enf

orce

men

tag

ency

inte

rven

tions

as

wel

l as

Sout

h Af

rica’

s m

arke

ting

and

bran

ding

initi

ativ

es

Com

mun

ity a

war

enes

s cr

eatio

nac

tiviti

es

Qua

rterly

Tou

rism

Res

earc

hAd

viso

ry c

omm

ittee

mee

tings

with

ext

erna

l sta

keho

lder

s

Mon

itor t

he im

plem

enta

tion

of th

e3-

year

TSA

dev

elop

men

t pla

n

DoL

, DoE

, Pro

vinc

es

NT

DSS

, pro

vinc

ial d

epar

tmen

ts,

SAPS

STAT

SSA,

DH

A, S

AT, p

rovi

nces

Mar

ch 2

008

Mar

ch 2

008

Mar

ch 2

008

Mar

ch 2

008

Impl

emen

tatio

n of

the

revi

sed

Sect

or S

kills

Pla

n an

d th

eM

ogal

e C

ity D

ecla

ratio

n on

tour

ism

ski

lls

A de

sign

ed a

nd b

udge

ted

for

cust

omis

ed in

cent

ive

in p

lace

Prov

inci

al S

afet

y an

dAw

aren

ess

Plan

sFi

nalis

ed

7 of

10

tabl

es o

f TSA

in d

raft

form

, whi

ch w

ould

incl

ude

indi

cato

rs s

uch

as G

DP,

prod

uctio

n, a

nd in

and

out

boun

dst

atis

tics


Faci

litat

e th

e ac

cele

ratio

n of

grad

ing

of to

uris

mes

tabl

ishm

ents

Dev

elop

stra

tegi

es to

fast

track

impl

emen

tatio

n of

B-

BBEE

in th

e se

ctor

and

capa

cita

te p

rovi

ncia

l and

loca

l gov

ernm

ent s

truct

ures

to d

eliv

er o

n th

e gr

ound

Impl

emen

tatio

n of

the

Airli

ftSt

rate

gy

Addr

ess

cons

train

ts to

sm

all

busi

ness

par

ticip

atio

n in

the

tour

ism

sec

tor t

hrou

gh th

eTo

uris

m E

nter

pris

ePr

ogra

mm

e

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Qua

lity

assu

red

tour

ism

prod

ucts

Broa

d ba

sed

trans

form

atio

nof

the

tour

ism

sec

tor i

n lin

ew

ith th

e 20

09 a

nd 2

014

targ

ets

Incr

ease

num

ber o

f tou

rists

in S

outh

Afri

ca

Sust

aina

ble

tour

ism

SM

MEs

Audi

ts o

f SM

ME

tour

ism p

rodu

cts

to a

sses

s ga

ps

Dev

elop

men

t of a

Qua

lity

Assu

ranc

e To

olki

t and

Tra

inin

gPr

ogra

mm

e

Dev

elop

men

t of a

com

mun

icatio

nst

rate

gy o

n gr

adin

g

The

deve

lopm

ent o

f sys

tem

sca

paci

ty to

han

dle

larg

e vo

lum

esof

enq

uirie

s an

d ap

plic

atio

ns

Con

clud

e ai

rlift

plan

Con

vene

Stra

tegi

c Pl

anni

ngC

omm

ittee

to d

evel

op p

ositi

ons

rega

rdin

g m

arke

tsH

old

bila

tera

l mee

tings

with

rele

vant

mar

kets

Con

clud

e bi

late

ral a

ir-se

rvic

eag

reem

ents

Iden

tify

foca

l poi

nts

in a

llpr

ovin

ces

Faci

litate

the

crea

tion

of lin

kage

sbe

twee

n SM

MEs

and

big

busi

ness

Acce

lera

te th

e ro

llout

of S

MM

Etra

inin

g an

d su

ppor

t ini

tiativ

es

Prov

ince

s

All g

over

nmen

t dep

artm

ents

DoT

, DFA

, AC

SA

DAC

, DoT

Mar

ch 2

008

2009

and

201

4

Mar

ch 2

008

Mar

ch 2

008

2,50

0 SM

ME

acco

mm

odat

ion

esta

blis

hmen

ts g

rade

d

20,0

00 b

usin

esse

s fo

rmal

lyco

mm

itted

to im

plem

enta

tion

ofth

e To

uris

m B

EE C

harte

r and

Scor

ecar

d

Incr

ease

slo

ts in

to S

outh

Afri

cafro

m to

uris

m p

ortfo

lio m

arke

tspe

r ren

egot

iate

d bi

late

ral a

irse

rvic

e ag

reem

ents

550

busi

ness

link

ages

cre

ated

2,60

0 SM

MEs

trai

ned

5 to

olki

ts d

evel

oped

300

SMM

Es s

ent t

o lo

cal a

ndin

tern

atio

nal e

xhib

ition

s


Dev

elop

a re

gula

tory

fram

ewor

k an

d ap

prop

riate

supp

ort m

echa

nism

s fo

r the

crea

tion

of a

via

ble

biof

uels

indu

stry

in S

outh

Afri

ca

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Dev

elop

men

t of b

iofu

els

indu

stry

as

a so

urce

of

rene

wab

le e

nerg

y, w

ithou

tra

isin

g ag

ricul

tura

l pric

es

Disc

ussio

ns w

ith s

take

hold

ers

onfin

alis

ing

the

stra

tegy

Fina

lisat

ion

of p

ropo

sals

on

ince

ntiv

es a

nd re

gula

tions

Fina

lise

mea

sure

s fo

rsm

allh

olde

rs

Fina

lisat

ion

of s

tand

ards

the

dti,

DO

A, P

resid

ency

, DST

,D

EAT,

SAB

SAu

gust

200

7

Dec

embe

r 200

7

Biof

uels

stra

tegy

app

rove

dby

Cab

inet

Esta

blis

hmen

t of r

egul

ator

yfra

mew

ork

and

ince

ntiv

esto

sup

port

prod

uctio

n an

dus

e of

bio

fuel

s

Stra

tegy

to e

nsur

ein

crea

sed

prod

uctio

n of

inpu

ts, p

artic

ular

ly b

ysm

allh

olde

rs

Res

earc

h, d

evel

opm

ent a

ndte

chno

logy

dem

onst

ratio

nsu

ppor

t pro

gram

me

final

ised

Key

act

ions

to b

e le

d by

DM

E


BiofuelsThe biofuels industry in South Africa is in its infancy. However it has substantial potential to assist in addressingimportant economic and social challenges. Internationally the biofuels industry is growing rapidly, due chieflyto a combination of: higher oil prices; mounting concerns with respect to the environment; and governmentpolicies, regulations and incentives that support this indigenous renewable fuel source over fossil fuels.

The Biofuels Draft Strategy – approved for public consultation by Cabinet in December 2006 – aims to achievean average biofuels market penetration of 4.5 per-cent in liquid road transport fuels (petrol and diesel) by 2013.The development of a biofuels industry will have enormous economic benefit. It will stimulate small-scale andcooperative farming practices in rural areas, creating up to 55,000 jobs opportunities. It will generate macroeconomicbenefits as increased use of biofuels will reduce our dependence on oil imports. It is estimated that about R2billion per annum will be added to GDP. Biofuels being a renewable energy source will also contribute 75 per-cent towards our 2013 Renewable Energy targets of 10,000GWh.


3.5.3 SUPPORT FOR THE CLOTHING AND TEXTILES SECTOR TO PRESERVE CAPABILITIES ANDRETAIN EMPLOYMENT

Clothing and textiles are amongst the most labour-intensive industries in South Africa employing approximately127,000 people (11 per-cent of total manufacturing employment). The sector contributes around 0.6 per centto GDP. The clothing and textiles sector has been under intense pressure since the mid 1990s, negativelyimpacted by periods of currency strength and fierce import competition, particularly from China. Notwithstandingthese pressures, the sector cannot be left to wither away due both to its contribution to employment as wellas to retain core capabilities that have been built in the sector.

Recent government efforts around the sector have been aimed at arresting its decline. However, the medium-long term challenge for the industry is to undertake the upgrading and restructuring that the industry needs tobecome fully sustainable. This will require an adaptation of current support measures – particularly the DutyCredit Certificate Scheme (DCCS) – by government but also a very strong commitment by business and labourto make the necessary adjustments. An added level of complexity that needs to be taken into consideration inrevising the DCCS is that it is an instrument that applies across the entire Southern African Customs Union(SACU) and not simply to the South African economy.

The sector faces a range of challenges. These include: difficulty in competing against low-cost imports; lowlevels of investment in upgrading of skills and production processes to become more competitive; associatedlow levels of product design and innovation; and a marked decline in exporting.

These challenges need to be fully confronted in agreeing how the industry goes forward. A number of measuresneed to be taken to place the industry on a more competitive and sustainable footing which essentially requiresmovement up the value chain. Key measures to be undertaken during the 2007/8 financial year include: aredesigned support scheme for the sector aimed at recapturing domestic market share, a review of input costsinto the clothing sector, full implementation of country of origin labelling and support for productivity upgradingand skills development.


Impl

emen

t mea

sure

s to

reca

ptur

e an

d st

abilis

e th

edo

mes

tic m

arke

t

Rev

iew

of i

mpo

rt du

ties

ofke

y in

puts

into

the

clot

hing

sect

or

Fast

-trac

k th

e de

velo

pmen

tof

an

alte

rnat

ive

supp

ort

mec

hani

sm to

the

Dut

y C

redi

tC

ertif

icat

e Sc

hem

e (D

CC

S)

Des

ign

cust

omis

ed in

dust

rial

upgr

adin

g pr

ogra

mm

e fo

r the

sect

or

Cre

atio

n of

a te

xtile

sen

gine

erin

g C

entre

of

Exce

llenc

e

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Arre

st o

f dec

line

of d

omes

ticm

arke

t sha

re

Red

uce

the

cost

s of

inpu

tsin

to th

e cl

othi

ng s

ecto

r and

ther

eby

impr

ove

cost

com

petit

iven

ess

Stab

ilise

indu

stry

and

ultim

atel

y se

t the

bas

is fo

rgr

owth

acr

oss

SAC

U b

ased

on h

ighe

r pro

duct

ivity

of

capi

tal a

nd la

bour

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ease

s in

vest

men

ts a

ndjo

b cr

eatio

n/re

tent

ion

in th

edo

mes

tic m

arke

t

Terti

ary

text

ile e

ngin

eerin

gqu

alifi

catio

ns in

the

indu

stry

Impl

emen

tatio

n an

d m

onito

ring

by C

CR

D d

ivis

ion

of th

e dt

i

Ong

oing

liai

son

with

indu

stry

,SA

RS,

ITED

and

ITAC

on

impl

emen

tatio

n an

d m

onito

ring

Initi

ate

an in

vest

igat

ion

on th

edo

wnw

ard

adju

stm

ents

on

sele

cted

text

iles

and

fibre

Inte

ract

ion

with

clo

thin

g an

dte

xtile

s st

akeh

olde

rs a

nd IT

AC

Con

sulta

tions

with

indu

stry

and

SAC

U p

artn

ers

Achi

eve

buy-

in w

ith s

take

hold

ers

Des

ign

ince

ntiv

e pr

otoc

ols

Enga

ge N

T on

the

budg

etar

yim

plic

atio

ns

the

dti t

o as

sess

and

app

rove

busi

ness

pla

n

SAR

S, IT

ED, I

TAC

ITAC

, NT

SAC

U, N

T

NT

CSI

R, D

ST

Appl

icat

ion

of th

e re

gula

tions

:Ju

ly 2

007

Quo

tas

timel

ine:

Dec

embe

r20

08

Mar

ch 2

008

Con

sulta

nt to

be

appo

inte

d in

Dec

embe

r 200

7

SAC

U a

gree

d pr

ojec

t pla

n to

be fi

nalis

ed in

Mar

ch 2

008

Mar

ch 2

008

Augu

st 2

007

Impl

emen

t the

cou

ntry

of o

rigin

labe

lling

regu

latio

ns

Mon

itor t

he im

plem

enta

tion

ofqu

otas

aga

inst

Chi

nese

impo

rts

Impo

rt du

ties

on s

elec

ted

text

iles

and

fibre

revi

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Initi

ate

a pr

oces

s to

dev

elop

aSA

CU

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e st

rate

gy

A w

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esig

ned

and

budg

eted

cust

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d pr

ogra

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e in

pla

ce

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tre o

f exc

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nce

deve

lope

dat

CSI

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Por

t Eliz

abet

h

Key

act

ions

to b

e le

d by

the

dti


3.5.4 IMPLEMENTATION OF OTHER KEY SECTORAL PROJECTS

Diamond beneficiation and jewelleryThe world market for uncut stones is valued at US$13.4 billion a year. By comparison, retail diamond jewellery salesin 2005 were valued at US$70 billion. Diamond-producing countries in southern Africa are therefore looking to bridgethat gap by promoting local beneficiation to ensure a bigger share of the downstream profit (cutting and polishing addsapproximately 50 per-cent to the value of rough stones), as well as much needed employment creation.

South Africa is the third-largest diamond producer in the world, with an annual output of 14.5 million carats, worthapproximately US$1.2 billion. The industry currently employs approximately 14,300 people, 11,000 of whom areemployed in mining, 2,400 in manufacturing and 900 in sorting and valuing. The country’s diamond trade activity isvalued at around US$2.5 billion, almost half comprising rough exports. Despite being a major producer, South Africaonly beneficiates 3 per-cent of its total diamond production.

In February 2006, Cabinet passed the Diamonds Amendment Act, aimed at promoting local value addition andeliminating loopholes in the law that had enabled companies to export rough diamonds duty free. The Act makesprovision for the local supply of rough diamonds through the establishment of the State Diamond Trader (SDT) withthe power to purchase 10 per-cent of mine production in order to improve access to rough diamonds for localbeneficiators. Further legislative amendments include the introduction of beneficiation licenses for control purposesand a reduction of the export duty to 5 per-cent. The key thrust of this policy is to increase local beneficiated diamondproduction from 3 per-cent to at least 10 per-cent of rough diamond production.

Key challenges facing the industry include: shortages of skilled labour, access to capital, and costs of cutting andpolishing. A major challenge is therefore to grow and advance South Africa's cutting and polishing capacity in orderto position South Africa as a globally competitive diamond-producing country. Development strategies in the sectorare therefore aiming to create a more enabling business environment through the creation of diamond and jewelleryhubs, addressing access to capital, and the provision of incentives to attract manufacturing investment, as well astraining and skills development initiatives.


Key

act

ions

to b

e le

d by

DM

E

Impl

emen

tatio

n of

Dia

mon

dBe

nefic

iatio

nLe

gisl

atio

n

Esta

blish

men

t and

exp

ansio

nof

dia

mon

d cu

tting

and

polis

hing

cen

tres

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Incr

ease

in s

uppl

y of

roug

hdi

amon

ds fo

r cut

ting

and

polis

hing

Valu

e ad

ditio

n to

pre

ciou

sm

etal

s an

d in

crea

sed

expo

rts o

f SA

jew

elle

ry

Fina

lise

the

listin

g of

the

Stat

eD

iam

ond

Trad

er a

nd a

ppoi

nt th

eBo

ard

Agre

emen

t of l

ocat

ion

of ID

Z w

ithAC

SA.

Appr

oval

of I

DZ

stat

us

Appo

intm

ent o

f cen

tre d

evel

oper

Con

stru

ctio

n of

jew

elle

rym

anuf

actu

ring

cent

re

the

the

dti,

NT,

The

Pre

siden

cy

DPE

, DO

T, S

ARS

Com

men

cing

Aug

ust 2

007

Mar

ch 2

008

Focu

sed

impl

emen

tatio

n of

the

bene

ficia

tion

drive

in th

e co

untry

(lice

nsed

cut

ters

, dea

lers

and

bene

ficia

tors

to a

cces

sdi

amon

ds)

Jew

elle

ry M

anuf

actu

ring

Cen

trein

IDZ

at O

liver

Tha

mbo

Inte

rnat

iona

l Airp

ort

Kim

berle

y di

amon

dbe

nefic

iatio

n hu

b


Key

act

ions

to b

e le

d by

the

dti

Esta

blis

hmen

t of a

Nat

iona

l Foo

d C

ontro

lAg

ency

Rev

iew

the

tarif

f pol

icy

on a

gric

ultu

ral p

rodu

cts

Prom

ote

expo

rts o

fbe

nefic

iate

d ro

oibo

s an

dho

neyb

ush

prod

ucts

Impl

emen

t the

bus

ines

spl

an fo

rmul

ated

toin

crea

se th

eco

mpe

titiv

enes

s an

d th

epr

ofita

bilit

y of

SA

fruit

cann

ing

Mak

hath

ini S

ugar

Proc

essi

ng F

acilit

yPr

ojec

t

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Incr

ease

exp

orts

thro

ugh

impr

oved

com

plia

nce

toin

tern

atio

nal q

ualit

yst

anda

rds

Incr

ease

d in

vest

men

ts,

job

crea

tion

and

incr

ease

d ex

ports

of

high

val

ue b

enef

icia

ted

prod

ucts

Dou

ble

the

curre

ntex

ports

of f

inis

hed

Roo

ibos

and

Hon

eybu

shpr

oduc

ts b

y 20

11

To c

reat

e a

sust

aina

ble

plat

form

for t

he lo

ng-

term

gro

wth

and

com

petit

iven

ess

of th

ein

dust

ry th

roug

him

prov

ed m

arke

tac

cess

; cos

t red

uctio

ns;

and

deve

lopm

ents

of

new

mar

kets

and

prod

ucts

Incr

ease

d in

vest

men

tsin

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infra

stru

ctur

eth

ereb

y cr

eatin

g 4,

200

dire

ct jo

b op

portu

nitie

s

Obt

ain

buy-

in a

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t fro

m k

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vern

men

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rs

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Con

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to p

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repo

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s an

dag

ree

on th

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plem

enta

tion

proc

ess

SA in

dust

ry to

neg

otia

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ith E

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dust

ries

to fa

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t the

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the

quot

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t

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OA,

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, ITA

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nd D

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esgr

o, W

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ovin

cial

dep

artm

ents

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atio

nal A

gric

ultu

ral

Mar

ketin

g C

ounc

il

WC

pro

vincia

l dep

artm

ents

KZN

DO

A, ID

C, D

BSA

and

Tong

aat H

ewle

tt

2009

Mar

ch 2

008

Mar

ch 2

008

Econ

omic

ana

lysi

s:M

arch

200

8

Neg

otia

tion

with

EU

:M

arch

200

9

Mar

ch 2

008

MO

U w

ith s

take

hold

ers

Legi

slat

ive

fram

ewor

k fo

rth

e es

tabl

ishm

ent o

f the

agen

cy

Tarif

f gui

delin

es to

be

used

by IT

AC in

the

revi

ew o

fag

ricul

tura

l and

agr

opr

oces

sing

tarif

fs

Com

preh

ensi

ve m

arke

ting

stra

tegy

dev

elop

ed

Full

econ

omic

ana

lysi

s of

the

sect

or to

impr

ove

mar

ket a

cces

s, re

duce

inpu

t cos

ts, d

evel

op n

ewpr

oduc

ts a

nd m

arke

ts

Phas

ing

out t

he 5

per

-cen

tca

nned

frui

t tar

iff in

the

EUan

d re

tent

ion

of th

e 45

00m

t quo

ta

Feas

ibilit

y st

udy

com

plet

ed


Agro-processingThe agro-processing sector contributes around 10 per-cent annually to the GDP and in 2005, it employed 183,000people. The sector can generate relatively low-skilled job opportunities and can contribute to more geographicallybalanced economic development. It has strong backward linkages with the primary agricultural sector, which employs10 per-cent of the country’s labour force for which a large number are women particularly in rural areas. The sectoris endowed with some of the world’s sought-after delicacies such as rooibos, ostrich and honey bush products.

Despite its contribution to the South African economy and its demonstrated potential, the sector is faced with a numberof challenges that need to be addressed. It has been affected by changes in the general tariff dispensation that ignoresthe global sensitivities of the agricultural sector. Local producers have to compete against heavily subsidised producersand manufactures from developed countries. Furthermore, entry into developed countries’ markets is constrained byboth tariff and non-tariff barriers to trade. Local producers have also come under immense pressure in the last fewyears, resulting from an increase in imports of cheap products. Other important constraints relate to saturation inexisting exports markets, insufficient spending on R&D – particularly on product development to enable an uppermovement along the value chain; increasing input costs; and insufficient infrastructure.

A number of key measures have been identified to be undertaken during the 2007/8 financial year: facilitating theestablishment of a National Food Control Agency (NFCA) to ensure compliance of South African food products tointernational food quality standards; review of the tariff policy for agricultural products to address the distortions intrade; and increase exports of beneficiated Rooibos and Honeybush teas. Concurrent to the roll-out of these projects,more comprehensive work will be done on this sector. A process is currently underway to develop a comprehensiveperspective on the entire agriculture sector.


Film and TelevisionASGI-SA prioritises cultural industries because of their potential contribution to nation-building and SouthAfrica’s international image and because they can support employment creation in tourism as well as in productionof cultural goods and services. the dti has developed KAPs for film and television production, which is presentedin this section, with KAPs for the crafts industry presented below. the dti will also develop proposals for otherelements of the cultural industries, notably music and drama.

The content industry is a key growth area in the world economy and was valued at US$1.2 trillion in 2003. In2003, global filmed entertainment was growing at a rate of 9.4 per-cent and television at the rate of 6.3 per-cent, both in excess of global entertainment industry growth of 4.2 per-cent. Yet South African participation inthis global growth is minimal and estimates are that the country’s share is only a fraction of one percent (lessthan 0.5 per-cent). It is estimated that the sector employs around 20,000 people directly in broadcasting, film,commercials and other media related companies.

Although the South African film industry has a long history, the industry had until 1994 largely been characterisedby an inward-looking and culturally exclusive production structure. The opening up of the political, economicand cultural systems availed new challenges and opportunities for the industry. An increasing number of featurefilm, television and documentary productions and commercials have been produced in SA since 1994, whichhad had a positive impact in the local industry.

Some of the key constraints holding back the development of the sector include: limited access to financing;limited access to distribution and exhibition facilities; insufficient audience development; few training opportunitiesfor people entering the industry as well as producers, directors and scriptwriters currently working in the industry;few opportunities to export South African film and television products; and inadequate co-ordination and anabsence of standards in training provision.


Key

act

ions

to b

e le

d by

the

dti

Laun

ch th

e re

vised

reba

te fo

rfo

reig

n an

d lo

cal p

rodu

ctio

nto

incr

ease

loca

l pro

duct

ion

Dev

elop

men

t of a

nEn

terp

rise

Dev

elop

men

tPr

ogra

mm

e to

ass

ist w

ithbu

ildin

g th

e ca

paci

ty o

fem

ergi

ng p

rodu

ctio

nco

mpa

nies

, inc

ludi

ng th

ede

velo

pmen

t of s

carc

e sk

illssu

ch a

s w

riter

s an

d ed

itors

. Esta

blis

hmen

t of f

ive

pilo

tpr

ogra

mm

es in

diff

eren

tlo

catio

ns to

add

ress

dist

ribut

ion

infra

stru

ctur

e,lo

cal c

onte

nt a

nd a

udie

nce

expa

nsio

n

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Impr

oved

and

incr

ease

dlo

cal c

onte

nt g

ener

atio

n

Impr

oved

com

petit

iven

ess

and

trans

form

atio

n of

prod

uctio

n co

mpa

nies

An in

crea

se in

retu

rns

ondo

mes

tic p

rodu

ctio

ns

The

revi

ew w

ill in

clud

ein

trodu

ctio

n of

a s

econ

d re

bate

sche

me

targ

eted

at t

he lo

cal

film

mak

ers

Audi

t exi

stin

g bu

sine

sspr

ogra

mm

es a

nd s

ervic

e de

liver

y

Iden

tific

atio

n of

cen

tres

ofex

celle

nce

Esta

blis

hmen

t of a

fram

ewor

k of

serv

ice

deliv

ery

Res

earc

h th

e di

strib

utio

n an

dco

nten

t alte

rnat

ives

Esta

blis

h a

PPP

to in

vest

in th

edi

strib

utio

n an

d co

nten

tal

tern

ativ

es

DAC

, DO

C

DAC

, DoC

DAC

, DoC

Dec

embe

r 200

7

Dec

embe

r 200

8

2009

firs

t qua

rter

Rev

ised

reba

te s

chem

e to

be

laun

ched

in th

e th

ird q

uarte

r

Inte

grat

ed p

rogr

amm

e on

finan

cial

and

non

-fina

ncia

lsu

ppor

t ser

vice

sFi

ve p

ilot p

rogr

amm

eses

tabl

ishe

d


Key

act

ions

to b

e le

d by

the

dti

Esta

blis

hmen

t of p

rovi

ncia

lin

tegr

ated

cra

ft hu

bsin

clud

ing

prio

ritis

atio

n of

prov

ince

s

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Incr

ease

d vo

lum

e of

cra

ftsa

les

natio

nally

and

inte

rnat

iona

lly a

nd n

umbe

rof

jobs

cre

ated

Audi

t of c

urre

nt h

ub in

itiativ

es

Dev

elop

men

t of a

blu

e-pr

int

for a

bes

t pra

ctic

e m

odel

alon

g a

franc

hisi

ng c

once

pt

Prio

ritis

atio

n of

pro

vinc

es

DAC

, EC

and

WC

pro

vinc

ial

depa

rtmen

ts

Mar

ch 2

008

Stak

ehol

der a

gree

men

t on

prop

osal

s fo

r the

esta

blis

hmen

t of

viab

lepr

ovin

cial

hub

s as

cen

tres

ofex

celle

nce

impl

emen

ting

best

prac

tice

Dra

ft bl

ue-p

rint f

or a

bes

tpr

actic

e m

odel

alo

ng a

franc

hisi

ng c

once

pt

2 hu

bs e

stab

lishe

d in

EC

and

WC


CraftsThe craft sector contributes approximately R2 billion to GDP in retail sales of which approximately R150m isin export sales. The sector comprises approximately 7,028 enterprises across the entire value chain (from rawmaterial suppliers to retailers). These production enterprises derive annual income in the order of R1,145 million,which supports an estimated 380,062 people, many of whom are in the most marginalised populations in therural and peri-urban areas of South Africa.

Over the last 5 years, the number of production enterprises has increased by an estimated average of 40 per-cent. This growth can largely be attributed to the growth in tourism visitor numbers that grew by 82 per-centover the last 10 years. The production of crafts in South Africa is, however, compounded by a number of factors,which are overlaid with social and economic issues arising from the legacy of apartheid. Some of these include:diversity of units of production, media and product ranges; low skills levels; inadequate working capital; lacko f s tandard and qua l i t y assurance across the va lue cha in ; and poor in fo rmat ion f low.

To create maximum benefit and greater enhancement of the sector, the craft sector strategy proposes integratedmetropolitan hubs with rural satellites. The hubs will perform the role of: enterprise development; R&D; marketaccess; and trade support. The hubs will be set up in partnership with provincial and local authorities and willreceive joint funding.


Cap

ital G

oods

Min

ing

and

Min

eral

Ben

efic

iatio

n

Agr

icul

ture

/ Agr

o-Pr

oces

sing

ICT

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Lead

/re

port

ing

depa

rtm

ent

Fina

lise

the

sect

orst

rate

gy

Dev

elop

men

t of

stra

tegi

es th

at w

illat

tract

inve

stm

ent i

nto

the

min

ing

and

bene

ficia

tion

indu

stry

of S

outh

Afri

ca

Und

erta

ke re

sear

ch o

nth

e cu

rrent

sta

tus

ofpr

imar

y ag

ricul

ture

activ

ities

and

fina

lise

mea

sure

to p

rom

ote

grea

ter v

alue

add

ition

Dev

elop

a c

lust

erin

dust

rial p

olic

yre

spon

se to

sup

port

ICT

serv

ices

and

elec

tro-te

chni

cal

prod

ucts

Doc

umen

t det

ailin

gov

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l per

spec

tive

onth

e st

atus

of t

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dust

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nstra

ints

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lan

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sub

sect

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vel

Doc

umen

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linin

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inte

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for t

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inin

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ctor

Doc

umen

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ailin

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eva

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chai

n’s

abilit

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cont

ribut

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sha

red

grow

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re, a

ndco

nstra

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at

subs

ecto

r lev

el

Doc

umen

t ind

icat

ing

pote

ntia

l ben

efits

of

expa

ndin

g IC

Tpr

oduc

ts a

nd s

ervi

ces

and

impl

icat

ions

for

polic

y an

d st

akeh

olde

rs

Proc

ess

unde

rway

tode

velo

p a

CSP

Con

vene

a m

inin

gin

vest

men

t stra

tegy

wor

ksho

p w

ithst

akeh

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rs

Task

team

con

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the

dti t

o de

velo

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rspe

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val

uech

ain

Und

erta

ke re

sear

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tify

oppo

rtuni

ties

with

inIC

T se

rvic

es to

supp

ort l

ocal

con

tent

deve

lopm

ent.

the

dti

DM

E

the

dti,

DO

A

DO

C

Broa

d ag

reem

ent i

ngo

vern

men

t and

with

stak

ehol

ders

on

the

curre

nt s

tate

and

futu

reof

the

indu

stry

, inc

ludi

ngits

link

ages

to th

ein

frast

ruct

ure

CAP

EX,

and

leve

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xist

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capa

bilit

ies

for e

xpor

ts

Broa

d ag

reem

ent i

ngo

vern

men

t and

with

stak

ehol

ders

on

the

futu

re o

f the

indu

stry

(incl

udin

g is

sues

on

upst

ream

and

dow

nstre

am li

nkag

es,

and

impa

ct o

n ex

ports

and

fiscu

s)

Broa

d ag

reem

ent i

ngo

vern

men

t and

with

stak

ehol

ders

on

inte

rven

tions

to e

nsur

eva

lue

chai

n co

ntrib

utes

optim

ally

to A

SGI-S

Ata

rget

s ar

ound

sha

red

grow

th, e

spec

ially

inte

rms

of e

mpl

oym

ent

crea

tion

and

hous

ehol

dfo

od s

ecur

ity

Broa

d ag

reem

ent o

ngo

vern

men

tin

terv

entio

ns to

sup

port

cont

ent d

evel

opm

ent

with

in IC

T se

rvic

es a

ndel

ectro

-tech

nica

lpr

oduc

ts (l

inke

d to

the

impl

emen

tatio

n of

the

digi

tal m

igra

tion

stra

tegy

and

expa

nsio

n of

broa

dban

d ac

cess

).

Tim

efra

mes

(for

ach

ievi

ngou

tput

s)A

rea

of P

rior

ity

Pres

iden

cy, D

PE, N

T

the

dti,

Pres

iden

cy,

DEA

T, D

WAF

, DPE

,N

T, D

ST

Pres

iden

cy, D

WAF

,D

EAT,

DPL

G, N

T, D

ST

the

dti,

DST

,Pr

esid

ency

Dra

ft do

cum

ent:

Nov

embe

r 200

7

Subm

issi

on to

Jan

uary

Lekg

otla

Wor

ksho

p to

take

pla

cein

Jun

e 20

07

Subm

issi

on o

f a d

raft

repo

rt to

Clu

ster

by

Nov

embe

r

Com

plet

e dr

aft i

nN

ovem

ber 2

007

Subm

issi

on to

Jan

uary

Lek

gotla

Dis

cuss

ion

on d

raft

docu

men

t at I

SFG

inJu

ne

Subm

issi

on to

Jul

yLe

kgot

la


3.5.5 SECTORS FOR WHICH SUBSTANTIAL SECTOR STRATEGY DEVELOPMENT AND PERSPECTIVESIS FURTHER REQUIRED

There are a number of sectors in the economy that have the potential to contribute to the competitiveness ofthe tradable activities and also diversify the non-traditional tradable activities. However no coherent sectoralapproach and strategies have been developed to take economic advantages presented in these sectors.Although there are projects that are already being rolled-out in some of these sectors, there is however theneed to develop an overarching strategy for each of these sectors as a basis for prioritising interventions.

During 2007/8 more comprehensive sector strategies and interventions will be developed, including in thefollowing sectors:

Mining and mineral beneficiation Agriculture /Agro-processing ICT (services and products) Creative Industries

Develop perspectives on: White goods Retail

Community/Social services

The 2007/8 IPAP commits to a process for sector strategy development as a KAP for this financial year. Theprocess should provide the basis for developing and prioritising sector-specific KAPs, which would beincorporated into 2008/9 IPAP and POA implementation plans. The table below sets out the process to befollowed for each of the above-mentioned sectors:


3.6 CROSS-CUTTING PRIORITIESThere are a number of cross-cutting interventions necessary to underpin a successful industrial policy. Inparticular, the efficiency of the basic rail and port infrastructure; the availability and cost of broadbandtelecommunications infrastructure; and the availability of appropriate skills have emerged as major cross-cutting constraints. Regulatory effectiveness of government is also an important factor that impacts on firms.For small and medium size firms the ‘regulatory burden’ may be too onerous. However, large projects mayalso be held up due to regulatory delays. Therefore the cross-cutting priorities for implementation in thiscurrent cycle of IPAP are designed to deal with these challenges. As should be expected, some of the cross-cutting priorit ies are informed by the sectoral interventions hence the similarity in the KAPs.

3.6.1 Improving the design and administration of industrial financingIndustrial financing is one of the important pillars available to successfully implement the NIPF. There is awell-developed infrastructure for providing industrial finance in South Africa, notably through The EnterpriseOrganisation (TEO) division of the dti, and the Industrial Development Corporation (IDC). The suitability ofcurrent financing mechanisms – most of which were designed in the immediate post-1994 period – are beingre-evaluated, taking into account evidence about their effectiveness, changed conditions and global bestpractice.

There are also specific areas of weakness in the current industrial financing that need to be addressed. Theyinclude the need for greater scale and more prioritisation, higher levels of reciprocity, greater emphasis onmore labour-intensive and value-adding activities and a focus on stimulating new or quantitatively higherlevels of economic activity. In addition to these issues of the design, the quantum of industrial financing alsoneeds to be re-visited. Firstly, industrial financing will play a critical role in leveraging the levels of privatesector investment necessary to meet the ASGI-SA target of raising gross fixed capital formation to 25 per-cent of GDP by 2014. Secondly, as the evolution of the global trading system generates diminishing spaceto use tariffs as an instrument of industrial policy, the role of industrial financing becomes correspondinglymore important. Thirdly, in the context of a volatile and often overvalued currency, industrial financingbecomes critical.


Phar

mac

eutic

als

Whi

te G

oods

Ret

ail

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Lead

/re

port

ing

depa

rtm

ent

Dev

elop

gov

ernm

ent

posi

tion

on th

epr

omot

ion

ofsu

stai

ned

loca

lpr

oduc

tion

ofph

arm

aceu

tical

s

Dev

elop

men

t of a

sect

oral

per

spec

tive

Dev

elop

men

t of a

sect

oral

per

spec

tive

Phar

mac

eutic

als

deve

lopm

ent s

trate

gyto

resp

ond

to th

edo

mes

tic d

eman

d fo

rdr

ugs

incl

udin

g AR

Vs

Doc

umen

t ind

icat

ing

curre

nt ro

le o

f the

indu

stry

in th

eec

onom

y, po

tent

ial fo

rac

hiev

ing

ASG

I-SA

targ

ets,

and

whe

ther

gove

rnm

ent

inte

rven

tions

are

desi

rabl

e or

nece

ssar

y

Doc

umen

t ind

icat

ing

curre

nt ro

le o

f the

indu

stry

in th

eec

onom

y, po

tent

ial fo

rac

hiev

ing

ASG

I-SA

targ

ets,

and

whe

ther

gove

rnm

ent

inte

rven

tions

are

desi

rabl

e or

nece

ssar

y

Proc

ess

unde

rway

at N

EDLA

C to

anal

yse

the

pote

ntia

lan

d co

nstra

ints

of

the

indu

stry

ISFG

to d

evel

opbr

ief d

ocum

ent

base

d on

exi

stin

gre

sear

ch

ISFG

to d

evel

opbr

ief d

ocum

ent

base

d on

exi

stin

gre

sear

ch

the

dti

the

dti

the

dti

Broa

d ag

reem

ent o

nw

heth

er a

nd h

owgo

vern

men

t sho

uld

supp

ort l

ocal

prod

uctio

n of

phar

mac

eutic

als

Broa

d ag

reem

ent o

nth

e ro

le o

f the

indu

stry

in a

chie

ving

ASG

I-SA

targ

ets,

esp

ecia

lly fo

rem

ploy

men

t cre

atio

n

Broa

d ag

reem

ent o

nth

e ro

le o

f the

indu

stry

in a

chie

ving

ASG

I-SA

targ

ets,

esp

ecia

lly fo

rem

ploy

men

t cre

atio

n

Tim

efra

mes

(for

ach

ievi

ngou

tput

s)A

rea

of P

rior

ity

Pres

iden

cy, D

ST,

DoH

, NT

Pres

iden

cy

Pres

iden

cy

NED

LAC

pro

cess

tode

liver

a fi

nal r

epor

tin

Jun

e

Stra

tegy

to b

eco

mpl

eted

in M

arch

2008

Subm

issi

on o

f a d

raft

repo

rt to

Clu

ster

by

Nov

embe

r

Doc

umen

t to

Janu

ary

Lekg

otla

Subm

issi

on o

f a d

raft

repo

rt to

Clu

ster

by

Nov

embe

r

Doc

umen

t to

Janu

ary

Lekg

otla


3.6.2 Leveraging public procurementLarge-scale plans are being implemented to both upgrade and install new infrastructure (electricity, rail, andports) as well as broader expenditure plans in areas such as ICT, health, housing, 2010 FIFA World Cup, andthe taxi re-capitalisation programme. This public expenditure will provide a massive investment injection intothe economy over the coming decade.

On the back of this investment arises a major opportunity to leverage the public expenditure, by ensuring thatdomestic firms are sufficiently competitive to capture significant portions of it; without compromising price andquality. However, substantial coordination will be required in order to maximise the linkages from the publicexpenditure programme. Industries and firms that previously supplied the parastatals have lost substantialcapabilities with some no longer active due to low levels of investment over the last two decades. As a result,a range of coordination activities need to take place: between public procurement managers and potentialsuppliers; amongst firms that can potentially form supply consortia; and between government departmentsparticularly linking the dti’s Customised Strategy Programmes (CSPs), DPE’s expenditure plans and DOL’straining plans.

2007/8 KAPs are:Development of supplier development strategies for each major government stream spending. For this year, the priorities will be focused mainly on the development of supplier development strategiesfor the following stream of expenditure programmes: energy, rail and ports, public transport, and ICT– linked to the implementation of the digital migration strategy, local manufacturing of Set Top Boxes (refer to KAP under capital goods, metal fabrications and transport equipment and also underICT services and electro-technical products). The work would require clear definition of supplier development targets and associated conditions.In order to ensure that public spending results in maximum benefits for the economy, state procurementmust be aligned to industrial policy imperatives. This would require that all government departmentsinclude domestic production perspective in their procurement plans and develop mechanisms for monitoring and evaluating the roll-out thereof.

3.6.3 Reducing intermediate input costsThe cost of intermediate inputs has been identified as a key constraint retarding the growth and employmentpotential in a number of sectors due to, inter alia, lack of competition in a number of key intermediate industries.The effectiveness and the enforcement of the competition policy and law, therefore, assume importance giventhe uniquely concentrated nature of the South Africa economy.

The KAPs from the above sector-specific activities include measures to be undertaken in this financial yearto address this issue of input costs. These mainly encompass: the finalisation of the competition policy andlaw review, which is aimed at strengthening the Competition Act; and the review of import duties on a numberof upstream products. Tariffs on upstream input industries may be reduced or removed, in the interests oflowering input costs into downstream manufacturing, taking into account issues such as domestic productioncapabilities and the levels of global distortions in these products. Tariffs on downstream industries, particularlythose that are strategic from an employment or value-addition perspective, will be retained in a manner thatensures long-term sustainability and global competitiveness. Such tariff determinations will be conducted ona case-by-case basis, taking into account the specif ic circumstances of the sector involved.


Fast

-trac

k pr

oces

s w

ithN

atio

nal T

reas

ury

to fi

nalis

eim

prov

ed s

uite

of i

ncen

tives

Up-

scal

ing

of th

e ID

Zpr

ogra

mm

e

Mod

aliti

es w

ith th

e In

dust

rial

Dev

elop

men

t Cor

pora

tion

(IDC

)

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Ensu

re th

at in

dust

rial

finan

cing

dis

pers

ion

lead

s to

the

desi

red

stru

ctur

alch

ange

s in

the

econ

omy

impr

ove

the

mon

itorin

g an

dev

alua

tion

of s

uppo

rtm

easu

res,

incl

udin

gm

onito

ring

the

qual

ity o

f the

adm

inis

trativ

e pr

oces

ses

Expa

nsiv

e pr

ogra

mm

e to

faci

litat

e an

d in

crea

se F

DI

and

empl

oym

ent a

cros

s a

rang

e of

sec

tors

Ensu

re g

reat

er a

lignm

ent

betw

een

IDC

fina

ncin

g an

dth

e na

tiona

l ind

ustri

al p

olic

ypr

iorit

ies

Inte

ract

ions

with

NT

Cab

inet

app

rova

l of t

he re

gion

alin

dust

rial d

evel

opm

ent s

trate

gyan

d th

e ne

w p

olic

y fra

mew

ork

arou

nd th

e ID

Zs

Stak

ehol

der c

onsu

ltatio

ns,

parti

cula

rly w

ith p

rovi

nces

Enga

gem

ents

and

con

sulta

tions

with

rele

vant

sta

keho

lder

s

DST

, Pre

side

ncy

Prov

ince

s, lo

cal g

over

nmen

t,N

T, D

PE, D

HA,

SAR

S, N

PA,

IDZ

oper

ator

s

DST

Mar

ch 2

008

Mar

ch 2

008

On-

goin

g

Agre

ed m

etho

dolo

gy w

ith N

T on

finan

cing

ince

ntiv

es

Rei

ntro

duct

ion

of ta

rget

ed a

nd u

p-sc

aled

of t

ax in

cent

ives

Rev

ised

SM

EDP

Up-

scal

ing

of C

ritica

l Infra

stru

ctur

eFu

nd

Dev

elop

men

t of I

ndus

trial

Upg

radi

ng P

rogr

amm

e

Expa

nd th

e nu

mbe

r of I

DZs

Fina

lise

gove

rnan

ce a

nd fi

nanc

ing

mec

hani

sms

for I

DZs

Agre

ed m

odal

ities

with

the

IDC

KA

Ps

(to

be le

d by

the

dti T

reas

ury)

are

:


3.6.4 Improving support mechanisms for innovation, technology and R&D supportGreater support for innovation and technology is necessary in order to contribute to the national target ofincreasing and sustaining R&D expenditure to 1 per-cent of GDP. South Africa has pockets of technologiesand capabilities that can be leveraged in order to narrow the gap with a range of technologically sophisticateddeveloped and developing countries. Although it is difficult, risky and costly, there is a long-term need todevelop domestic technologies and bring them to market. In this regard, substantial work has been done withrespect to tracking global technology trends and relating them to areas where South Africa could lead withrespect to proprietary technologies or where it should focus on technology transfer, adoption and adaptation.The National Research and Development Strategy, from DST, provides the overarching framework fortechnological interventions, particularly on the research side of R&D.

The focus from the NIPF is, therefore, weighted heavily towards the development side of R&D. This requiresthat technology financing be expanded in order to meet our national R&D targets, which in turn impliesincreased support measures for process and product innovation, and commercialisation of technologies. Thereis, therefore, a need for greater coherence and collaboration between the dti and DST in developing suchsupport measures. There is also a broader policy need to strengthen systems to protect and develop SouthAfrica intellectual property (IP) and to encourage its commercialisation domestically in favour of licensingabroad. This is particularly with respect to IP that is developed through the public purse, such as the ScienceCouncils.


Fina

lise

the

com

petit

ion

polic

yan

d la

w re

view

Rev

iew

of i

mpo

rt du

ties

of k

eyin

dust

rial i

nput

s in

tom

anuf

actu

ring

(incl

udin

gup

stre

am c

hem

ical

s,al

umin

ium

and

text

iles)

Rev

iew

of i

mpo

rt du

ties

onm

achi

nery

and

equ

ipm

ent n

otpr

oduc

ed a

nd n

ot li

kely

to b

epr

oduc

ed in

Sou

th A

frica

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Shift

the

man

date

of t

heco

mpe

titio

n au

thor

ities

to a

stro

nger

pol

icy

advo

cacy

info

rmed

by

the

NIP

F an

dst

reng

then

it to

dea

l mor

e w

ithan

ti-co

mpe

titiv

e pr

actic

es a

ndou

tcom

es in

the

econ

omy.

Red

uce

cost

s in

puts

into

sele

cted

man

ufac

turin

gin

dust

ries

thro

ugh

revi

ewin

gun

due

trade

pro

tect

ion

Red

uce

the

cost

s of

the

inpu

tsto

feed

into

the

publ

ic a

ndpr

ivat

e in

vest

men

tpr

ogra

mm

es

Con

sulta

tion

betw

een

stak

ehol

ders

on th

e po

licy

and

draf

t am

endm

ents

Initi

ate

inve

stig

atio

ns w

ith IT

AC

Initi

ate

an in

vest

igat

ion

with

ITAC

com

petit

ion

auth

oriti

es,

Pres

iden

cy,

DPE

ITAC

, NT

ITAC

, Pre

side

ncy,

NT

July

200

7 fo

r Com

petit

ion

Polic

y D

oc

Dec

embe

r 200

7 fo

r Dra

ftam

endm

ents

Mar

ch 2

008

Mar

ch 2

008

Com

petit

ion

Polic

y D

ocum

ent t

o be

appr

oved

by

Cab

inet

Dra

ft am

endm

ents

to s

treng

then

Com

petit

ion

Act a

ppro

ved

byC

abin

et.

Impo

rt du

ties

on s

elec

ted

upst

ream

chem

ical

s, a

lum

iniu

m a

nd te

xtile

sre

view

ed

Impo

rt du

ties

on m

achi

nery

and

equi

pmen

t not

pro

duce

d an

d no

tlik

ely

to b

e pr

oduc

ed in

Sou

th A

frica

revi

ewed

KA

Ps

(to

be le

d by

the

dti)

are:


3.6.5 Improving infrastructure and logisticsThere have been difficulties with both the price and quality of the infrastructure necessary for trade anddevelopment. The efficiency of the basic rail and port infrastructure, public transport, as well as the availabilityand cost of broadband telecommunications infrastructure, have emerged as major cross-cutting constraints.Similarly, there is a need for sufficient and cost-effective energy supply via a reliable distribution system.

The decline in annual infrastructure investment since the late 1970s has been reversed. There are large-scaleplans implemented to both upgrade and install new infrastructure (ICT, roads, public transport, electricity, rail,and ports).


KA

Ps

(to

be le

d by

the

dti)

are:

Dev

elop

mec

hani

sms

toop

erat

iona

lise

and

mon

itor

the

R&D

tax

ince

ntiv

ear

rang

emen

ts.

Impr

ove

polic

y ar

rang

emen

tsw

ith re

gard

to th

e tre

atm

ent

of IP

on

publ

icly

-fund

ed R

&D

Dev

elop

the

inst

itutio

nal

plat

form

s re

quire

d to

sup

port

cutti

ng-e

dge

indu

strie

s in

Sout

h Af

rica

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Tim

efra

mes

(for

ach

ievi

ng o

utpu

ts)

Effe

ctiv

e ar

rang

emen

ts in

plac

e th

at fa

cilit

ate

incr

ease

in p

rivat

e se

ctor

inve

stm

ent

in S

outh

Afri

ca.

Incr

ease

leve

ls o

fco

mm

erci

alis

atio

n fro

mpu

blic

ly-fu

nded

rese

arch

Incr

ease

num

ber o

fkn

owle

dge-

base

d in

dust

ries,

engi

neer

ing

firm

s, a

ndin

dust

ries

base

d on

hig

h-va

lue

prod

ucts

DST

to d

evel

op th

e ap

prop

riate

adm

inis

trativ

e sy

stem

s to

geth

erw

ith th

e SA

RS,

and

indu

stry

DST

to d

evel

op d

raft

legi

slat

ion

follo

wed

by

cons

ulta

tion

with

inte

rest

ed s

take

hold

ers

afte

rw

hich

it w

ill be

intro

duce

d in

toth

e le

gisl

ativ

e pr

oces

s

Fina

lisat

ion

of a

det

aile

d bu

sines

sca

se a

nd th

e de

velo

pmen

t of

enab

ling

legi

slat

ion

for t

he T

IA.

Fina

lisat

ion

of d

etai

led

busi

ness

case

and

the

deve

lopm

ent o

fen

ablin

g le

gisl

atio

n fo

r SAS

A.

the

dti,

NT,

SAR

S

the

dti,

DM

E, D

oH, D

oA

the

dti,

DPE

, DoC

, DoE

, DM

E

Firs

t rep

ort –

Nov

embe

r 200

7

Subm

it in

to th

e le

gisl

ativ

epr

oces

s by

the

end

of J

uly.

Proc

ess

ther

eafte

r will

depe

ndon

the

Parli

amen

tary

cal

enda

r.An

ticip

atio

n th

at th

e le

gisla

tion

will

be in

pla

ce b

y M

arch

200

8

TIA

busi

ness

cas

e by

Jun

e20

07 a

nd le

gisl

ativ

e pr

oces

sto

follo

w

SASA

bus

ines

s ca

se b

y Ju

ne20

07 a

nd le

gisl

ativ

e pr

oces

sto

follo

w

Stra

tegy

for s

pace

indu

stry

by M

arch

200

8

R&D

stra

tegy

for t

heH

ydro

gen

Econ

omy

by J

une

2007

Indu

stria

l sup

port

stra

tegy

for

Mee

rKAT

by

Dec

embe

r 200

7

Reg

ular

repo

rt on

the

impa

ct o

fth

e R

&D ta

x in

cent

ives

Legi

slat

ion

gove

rnin

g th

etre

atm

ent o

f IP

from

pub

licly

-fu

nded

R&D

Appr

oval

of d

raft

legi

slat

ion

byC

abin

et

Esta

blis

hmen

t of T

echn

olog

ical

Inno

vatio

n Ag

ency

(TIA

)

Esta

blis

hmen

t of t

he S

outh

Afri

caSp

ace

Agen

cy (S

ASA)

Stra

tegy

to d

evel

op a

n in

dust

rial

base

for s

pace

-rela

ted

infra

stru

ctur

e, p

rodu

cts

and

serv

ices

Res

earc

h, d

evel

opm

ent a

ndin

dust

rial s

uppo

rt st

rate

gy fo

r the

deve

lopm

ent o

f hyd

roge

n-ec

onom

y re

late

d pr

oduc

ts (e

.g.

cata

lyst

s ba

sed

on th

e Pl

atin

um-

grou

p m

etal

s –

and

cost

-co

mpe

titiv

e hy

drog

en)

Indu

stria

l sup

port

stra

tegy

for t

hede

velo

pmen

t of M

eerK

AT


3.6.6 Linking skills development to sector strategiesSkills development and training has emerged as one of the key constraint holding back a number of, if notall, sector development. Although the educational and skills development framework are led by the DOE andDOL respectively, and therefore the related interventions falls under the skills focus group of the EconomicCluster, there is however, a need for greater and stronger integration between industrial and skills policy andimplementation, particularly with respect to sector strategies. This is critical in areas such as ensuring thatsector and SETA strategies and implementation are better aligned; and that scarce skills and immigrationissues are appropriately prioritised.

The projects for this year are therefore focused on improving institutional arrangements around skills policyand skill development and training for enhanced alignment to the economic needs. The work around theestablishment of centres of excellence and competence to develop South Africa skills, technology and sciencebase will continue and as more refinements are achieved this year, critical actions emanating from this areaof focus will inform IPAP in future years.


Incr

ease

acc

ess

to IC

Tin

frast

ruct

ure

Dev

elop

a m

onito

ring

syst

em fo

r inf

rast

ruct

ure

impl

emen

tatio

n an

dex

ecut

e im

pact

asse

ssm

ent i

n ar

eas

incl

udin

g en

ergy

, wat

er,

ICT,

por

ts, r

ail,

air-

trans

port,

road

as

refle

cted

in A

SGI-S

A

Fina

lise

ports

and

rail

inve

stm

ent p

lan

Impl

emen

t the

pub

lictra

nspo

rt ac

tion

plan

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Lead

/re

port

ing

depa

rtm

ent

Impr

ove

cost

s an

dac

cess

ibilit

y of

ICT

tech

nolo

gies

in th

eec

onom

y

Con

tinuo

usim

prov

emen

t in

infra

stru

ctur

e

Expa

nd c

apac

ity fo

rco

mpe

titiv

e po

rts a

ndra

il sy

stem

s th

at a

lso

serv

e de

velo

pmen

tal

need

s

Impr

oved

pub

lictra

nspo

rt’s

effic

ienc

yan

d af

ford

abilit

y on

am

ass

scal

e

DPE

to e

stab

lish

mon

itorin

g sy

stem

and

com

plet

e im

pact

asse

ssm

ents

Rel

evan

t dep

artm

ents

to d

evel

op p

lan

with

stak

ehol

ders

DO

C

Pres

iden

cy

DPE

and

DO

T

DO

T

Rol

l-out

Sen

tech

Wire

less

Bro

adba

ndan

d In

fraco

and

impl

emen

ting

Dig

ital

Mig

ratio

n St

rate

gy

Enha

nce

acce

ss to

high

-spe

ed b

road

band

by th

e re

sear

chco

mm

unity

thro

ugh

the

esta

blis

hmen

t of

SAN

ReN

(Sou

th A

frica

nN

atio

nal R

esea

rch

Net

wor

k)

Rep

ort t

o C

abin

et o

nes

tabl

ishm

ent a

ndna

ture

of m

onito

ring

syst

em a

nd o

n im

pact

asse

ssm

ents

Plan

sub

mitt

ed to

Clu

ster

and

then

Cab

inet

Acce

lera

teim

plem

enta

tion

of ta

xire

cap

prog

ram

me

Acce

lera

teim

plem

enta

tion

ofre

form

ed b

us s

ubsi

dysy

stem

Inve

stm

ent p

lan

for

publ

ic tr

ansp

ort t

o 20

11(fo

r 6 m

etro

s an

d 6

seco

ndar

y ci

ties)

Tim

efra

mes

(for

ach

ievi

ngou

tput

s)

DPE

, the

dti,

DST

,Pr

esid

ency

, NT

DPE

, DW

AF, D

PLG

,N

T, D

OT,

DM

E, D

OC

Pres

iden

cy, t

he d

ti, N

T

Pres

iden

cy, t

he d

ti, N

T

Dec

embe

r 200

7

Augu

st 2

007

July

200

7

Nov

embe

r 200

7

June

200

8

Mar

ch 2

008

2007

/8 K

AP

s ar

e:

GLOSSARY

ASGI-SA Accelerated and Shared Growth Initiative for South Africa

ACSA Airports Company of South Africa

BBBEE Broad Based Black Economic Empowerment

BPO&O Business Process Outsourcing and Offshoring

DAC Department of Arts and Culture

DCCS Duty Credit Certificate Scheme

DEAT Department of Environmental Affairs and Tourism

DHA Department of Home Affairs

DME Department of Minerals and Energy

DoA Department of Agriculture

DoC Department of Communications

DoE Department of Education

DoL Department of Labour

DoT Department of Transport

DPE Department of Public Enterprises

DSS Department of Social Services

DST Department of Science and Technology

the dti Department of Trade and Industry

DWAF Department of Water Affairs and Forestry

FRIDGE Fund for Research into Industrial Development, Growth and Equity

GDP Gross Domestic Product

IDC Industrial Development Corporation

ISFG Industrial Strategy Focus Group

IPAP Industrial Policy Action Plan

KAP Key Action Plan

MIDP Motor Industry Development Programme

NIPF National Industrial Policy Framework

NT National Treasury

POA Programme of Action

SABS South African Bureau of Standards

SACU Southern African Customs Union

SAT South Africa Tourism

SOE State Owned Enterprise

STATSSA Statistics South Africa



Asse

ss th

e ef

fect

iven

ess

ofth

e ex

istin

g in

stitu

tiona

l skil

lsge

nera

tion

syst

ems

Asse

ss th

e ef

fect

iven

ess

ofth

e ex

istin

g oc

cupa

tiona

lsk

ills g

ener

atio

n sy

stem

Rev

iew

targ

ets

and

stre

ngth

en in

tegr

atio

n an

dco

ordi

natio

n of

Nat

iona

lH

uman

Res

ourc

eD

evel

opm

ent S

trate

gy(in

cludi

ng N

SDS

and

JIPS

A)

Ref

ine

and

impr

ove

the

impl

emen

tatio

n of

the

scar

ce s

kills

impo

rtatio

nfra

mew

ork

Esta

blis

hmen

t of f

orum

betw

een

the

Skills

Foc

usG

roup

(SFG

) and

the

Indu

stria

l Stra

tegy

Foc

usG

roup

(ISF

G) t

o de

velo

p a

stra

tegy

to lin

k th

e ed

ucat

ion

and

skills

dev

elop

men

tpo

licy

to th

e N

IPF

Pro

ject

s/ K

AP

sO

utco

me

Ben

chm

arks

Out

put

Pro

cess

es to

achi

eve

outp

uts

Sta

keho

lder

depa

rtm

ents

Lead

/re

port

ing

depa

rtm

ent

Addr

ess

capa

city

in G

ener

al,

Furth

er a

nd H

ighe

r Edu

catio

nin

stitu

tions

to m

eet t

he s

kills

requ

irem

ents

Addr

ess

gove

rnan

ce a

ndop

erat

iona

l mat

ters

perta

inin

g to

SET

As, N

SFan

d ot

her o

ccup

atio

nally

rela

ted

skills

dev

elop

men

tst

ruct

ures

to a

ccel

erat

eoc

cupa

tiona

l ski

llsde

velo

pmen

t

Ensu

re lo

ng-te

rm p

rovi

sion

of c

ore

and

criti

cal s

kills

espe

cial

ly in

prio

rity

sect

ors

Bette

r alig

nmen

t of e

cono

mic

scar

ce s

kills

and

imm

igra

tion

quot

a lis

t

Ensu

re th

at th

e ed

ucat

ion

and

skills

dev

elop

men

t pol

icyar

e al

igne

d to

the

NIP

F

Inte

ract

ions

bet

wee

ngo

vern

men

t dep

artm

ents

,fin

alis

e im

plem

enta

tion

plan

on

the

criti

cal a

reas

iden

tifie

d by

the

JIPS

A

Inte

ract

ions

bet

wee

ngo

vern

men

t dep

artm

ents

,fin

alis

e im

plem

enta

tion

plan

on

the

criti

cal a

reas

iden

tifie

d by

the

JIPS

A

Inte

ract

ions

bet

wee

n ke

yde

partm

ents

Inte

r-dep

artm

enta

lco

ordi

natio

n to

dev

elop

the

mas

ter l

ist a

nd a

lso

the

quot

a lis

t

Form

al in

tera

ctio

nsbe

twee

n tw

o Fo

cus

Gro

ups

to a

gree

on

Foru

m’s

Ter

ms

ofR

efer

ence

and

oper

atio

nalis

atio

n

DO

E

DO

L

DO

E

DH

A

the

dti

Rep

ort w

ith c

lear

reco

mm

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TEL

: 011

534

372

4

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Implementation of Government’s1.2 The Cabinet Lekgotla of July 2007 endorsed the Industrial Policy...

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