Strategies for industrial development

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Overview of apartheid and post-apartheid industrial development strategies.The National Development PlanThe concept of Industrial Development Zones (IDZ’s) and their distribution.Spatial Development Initiative (SDI’s)Case study of two SDI’sIssues associated with industrial centralisation and decentralisation.

In the 1940’s the Industrial development Corporation (IDC) was established by the new government to promote economic growth through developing a broad-based industrial sector.

The main aim was to ensure that SA could be industrially independent and not have to rely on imported goods from the UK and Europe.

It aimed to Provide finance for start-up industries and to bring partnerships together for larger industrial needs.

Apartheid industrial development strategies

Apartied was proving to be an expensive policy to implement because of the racial separation and separate development which impacted on the development of the landscape, water , health care, education, sanitation and housing..

Apartied meant South Africa was to be a “white” republic in which black people did not feature as citizens. The Bantustan policy south to place all black Africans in a “homeland” according to their ethnic identity.

Aparthied industrial development strategies

Apartheid industrial development strategies continued..Up until 1970’s economic development is SA

was highly centralised, occurring predominantly around urban areas.

By the 1980’s there was a shift of focus to more even economic growth and a number of growth models were proposed E.g.. The Good Hope Plan (1981)

And in 1994 the policy of apartied was abolished leaving the country with without a policy and not in a very good economic state.

Post-aparthied - RDPThe unsound economic and development

policies were replaced with the Reconstruction and Development Programme or RDP in 1994.

The RDP came to an end in 1998 but did achieve significant success by improving water supplies in rural villages, creating new jobs in the water supply programme and provide 400,000 new houses.

GEAR – Growth, Employment and redistribution.This policy was put in place from 1996 – 2003 It aimed to expand the private sector, encourage

trade, the use of better business practises, to improve output and to increase investment.

The GEAR succeeded in attracting foreign investments and increasing demand but failed to reduce poverty and unemployment.

Because of these failures many favoured the BEE policy.

Post-aparthied – The GEAR strategy

BEE – Black economic empowerment policyThe BEE began in 1995It was introduced to rectify inequalities by

giving economic opportunities to disadvantaged groups.

It did so by increasing the number of previously disadvantaged people who manage, own and control the countries economy.

The were many critics on this policy – see Pg. 299 in Focus text book

Post-aprthied – The BEE policy

B-BBEE – Broad-based Black Economic Empowerment

Introduced in 2007This policy was introduce to meet some of the

critics about the BEE and specifies codes of good practice to measure conformity with BEE in all sectors of the economy

Post-apartied – The B-BBEE policy

The National Development Plan (NDP) offers a long-term perspective. It defines a desired destination and identifies the role different sectors of society need to play in reaching that goal.

According to the plan, South Africa can realize these goals by drawing on the energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, and promoting leadership and partnerships throughout society.

http://www.youtube.com/watch?v=wfr6ft4cUu0

The National Development Plan

The NDP identifies the task of improving the quality of public services as critical to achieving transformation. Provinces must focus on identifying how to overcome obstacles. This will be reinforced by local governments requirement to fulfill their role.

Planning and implementation will be followed by the national government to make sure it is on track.

The President and Deputy President will be in charge of this initiative. Premiers and Mayors will need to be visible and active participants of the plan with their offices being the catalytic agencies to drive implementation at provincial and municipal levels.

National Development Plan

The NDP and its proposals will need to be implemented in the right order over the next 17 years. Four stages have been identified as will be seen in the image.

The Government has already started a process to join the long term plans of departments with the NDP and to identify areas where policy change is required to ensure positive results.

The NDP is a plan for the whole country. Government will engage with all sectors to understand how they are contributing to implementation and particularly to identify any obstacles to them fulfilling their role effectively.

The Plan will shape budget allocation over the next 17 years.

National Development Plan

The Spatial Development Programme (SDI) are used to initiate and support a series of development corridors stretching across parts of SA and in some cases, other countries.

The SDI’s are an extension of the existing GEAR policy, which focused on growth, employment and redistribution.

The Spatial Development Initiatives

http://www.mcli.co.za/mcli-web/mdc/sdi.htm

To developed and improve existing transport infrastructure

To correct some of the damage done by the apartheid strategies

To create an attractive environment for private sector investment

To initiate and support economic activities along transport corridors.

SDI’s aims

Maputo Development Corridor (which helped agriculture, Transport, mining, tourism and port development)

Wild Coast and Lubombo SDI’s (helping agriculture and transport infrastructure)

Fish River SDI’s ( helping agriculture, manufacturing, tourism and port development)

Platinum and Coast to Coast SDI’s (supporting transport corridor)

For more examples go to Pg. 302 of Focus textbook

SDI’s – Transport corridor examples

The Initiatives in the previous slide are expected to increase the range of economic activities performed in each area.

This will increase the productivity and wealth of the marginal areas of SA and raise the standard of people living there.

SDI continued..

The Industrial Development Zones (IDZ) concept was founded in 1996

It was to be supervised by 2 goverment departments

These are the core within SDI’sThe plan is to develop and upgrade the

infrustructure and services that are needed to make the towns involved world class competitors with modern industrial zones

Industrial Development Zone concept

IDZ’s IDZ’s are either in prots or near airportsThe goverment offered some incentives to new investors as

well as offered assistance to the IDZ’s by developing new road and rail links where needed

By 2012, three IDZ’s were operating: Richards Bay, East London and Coega ( which is the most successful one)

These IDZ’s help to minimize international trade barriers, enabling importers and exporters to operate under better economic conditions.

The costs of IDZs are high. The government contribute to investment and to attracting foreign and domestic private/public investment by creating very good infrastructure. This infrastructure includes roads and railway connections and building harbors.

http://www.coega.co.za/

This is the largest and the most successful development corridor in SA.

It connect SA’s economic hub Gauteng with Mozambique's capital, Maputo.

The corridor also has links to agricultural products and minerals of Mpumalanga and Limpopo.

Maputo Development Corridor SDI: Case Study

The reconstruction of the Maputo N4 toll road

Better customs posts at the boarder for quicker transits

ExpansionThe new Mozal aluminium smelter near

Maputo with a capacity of 500.000 tons a year

A gas pipline from Mozambique to Secunda, Where Sasol converts natural gas to diesel and aviation fuel.

Maputo Development Corridor SDI - Achievments: Case Study

The successful MDC is an example for other SDI’s

A reason for its success was the efficient NGO overseeing all aspects of the initiative.

Maputo Development Corridor SDI – conclusion: case study

Issues with industrial Centralization

Centralisation is the concentration of industries in urban areas.

It refers to the fact that there must be something on the surface that is attractive to people.

Can lead to uneven distribution of wealth, opportunities and development.

Centralisation in SA has occurred around four industrial core regions (Gauteng, Durban-Pinetown, PE, CT)

The problems with industrial centralisation include lack of housing, lack of piped water, lack of jobs and traffic congestion. On the positive side, industrial centralisation of economic activities provides competition for goods and assists businesses.

Decentralisation was started in 1948 by the national party and was ended in 1994 at the end of aparthied.

It was used mainly as racial segregation making it hard for black people to move to from rural to urban areas as well as forcing urban black people to go back to rural areas.

The issue with decentralization was that it encouraged racial segregation and not many people in urban areas.

So now rural towns are losing people due to urban sprawl, resulting in closure of very expensive infrastructure (hospitals, schools etc.) All of this infrastructure now has to be rebuilt in major centers to accommodate for the influx of people from rural towns.

Issues with industrial Decentralization