Cape Town – The manufacturing sector is not yet out of the woods, but intervention in a number of business and industrial sectors has seen the threat subside, the Minister of Trade and Industry Rob Davies argued today.
Presenting his budget vote today in Parliament, Davies said in 2009 when the new administration began, the threat of de-industrialisation loomed large.
Where the state had acted purposefully to implement programmes developed in consultation with stakeholders, positive results have been achieved, he said.
These included interventions backed by incentives in sectors such as the automotive sector, business process outsourcing, the film sector, clothing and metals fabrication.
In a media briefing before presenting his budget vote, Davies said he believed that South Africa needed a higher impact industrial policy, adding that opponents have argued repeatedly for a “more focused and lighter-touch industrial policy”.
“I said to our opponents, ‘well then you come and tell us of the different support programmes and interventions which we’ve been making, which ones do you think we should pull back in the name of lighter touch’. Because I know that manufacturers want us to do this and I [know] that when we do it, it does yield some results,” he said.
Davies said contrary to local perceptions, there had not been any disinvestment drive following the
Marikana shooting and labour unrest in the mining sector last year.
He pointed to a Grant Thornton survey released today, which revealed that 48% of South African business owners and executives were optimistic about the outlook on the economy.
South African business was more positive than European business executives, where just 20% were optimistic about the future, and slightly more positive than the average Brics business person, where 47% held an optimistic outlook.
A joint study would be released later this month on how Japanese businesses could increase their presence in South Africa, when Davies and President Jacob Zuma head to Japan on a state visit.
In his budget vote, Davies pointed out that since its launch last year R1.4 billion in grants under the Manufacturing Competitiveness Enhancement Programme (MCEP) had been approved to 214 enterprises.
He added that MCEP grants were being disbursed within two months of applications being made.
Under the 12i tax incentive, the department had supported 26 projects involving investments valued at R32.6 billion.
The country’s infrastructure rollout had to also be used to drive industrialisation, Davies said, pointing out the designation of a number of sectors by the department so far would help drive local production.
A number of sectors had been designated, namely: rail rolling stock, power pylons, bus bodies, textiles and clothing, canned vegetables, furniture, certain pharmaceuticals and set-top boxes.
Industrial development must also be backed by broadening economic development if the country was to develop sustainably, by developing small businesses and black entrepreneurs.
Incubation offered by the government had become an important vehicle to boost support to small businesses.
The number of incubators under the Small Enterprise Development Agency (Seda) had grown to 42, after the agency opened 10 incubators in the last financial year.
The department launched its incubation support programme in September last year to provide cost-sharing grants to organisations and businesses that intend expanding or starting up new incubators and incubation programmes to support small businesses.
Davies said since its launch, the department had approved 13 grants with a total project value of R373 million in sectors such as renewable energy, IT, chemicals, mining, agro-processing, and clothing and textiles.
The department wants to encourage universities and science councils to host incubators to develop hi-tech and high-growth sectors.
Work was also underway to improve support to co-operatives by amending the Co-operatives Development Act which must still be signed into law.
The department was also tweaking BEE to grow the productive sectors. Last year it released a BEE Bill to eliminate fronting and amended the BEE codes of good conduct to help develop black entrepreneurs.
Both the bill and draft codes have yet to be signed into law. – SAnews.gov.za
