Trade and Industry Minister Dr Rob Davies
Photo by: Duane Daws
A greater portion of South Africa’s economic activities had to include value-addition and high-quality services, as the country transitioned to becoming a more developed economy, Trade and Industry Minister Dr Rob Davies said on Friday.
Speaking at the launch of the Department of Trade and Industry’s (DTI’s) Industrial Development Incentive Administration Division (IDIAD) 2012/13 Incentive Performance Report, in Pretoria, he stated that various levers that could be used to deploy industrial development were outlined in the Industrial Policy Action Plan, of which incentives was one.
“About 65% of the DTI’s R9-billion yearly budget goes towards incentives and this report is one of the ways in which it accounts for what it has done with the funds,” he explained.
Davies stressed that incentives were important, as it was the only way new players could successfully break into certain industries, while it could also bring about a change in behaviour.
The Minister acknowledged that South Africa’s incentives could not be the most generous in the world, from a finance point of view, adding that they, therefore, had to be designed smartly to attract local business and investment.
He stated that the DTI had a role to play in this, as it had to ensure that incentives were scaled and pitched correctly to attract the necessary players and yield results.
“Further, we, as the DTI, also have to make sure that we administer the incentives in a way that allows for continuous improvement,” he said, adding that the department also had to continuously monitor and evaluate the incentives and ensure that a high level of integrity was maintained in awarding the grants.
It was also important to note that incentives had a cyclical dimension, he pointed out.
“When times are tough, government needs to come to the party on a larger scale than they do when times are favourable.”
INCENTIVE PERFORMANCE REPORT
Incentive programmes included in the report were structured according to five incentive clusterings – the broadening participation cluster, the competitiveness investment cluster, the manufacturing investment cluster, the services investment cluster and the infrastructure support cluster.
Davies said the performance and uptake of the incentives programmes provided by the IDIAD continued to grow, as demonstrated by the measurable impacts in key strategic areas such as broadening economic participation, investment and export promotion, and employment creation.
He noted that this was evident in the broadening participation cluster, where the black business supplier development programme supported 1 213 enterprises, the cooperative incentive scheme supported 314 cooperatives and the incubator support programme supported 14 incubators to the total value of R705.3-million during the 2012/13 financial year.
“The diversity of enterprises and business activities supported in this cluster is impressive, as it extends to the retail and services sector, automotive repairs, fisheries, and the mining and quarrying sector,” he said.
Meanwhile, during the 2012/13 period, the manufacturing investment cluster approved 580 projects for the grant amount of R5.1-billion, with a projected investment of R22.8-billion and 87 380 projected jobs.
Prominent support for sectors such as the automotive, agroprocessing, chemical and metals fabrication sectors was noticeable in the cluster.
Further, the approval of 197 Manufacturing Competitive Enhancement Programme projects for R983-million, with a projected investment of R4.2-billion, had begun to show in sectors such as plastics, electrotechnical, paper and pulp, and textiles, Davies said.
Meanwhile, the incentive programmes under the services investment cluster, which included the business support service, film and TV production and tourism support programmes, continued to contribute “profoundly” to employment opportunities, investment and enhancement of the international profile, he said.
Over the past financial year, 205 projects to the value of R710-million were approved in this cluster, supporting the creation of 89 230 job opportunities.
“These beneficial outcomes give us confidence that our country is building [strong] foundations for enterprise development and industrialisation. Sustainability, however, requires strong partnerships and commitment from the different partners and stakeholders in the small and medium-sized enterprises space,” he concluded.