The South African economy has undergone substantial transformation since the advent of democracy. It recorded an average economic growth rate of 3.2% per annum in real terms over the period 1994 to 2013, a remarkable improvement on the 1.4% average annual growth registered during the period 1980 to 1993.
With the Industrial Development Corporation’s (IDC’s) support, manufacturing gross domestic product (GDP) has increased by 61% in real terms over the period. The sector also became increasingly export-orientated, accounting for more than half of the country’s exports by 2013, compared with 42% in 1994. However, there is an opportunity to do more as illustrated by the manufacturing sector’s relative contribution to overall GDP and employment declining over the last two decades. The geographical destination of South Africa’s exports has also changed since 1994. New markets have emerged, notably in the Far East, while the relative importance of certain traditional export markets has declined. The country is benefiting from stronger economic links with its neighbours, with the rest of Africa becoming a major trading partner.
The biggest challenge facing the country at this stage of its development is the high levels of unemployment. To overcome this challenge, the country needs to continue building sustainable economic partnerships between government, business and labour. The IDC has been an exemplary partner in this regard, by investing over R80-billion during this period.
The success of recent initiatives such as the renewable-energy build programme shows how such partnerships can act as a catalyst for development. The IDC’s leadership role in this programme is evident in its commitment of over R13-billion in just 3 years for these investments. The continued roll-out of infrastructure programmes will not only have immediate benefits in terms of direct and indirect job creation, but hold long-term benefits for manufacturing and other sectors by increasing the country’s competitiveness and value addition through localisation opportunities. In addition to its catalytic role in renewable energy, the IDC is also growing infant industries in manufacturing of components for wind and solar power.
Mining will continue to play an important part in the country’s economic development, with the challenge being to add value to our mineral resources through beneficiation and value chain development, and in the process expand employment in sectors with stronger multipliers. Other immediate opportunities include agroprocessing that can act as a catalyst for rural development.
The IDC will play an important part in initiatives to grow South Africa’s productive sectors and contribute to the job creation targets as outlined in the New Growth Path and the National Development Plan.