The seventh issue of the Department of Trade and Industry’s Industrial Policy Action Plan (Ipap) launched on 7 May, highlights the development of a specific support framework for black industrialists.
In terms of Ipap 2015, the Black Industrialists Development Programme will be established over the coming year. It will be aimed at promoting industrialisation, sustainable economic growth and transformation through the support of black- owned entities in the mainstream of the South African manufacturing industry and related manufacturing sectors.
Briefing reporters at the Industrial Development Corporation (IDC) in Johannesburg at the launch, Minister Rob Davies said the government would focus on the programme.
“If we are focusing on the manufacturing sector we need to ensure that the manufacturing sector becomes much more representative of the demographics of our people, but more importantly that the manufacturing sector benefits from the
available pool of talent from the country and the population as a whole.
“In March, the department said it would avail R1bn in support of the programme with the initial aim being to support 100 black industrialists. “Becoming an industrialist is not an easy task. It requires passion and a skills set and capabilities. What we are going to be doing is we are focusing on a particular programme which will identify and support black industrialists,” Davies said on Thursday.
Access to finance and markets
According to the document, the programme envisages implementing key measures such as access to finance, access to markets, skills development, standards, quality and productivity improvements by black manufacturing companies.
Recommendations from commissions reporting back at the Black Industrialists Indaba held in March included that a committee comprising the government, the private sector and co-opted experts be established to explore more ways to accelerate the implementation of the programme. It was also agreed that the Preferential Public Procurement Act be reviewed and that the setting of the black majority threshold be at 75% for companies qualifying for the programme.
Skills development will be placed at the core of the programme.The IPAP said that in the 2015/16 year, the programme would be designed, developed and structured. According to the document, the development of the programme would be overseen by the Department of Trade and Industry as the lead, with supporting agencies such as the IDC and the Development Bank of Southern Africa.
Industrialisation in history
Davies also said the manufacturing sector played an important role in South Africa’s economy. “The manufacturing sector and value addition remain critical objectives of achieving the kinds of structural changes that are necessary to place our economy on a higher level of more inclusive growth.
“History had shown that industrialisation was a necessity. “The lessons that we’ve drawn and which is also the common understanding of the African continent, is that industrialisation is necessary because if we don’t industrialise we are trapped in the most disadvantageous place in the global division of labour as producers and exporters of primary products and as importers of finished goods.”That is the most disadvantageous position to be in because the real value in value chains lies in the parts that take place after the delivery of the primary materials.”
An important sub-theme that formed part of radical economic transformation, he said, was that the government was expected to increase the impact of industrial policy measures.”This Ipap also represents our intent to progressively upscale our industrial policy. What is clear to all of us is that this economy has not had sufficiently fast inclusive economic growth, [gross domestic product] growth has not been high enough and the growth that we’ve had has not been inclusive enough to place us in a position where we can see a significant dent in the levels of poverty, inequality and unemployment in our country,” Davies explained.
The target in the Medium Term Strategic Framework was for 5% of inclusive growth to have been delivered by the end of this term in government. The latest Ipap, as well as previous iterations, indicated the actions that different government entities needed to carry out to support industrialisation.
“What we are doing is that we are creating an environment,” said Davies. “We are creating a support package of measures; we are creating a defensive framework that will allow manufacturing activities to flourish in South Africa. That’s what it’s about.”A total of 3 384 private sector enterprises across all provinces were provided with incentive and other support in 2014 to the value of R13.6bn.
The chairman of the Manufacturing Circle, Bruce Strong, welcomed the Ipap, saying that South Africa’s growth was tied to the health of manufacturing.
Source: Cape Business News
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Abengoa (MCE: ABG.B/P SM /NASDAQ: ABGB), the international company that applies innovative technology solutions for sustainability in the energy and environmental sectors, and state-owned financier, the Industrial Development Corporation (IDC), together with KaXu Community Trust have launched a 100 MW solar plant near the town of Pofadder ( Northern Cape Province ), capable of providing clean and sustainable power to approximately 80,000 homes in South Africa .
Minister of Economic Development, Mr Ebrahim Patel , officially inaugurated this innovative solar power plant. They were accompanied by Deputy Minister of Public Enterprises , Mr. Bulelani Magwanishe, Premier of the Northern Cape, Silvia Lucas , executives of Abengoa and IDC and representatives of the local community.
KaXu Solar One, the first Solar Thermal Electricity (STE) power plant in South Africa , incorporates a storage system that enables production of 100 MW for 2.5 hours after sunset or before dawn. The project will result in approximately USD 891 million direct and indirect investment inflows to South Africa , generate approximately USD 516 million in taxes over the next 20 years, and created 1,000 construction jobs during its three-year construction period.
This project, a well arranged public-private partnership, was awarded by the Department of Energy of South Africa and it will serve clean and reliable electricity to Eskom, South Africa’s power utility, under a 20-year power purchase agreement. Abengoa owns 51 % of the project, the IDC 29 % and KaXu Community Trust 20 %.
Manuel Sanchez Ortega , Vice President and CEO of Abengoa , has stated: “We are proud of the role we are playing to help South Africa meet its ongoing energy demands. This project will leave a legacy that will benefit the community of Pofadder, Northern Cape and the entire country. This would not have been possible without the leadership of the South African Department of Energy .”
IDC Chief Executive, Geoffrey Qhena , has declared: “The project is based on a strong public-private sector partnership and forms part of our efforts to support Government’s initiatives to introduce alternative sources of energy into the country’s energy mix as contemplated in the integrated resources plan”.
Fadiel Farao, the Chairperson of the KaXu Community Trust , says KaXu Solar One will be a catalyst for economic development in the Khai Ma municipality in the Northern Cape. “The project has stimulated the local economy and will go a long way towards helping to generate much-needed economic opportunities for people in this area.” KaXu Community Trust is made up of members of the local community.
Abengoa is building in the region Khi Solar One, a 50MW solar plant using tower technology and has already started the construction of a third project, Xina Solar One, a 100 MW parabolic trough plant. Xina Solar One will shape with KaXu Solar One the largest solar platform in sub-Saharan Africa.
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The Industrial Development Corporation (IDC) has over the past year facilitated the creation and saving of 160 000 jobs.
This is according to its annual report, which documents its funding activities for the financial year ending March 2014.
The development finance institution has also disbursed billions of rands over the past five years as it reviewed its business operations to align them to government’s mandate to bolster economic participation.
In a foreword of the IDC’s annual report for the 2013/14 financial year, Economic Development Minister Ebrahim Patel said when he assumed office five years ago, his department initiated a process of transforming the IDC to play a role of empowering small, medium and big corporations in order to create jobs and respond to economic and social imperatives.
“The IDC heeded our call, realigning its focus areas and strategies with industrialisation priorities.
“These included the broadening and deepening of productive value chains, both domestically and regionally, the beneficiation of our country’s resource wealth and the green economy.
“The Corporation geared itself for a more proactive and catalytic role in the expansion and diversification of South Africa’s industrial base, with a special focus on labour- absorbing investment activities. It thus joined forces with other public sector entities in signalling to the marketplace the desired orientation, inclusivity and pace of economic development in the years ahead,” Minister Ebrahim said.
Of the 160 000 jobs that were saved or created, 11 500 were in income-generating informal economy activities related to recycling of waste materials. Industrialisation is crucial for the sustainability of economic growth, the balance of payments, job creation and poverty alleviation, the IDC said.
“Nevertheless, perseverance and proactivity in seeking opportunities for the expansion of industrial capacity translated into R13.8 billion in financing approvals for 2014, a 5.8% increase compared to the previous year.”
IDC mainly funds major projects in the production sectors of the economy, like manufacturing, mining and agriculture, among others, as the plan is to use empowerment policies to create an enabling environment for entrepreneurs to get into the productive sectors of the economy.
What has the corporation done over the past five years?
When the recession was on the verge of devastating local and foreign markets, South Africa’s economy shed just over one million jobs when the meltdown peaked in 2009.
During that period, the IDC stepped up its funding support and played an important role in creating and saving almost 130 000 jobs.
Sefa has since approved R1.5 billion in direct and indirect lending to about 74 000 small and micro enterprises.
In response to alarming youth unemployment figures, IDC and Sefa jointly set aside R2.7 billion to launch the youth fund in partnership with the National Youth Development Agency in 2013 to support youth entrepreneurship.
According to the report, the IDC has approved R105.3 million for 11 businesses with significant youth ownership during financial year 2014.
Sefa disbursed R157 million to more than 10 200 youth owned enterprises.
One of the businesses that Sefa has supported recently is Kolourful Empowerments (Pty) Ltd, an 18-month-old goods transport company based in Durbanville, Cape Town.
The business, which is owned by four university graduates who have equal shareholding, was awarded funding of R1 250 000 to buy a truck to enable them to fulfil the requirements of a contract that the company won.
Jason Trout, the company’s managing director, said the funding has been a stepping stone for the infant company, which transports goods such as granite, containers, machinery, equipment and sometimes foodstuff to nationwide.
“Through the loan facility SEFA has provided my company, it has allowed us to grow to the next level of growth as well as many subsequent opportunities and more impactful networking sessions.
“Kolourful Empowerments has two heavy duty commercial vehicles. The intention is to grow and diversify the fleet as far as is organically possible,” he said.