Transcript 09h30 Dr Tebogo Makubex - NCPC

1
2015
KZN Manufacturing Indaba
21 July 2015
Inkosi Albert Luthuli International Convention Centre
2
2015
CONTEXT: 1
In 2007 Government adopted the National Industrial Policy Framework (NIPF), and its practical
implementation plan - the IPAP - as its guiding approach to industrialisation

IPAP aligned itself with the overall vision and perspectives set out in the National
Development Plan (NDP) of 2012; and remains in line with the job creation strategy
advocated in the New Growth Path (NGP)

IPAP is linked to the NDP as follows:
 NDP highlights the need for SA to develop a more competitive and diversified economy,
with a deepening productive base in mining, agriculture, manufacturing and associated
services
 NDP recognises that successful resource exploitation and development are critically
dependent on the coherence of shared local and regional investment and regulation
policy
 NDP advocates for the need to move steadily away from an exchange rate linked
primarily to commodity prices, towards one based on the sophistication of SA’s overall
export basket
3
2015
Sectoral composition of the South African economy

The manufacturing sector’s contribution to SA GDP declined sharply from 20.9% in 1994 to
11.6% by 2013, whilst the mining sector’s share increased from 7.3% to 9.2%.
Sectoral composition of the South African economy, 1994
Agriculture,
forestry &
fishing, (4.6%)
General
government,
(16.2%)
Finance, retail
estate &
business
services, (16.1%)
Wholesale, retail
& motor trade,
catering &
accommodation,
(14.2%)
Mining &
quarrying, (7.3%)
Manufacturing,
(20.9%)
Electricity, gas &
water, (3.6%)
Sectoral composition of the South African economy, 2013
Agriculture,
forestry &
fishing, (2.4%)
General
government,
(17.1%)
Mining &
quarrying, (9.2%)
Manufacturing,
(11.6%)
Finance, retail
estate &
business
services, (21.5%)
Electricity, gas &
water, (3.0%)
Construction,
(3.7%)
Construction,
(3.1%)
Community,
social & personal
services, (5.3%)
Transport,
storage &
communication,
(8.7%)
Source: SARB, IDC, the dti
Wholesale, retail
& motor trade,
catering &
accommodation,
(16.6%)
Community,
social & personal
services, (6.0%)
Transport,
storage &
communication,
(8.9%)
4
2015
Trends in GDP composition per sector

Services sectors have been driving economic growth in South Africa (finance, ICT, business
services). Manufacturing sector registered strong growth over 2004-07 due to robust
export growth and solid growth in domestic demand.
GVA (Constant 2010 prices, R millions (Period))
2000000
Gross value added, 2014
1800000
1600000
11%
1400000
1200000
Primary sector, (11%)
1000000
21%
800000
Secondary sector, (21%)
600000
Tertiary sector, (68%)
400000
200000
68%
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Year
Primary sector
Secondary sector
Source: SARB, IDC, the dti
Tertiary sector
5
2015
Trends in the manufacturing industry

South Africa’s manufacturing industry is dominated by three sectors: namely food &
beverages, petroleum & chemical products, and metals & machinery. These three sectors
account for two thirds of total manufacturing production..
Contributors to the manufacturing industy, 1993
Radio & TV,
(1.5%)
Transport
equipment,
(7.7%)
Electrical
machinery,
(3.0%)
Non-metallic
mineral
products, (4.1%)
Radio & TV,
(1.4%)
Furniture &
other, (11.0%)
Food, (16.8%)
Metals &
machinery,
(20.6%)
Textiles &
clothing, (7.0%)
Wood & paper,
(9.7%)
Chemicals,
(18.6%)
Contributors to the manufacturing industy, 1993
Transport
equipment, (8.1)
Electrical
machinery,
(2.7%)
Food, (24.5%)
Metals &
machinery,
(20.5%)
Non-metallic
mineral
products, (3.6%)
Furniture &
other, (6.5%)
Textiles &
clothing, (2.9%)
Wood & paper,
(8.8%)
Chemicals,
(21.1%)
6
2015
Manufacturing value addition and import leakage
75
24
70
25.0
22
65
20
MVA (% of GDP )
60
55
50
18
10.0
14
12
40
10
Manufacturing imports (% of merchandise imports)
Source: SARB, IDC, the dti
15.0
16
45
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Year
Manufacturing exports (% of merchandise exports)
20.0
5.0
0.0
2002200320042005200620072008200920102011201220132014
Year
Manufacturing import leakage (SIC 3)
Manufacturing import leakage (annual growth %)
Manufacturing imports & exports (annual %
growth)
30.0
Manufacturing, value added (% of GDP)
7
2015
SA changing trade patters
Region/Country
Share of Exports (%)
Total
Automobiles (26.1)
Platinum (11.6)
13.6
Rhodium( 5.9)
Palladium (5.3)
9
Manufactured
Commodity
5.5
Total
21.6
Manufactured
25.7
Commodity
17.1
Total
12.9
Manufactured
Commodity
3.3
Total
Manufactured
13
5.8
Commodity
19.7
Total
Manufactured
Commodity
Main Products (%)
8.4
5.2
11.5
Purifying Machinery (11.4)
Platinum (7.1)
Coal (7.0)
Automobiles (6.2)
Aviation spirit (6.1)
Iron & Steel (3.6)
22.4
Electrical energy (2.1)
Diesel trucks( 5.3)
Iron ore(45.9)
Coal (7.0)
Chromium ores (10.9)
Ferro-chromium (8.9)
Platinum (37.5)
Iron ore (11.8)
Aluminium (4.8)
Ferro-chromium (4.8)
Source: the dti, StatsSA, SARB, SA National Treasury
• South Africa’s trade patterns have
changed in response to global
growth trends
• Emerging Markets and SADC share
in South Africa’s export basket is
rising:
– SADC absorbed 13% of South
Africa’s exports in 2011
– almost a quarter of
manufactured exports
destined to SADC
– exports to China increased to
13% in 2011 (averaged 4.2%
between 2005-2008)
• Share of exports to the European
Union declined from 33% in 2005
to 21.6% in 2011
8
2015
Provincial contribution to the National GDP, 2014
FS, 5.1%
NC, 2.2%
NW, 6.5%
MP, 6.8%
GP, 35.2%
LP, 7.1%
EC, 7.4%
KZN, 15.8%
WC, 13.9%
Source: SARB, IDC, the dti
9
2015
Manufacturing contribution to provinces’ GDP, 2014
NC
2.1%
FS
8.5%
NW
6.5%
MP
LP
4.4%
2.5%
EC
12.2%
WC
11.8%
KZN
15.8%
GP
0.0%
13.5%
5.0%
Source: SARB, IDC, the dti
10.0%
15.0%
20.0%
10
2015
Composition of the KZN economy, 2014
3.0%
1.9%
Finance, retail estate & business services,
(16.5%)
Manufacturing, (15.8%)
3.8%
16.5%
5.8%
General government services, (13.3%)
11.9%
15.8%
Wholesale, retail & motor trade, catering
& accommodation, (15.5%)
Transport, storage & communication,
(11.9%)
Personal services, (5.8%)
Mining & quarrying, (1.9%)
Construction, , (3.0%)
15.5%
13.3%
Source: SARB, IDC, the dti
Agriculture, forestry & fishing, (3.8%)
11
2015
KZN share of employment by industry
Electricity, gas & water
0.9%
Agriculture, forestry & fishing
3.8%
Construction
Mining & quarrying
9.8%
0.2%
Private households
8.4%
Transport, storage & communication
7.0%
Wholesale, retail & motor trade, catering &
accommodation
22.6%
Community and social services
22.2%
Manufacturing
14.3%
Finance, retail estate & business services
0.0%
Source: SARB, IDC, the dti
10.8%
5.0%
10.0%
15.0%
20.0%
25.0%
12
2015
CORE OBJECTIVES OF THE IPAP
DIVERSIFY THE
ECONOMY
Provide strong
support for
value added
manufacturing,
especially in
globally
competitive
non-traditional
tradable goods
and services
PROMOTE A
LABOURABSORBING
INDUSTRIALISATION
PATH
- with systematic
development of
employmentcreating linkages
and multipliers
Industrialisation
model focused on
INCLUSION OF
HISTORICALLY
DISADVANTAGED
PEOPLE AND
REGIONS
Contribute towards
INDUSTRIAL
DEVELOPMENT IN
AFRICA
- focused on
infrastructure,
productive capacity
and expanded trade
for regional
economic
integration
Long term
intensification
of South
Africa’s
industrialisation
process and
movement
towards a
KNOWLEDGE
ECONOMY
2015
13
14
2015
Transversal Focus: Procurement

Government purchasing power through public procurement contributes between
15% and 25% to GDP (value that is extracted from large scale procurements)

National Industrial Participation Programme (NIPP): Imported Content => US$10
million

Defence Industrial Participation: managed by Armscor and applicable to all defence
procurement. Imported Content => US$2 million

Competitive Supplier Development Programme (CSDP):
conjunction with State Owned Companies (SOCs) .

Designation & Local Production

The Renewable Energy Independent Power Producer Procurement Programme
(REIPPPP)

The Local Procurement Accord
managed by DPE in
15
2015
Designated sectors
Sectors Already Designated*
Minimum
Local Content
Thresholds
Description
Date
1. Rail Rolling Stock
65%
16-07-12
2. Power Pylons
100%
16-07-12
3. Bus Bodies
80%
16-07-12
4. Canned/Processed Vegetables
80%
16-07-12
5. Textile, Clothing, Leather and
16-07-12
100%
Footwear Sector
16-07-12
6. Solar Water Heaters (collectors
70%
19-07-12
and storage tanks/geysers)
7. Set-top Boxes
30%
26-09-12
8. Certain Pharmaceutical Products
Per Tender
07-11-12
9. Furniture Products
85%
15-11-12
10. Electrical andTelecom Cables
90%
08-05-13
11.Valves Products and Actuators
70%
06-02-14
12. Working Vessels
10-100%
01-08-14
13.Residential Electricity Meters
50-70%
01-08-14
* Instruction notes already circulated by the National Treasury
16
2015
Transversal Focus: Industrial Financing
CLUSTER
INCENTIVE SCHEME
BROADENING
PARTICIPATION
• Black Business Supplier Development
Programme (BBSDP)
• Co-operative Incentive Scheme (CIS)
COMPETITIVENESS
INVESTMENT
• Sector Specific Assistance Scheme (SSAS)
• Export Marketing & Investment Assistance (EMIA)
MANUFACTURING
INVESTMENT
• Manufacturing Investment Programme (MIP)
• Capital Projects Feasibility Programme (CPFP)
• 12i Tax Incentive
• Automotive Incentive Scheme (AIS)
SERVICES INVESTMENT
• Film & Television Production
• Business Process Services (BPS)
• Tourism Support Programme (TSP)
INFRASTRUCTURE
INVESTMENT
• Critical Infrastructure Programme (CIP)
• IDZs
17
2015
Transversal Focus: Industrial Financing
R2 billion has been allocated over the MTEF period to
manufacturing development incentives and support for
growing industries, such as business process
outsourcing
The Manufacturing Competitiveness Enhancement
Programme (MCEP) will spend R5.4 billion over the
MTEF and will assist companies with financial support
to upgrade production facilities
• MCEP is the biggest manufacturing incentive and
supports response to companies impacted by
structural and cyclical economic changes
• Deployed
towards upgrading competitiveness of
labour intensive and value-adding manufacturing
sectors
• Grant finance with clear rules-bound access criteria
• Maximise employment and value-added potential in
key sectors
• Exclusions:
programmes
sectors
with
dedicated
support
18
2015
Transversal Focus:
Special Economic Zones & Regional Industrial Clusters
• Budget allocation of R3.53bn over MTEF
for SEZ’s
• Promote creation of a regionally diversified
industrial economy
• Establish broader range of industrial parks
and infrastructure for effective clustering
and hubs
• A dedicated and integrated legislative
framework to enable effective regulation
and management
• The Work Programme of the Regional
Economic Communities: joint infrastructure
development and development of regional
value chains
• Cross-border
development
infrastructure and sector
19
2015
TRADITIONAL SECTORS AND SERVICES
2015
20
21
2015
Sectoral Focus: Automotives

Continuous support for OEMs and local component suppliers
through the revised Automotive Production and Development
Programme (APDP)

The ASCCI-driven intervention which involves the identification of
products or component groups for localisation as well as the
creation of focused Action Plans to give practical impetus to the
localisation drive

Stepped up work on African integration across the full auto sector
value chain
2015
22
23
2015
Energy challenges and impacts on the economy
Rising electricity prices
CO2 Emissions and GPD in Selected Countries ( 1971-2011)
40
Electricity price (c/kWh)
35
30
25
20
15
10
5
Eskom Average Price, from annual financial statements and statistical yearbooks
2008/09
2006/07
2002
2004/05
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
1958
1956
1954
1952
1950
0
Real price 2009 base year
Energy intensity and GPD in selected countries (1971-2011)
5
4.5
TPES per Capita (toe)
4
3.5
3
2.5
2
1.5
1
0.5
0
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
GDP per Capita (US$)
China
Germany
India
Spain
South Korea
South Africa
Malaysia
Source: Nersa, IEA, own calculations
24
2015
Sectoral Focus: Green industries
 Green Transport – develop policy for production of compressed natural gas
(CNG), biomethane-fuelled and electric vehicles
 REIPPPP – Leverage procurement and designation of solar photovoltaic energy
inputs into the national grid
 Scale up Industrial Energy Efficiency Programme
 Eco-labelling development programme - development and accreditation of one
new occupational qualification per annum
 Green skills programme - stimulating demand and supply of critical and scarce
“Green Skills’
 Develop of model policy and regulations to support biogas and natural gas use in
transport
25
2015
Sectoral Focus:
Primary Minerals Beneficiation and Construction
 Investment in mining and petroleum beneficiation projects will receive R2.7bn
over MTEF
 Development of Mineral Beneficiation Action Plans (MBAP) will unpack the
Minerals Beneficiation Strategy (2011) and give specific policy guidance with
regard to wide-ranging minerals beneficiation
 Targeted support measures to increase the supply of mining capital goods
(plant, machinery, after-market) that can unlock and deepen capital goods
manufacturing industries in SA for local consumption and export into key markets
 Strategic input into the legislative review of the Mining Charter (2010) to include
the recognition and reward of local content
 Expansion of the PGM beneficiation industry - aiming to catalyse practical
collaboration between the local mining industry, fuel cell OEMs and component
manufacturers and potential public and private users
2015
26
Thank you