Transcript Slide 1
Wind Power for Local Economic Development: South Africa leading the Way - 28 September 2010 - Gallagher Convention Centre Gerhard Fourie: Director Advanced Manufacturing, Department of Trade and Industry Content • Declining Share of Manufacturing in GDP • Industrial Policy Action Plan • Investigation into the Development of a Wind Energy Industrial Strategy for South Africa • Possible Support Measures Declining Share of Manufacturing Sector • SA economy increasingly dominated by services-related sectors - in line with international trends. Contribution to national GDP 70 Tertiary sector 60 • Share of the manufacturing sector the 2nd largest sector of the economy - decreased sharply since the early 1990s in light of globalisation, trade liberalisation and an increasingly challenging global trading environment. 40 Secondary sector (incl. Manufacturing) 30 20 Primary sector (Agriculture & Mining) 10 Source: SARB 2006 2004 2002 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 1948 0 1946 % Share 50 Declining Share of Manufacturing in GDP An unsustainable consumption-driven growth path Divergence of GDP growth by production and consumption sectors, 1994-2008 (R’2000) 600,000 500,000 300,000 200,000 100,000 Agriculture, forestry and fishing Mining and quarrying Manufacturing Electricity, gas and water Construction (contractors) Wholesale and retail trade, catering and accommodation Transport, storage and communication Financial intermediation, insurance, real estate and business services 2008 2008 2007 2007 2006 2006 2005 2005 2004 2004 2003 2003 2002 2002 2001 2001 2000 2000 1999 1999 1998 1998 1997 1997 1996 1996 1995 1995 1994 1994 R'm (2000) 400,000 4 Source: SARB Credit Extension versus Investment Despite massive private credit extension only a small proportion is being channelled towards fixed investment … Private sector credit extension by all monetary institutions, 1990 – 2008 (%) 100% 90% Other loans and advances 70% 60% 50% Mortgage advances 40% 30% 20% Leasing finance Installment-sale credit 10% Bills discounted Bills discounted Mortgage advances 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1997 1996 1995 1994 1993 1992 1991 Investments Leasing finance 1998 Investments 0% 1990 % of Total credit extended to the private sector 80% Installment-sale credit Other loans and advances 5 Source: CSID (SARB), 2009 Failure to leverage public capital expenditure Public investment and trade balance in metal products and machinery, 1990 - 2008 120,000 100,000 80,000 60,000 R'bn (2005) 40,000 20,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 -20,000 -40,000 -60,000 -80,000 -100,000 General government gross fixed investment Trade balance: metal fabrication, machinery, transport equipment Public corporations gross fixed investment 6 Source: SARB Industrial Policy Action Plan • Increasing concerns about carbon emissions and climate change will have a profound impact on our future economic landscape, Increasing ‘eco-protectionism’ in advanced economies • Increasing energy costs will be a major threat to manufacturing • Department of Energy – Renewable Targets • Opportunities to develop new industries and substantially increase energy efficiencies • Key opportunities – Solar Water Heating – Concentrated Solar Power – Wind – Biomass – Automotives – Substantial improvements in industrial energy efficiency • Potential to create thousands of direct jobs but requires more scoping • IPAP 2 - http://www.thedti.gov.za/ipap/ipap.htm 7 Investigation into the Development of a Wind Energy Industrial Strategy for South Africa Funded by United Nations Development Programme and the Royal Danish Embassy – Under SAWEP Sector research was required to qualify and quantify the opportunities presented to establish a local Wind Turbine Manufacturing Sector. Possible support measures will be determined by the underlying economic constraints and opportunities that shape the study Scenarios for the localisation of wind energy project spend Scenario Assumptions % value Local spend/MW 1. Low-industrial content Grid connection, civil works, other capital costs, fully imported wind turbines 29 R4.64million 2. Medium-low industrial content Grid connection, civil works, other capital costs, tower locally made, rest of turbine imported 47 R7.52million 3. Medium-high industrial content Grid connection, civil work, other capital costs, tower, blades, generator and nacelle made locally, rest imported 66 R10.6million 4. High industrial content Grid connection, civil works, other capital costs, most of turbine made locally, except for specialised items such as gearbox, rotor bearings 87 R13,9million Possible Support Measures • IPAP 2 suggests a systematic promotion of green and energy-efficient goods and services in South Africa – can include wind turbine manufacturing • Integrated Resource Plan will determine viability of localisation • The sector may be designated as a priority. – This process may lead to a Key Action Plan (KAP) for the industry with key performance indicators for next IPAP phase. • The strategic leveraging of public procurement - overhaul of Preferential Procurement Policy Framework Act (PPPFA) • Competitive financing programme to assist South African suppliers to acquire project financing at competitive rates in order to compete with foreign suppliers when bidding to supply into large capex projects in South Africa. • Range of dti Incentives • Next Step - Consultation with potential vendors, manufacturers and developers Thank you Gerhard Fourie Director Advanced Manufacturing [email protected] Tel: +27 12 3941151