Figure 1:
Growth in the Manufacturing Sector in relation to the Purchasing Managers Index[17]
(PMI), 2004 – 2009[18]
IPAP2
identifies manufacturing as the biggest contributor of the production sector[19]
(54.3 per cent of all production sectors in 2008). Performance in this sector has been varied
with a steady decline in its productivity and competitiveness. This can be
ascribed to the high cost of capital, weak skills base, unreliable and
expensive port and rail system, the monopolistic provision and pricing of key
inputs into manufacturing and the failure to use public procurement
effectively.[20]
IPAP2 recognised the divergent performance within the manufacturing sector,
with the potential employment creating industries remaining stagnant. Given the
trends in the different sectors, the manufacturing sector remains important for
employment creation and economic growth[21].
The global
financial crisis has had a severe impact on our industrial capacity with a
significant decline recorded within the manufacturing sector. The greatest
decline in employment was in the retail and manufacturing sectors. This
revealed the structural weakness of the economy, as well as the
labour-absorption potential of this sector. Manufacturing, especially within
the automotive and clothing and textile sectors, and other production sectors
have been identified as the engines of long-term sustainable growth and job
creation in developing countries.[22]
IPAP2 emphasised the prominence of
the production and consumption sectors of the economy, with the explicit belief
that industrial focus should be on the “production” sector as the vehicle for
growth and employment creation. Despite the importance of developing a
knowledge economy, the Information Technology (IT) services received no mention
in IPAP2. A concern is that potential productive industries are omitted because
they are not labour intensive, and whether job creation should be the sole
criteria for Industrial Policy support[23].
The disproportional allocation of industrial funding to the automotive and
clothing, textile, footwear and leather sector implies that Government’s focus
is on maintaining existing jobs rather than creating jobs[24].
The
financial support given to these sectors indicates their overreliance on
Government support for their survival. Support for these industries is at the
expense of other viable industries, and Government has not yet indicated the
full cost of supporting these specific sectors[25].
Recently, employment creation in
The
Committee agrees with IPAP2’s emphasis on the manufacturing sector being the
catalyst for economic growth and job creation. In this regard, Foreign Direct
Investment should be encouraged but with an emphasis on the promotion of the
industrial development, in both new and existing industries, specifically in
economically depressed areas to achieve these goals.
4.2 Coherence between macro and micro economic policies
IPAP2 stressed the need for alignment and stronger coherence between
macro- and microeconomic policies to effectively achieve the objectives of job creation
and poverty eradication. Macroeconomic policies refer to fiscal policy, which
deals with government expenditure and revenue collection, and monetary policy,
which deals with the supply of money, the availability of money and interest
rates or the cost of money. On the other hand, microeconomic polices refer to
policies that improve economic efficiency and equity, usually through judicial
and regulatory mechanisms. This type of policy typically focuses on individual sectors of
the economy, such as industries, businesses and households but may also
institute economy-wide reforms through policies such as tax policy and
competition policy.
IPAP2 expresses a dependence on macro-economic policies which are
favourable relative to
§
A competitive and stable
exchange rate regime; and
§
A competitive real interest
rate regime.
In turn,
it argues that microeconomic policies can contribute to the stability of
macroeconomic variables, such as inflation, mainly by increasing competition
within industries and improving efficiencies between industries; thus lowering
prices.
In terms
of South Africa’s monetary policy, where the South African Reserve Bank focuses
on targeting inflation by adjusting interest rates and practising a floating
exchange rate regime, Box 1 below illustrates the effect that changes in the
interest rate through the exchange rate channel will broadly have on the
external economy (i.e. on imports and exports).
In a flexible (floating) exchange
rate regime, the effect of a change in the interest rates on the exchange rate
and net exports is as follows:
↓Ms → ↑I → ↑FA →
↑R → ↓X → ↓(X-M) → ↓Y
Where:
Ms = Money
supply
I =
Interest rate
FA =
Foreign assets
R =
Exchange rate
X = Exports
(X-M) = Net
exports
Y =
National Income (GDP)
↑
= Increase
↓ =
Decrease
A change in the repo rate affects
commercial banks’ interest rates as well as exchange rates, money supply and
credit affordability. Through the various transmission mechanisms, changes in
the repo rate will eventually influence decisions on spending by individual
consumers and Government and investment by private institutions. The end result
of a change in the repo rate is a change in the supply and demand for goods and
services which put pressure on the prices of these goods and services
(inflationary pressure if average prices are rising). The repo rate is being
used as an instrument to control inflation and in this process the goods and
services market (depicted by aggregate demand and supply) are influenced.
It must be noted that in the South
African context, this channel may not be that strong, as the
Figure 2
below indicates the relationship between the real effective exchange rate[27]
and the real Gross Domestic Product (GDP) growth in manufacturing. The growth
in manufacturing seems to be positively correlated to the real effective
exchange rate (REER) between 1980 and 1989. However, from 1989 to 2000, there
seems to be an inverse correlation between the two. From 2000 onwards, the
positive correlation appears again. The SARB also indicated that real GDP
growth in manufacturing seems to be more sensitive to changes in local and
international income and expenditure.
Figure 2:
Real effective exchange rate and annual growth rate of real GDP in
manufacturing, 1980 – 2009[28]
In
general, stakeholders supported the view of the alignment between macro and
micro economic policies. The Congress of South African Trade Unions (COSATU)
asserted its support in that macroeconomic policy should promote IPAP2 and
welcomed the move away from macro-economic policy that “claims to promote
stability” at the expense of real economic growth. NUMSA calls on the Minister
of Economic Development to settle the debate and give clear direction on
macroeconomic policy that would be required to realise the objectives of IPAP2.
An
alternative view postulated by Prof P Bond is that the unsound macroeconomic
management of the economy would not induce an increase in the productive
activity of the real economy. He further argues that there would be no reversal
in the implementation of macroeconomic policy given the statement by the
Minister of Finance during his budget speech on 17 February 2010 wherein the
view that the exchange rate regime and inflation-targeting would be retained
was reinforced. Prof Bond argues that this would imply the pursuit of high
exchange rates, the maintenance of a volatile currency and high interest rates.
With
respect to ensuring a stable and competitive currency, COSATU expressed a view
calling for the devaluation of the currency to a more competitive level in
support of industrial policy. COSATU further argues that developing countries
pursuing industrial policy had targeted their respective exchange rates. Mr S
Jennings, Chief Executive Officer (CEO) of the PG Group, informed the Committee
that the current strong value of the currency has placed the export sector;
particularly the automotive component sector was at risk, with further
retrenchments planned.
However, Dr E Wessels is of the view that a strong currency
is not necessary to “reduce the cost of imported capital goods” within
developing countries. He further argues that the inflationary consequence of
depreciation has been exaggerated because the overall impact on the economy is
determined by the REER, which is measured by the ratio of non-tradable prices
to tradable prices. On the other hand, Prof F Tregenna highlighted the
constraints to the implementation of IPAP2 as the lack of a clear macroeconomic
policy, the strength of the exchange rate, exchange rate volatility, high
interest rates and low domestic demand.
The National Treasury’s view of the real exchange rate is
that it must depreciate in the long term. This implies that there must be a
moderation in the nominal exchange rate coupled with lower inflation and much
stronger productivity in sectors exposed to international competition.
Therefore, the National Treasury still advocates for the reduction of dissaving
and the inflation targeting framework. Although a depreciated exchange rate is
helpful to support competitiveness, it cannot ensure that exports will be
promoted successfully. It therefore stressed that complementary policies, such
as good quality education, infrastructure development, effective enforcement of
competition and well designed regulatory frameworks, are required to raise
economy-wide productivity. In addition, product and factor market rigidities
must be removed to facilitate demand and production adjustments to relative
price changes, which is the realm of microeconomic reforms.[29]
In terms of the volatility of the exchange rate, the
National Treasury acknowledges that this a concern, particularly for small and
medium sized exporters when needing to invest in production capacity and for
importers when planning the costs of capital or consumption goods. It therefore
suggests that more targeted intervention at these levels should be made to
assist firms with the overall costs of hedging. The gradual accumulation of additional
foreign reserves by the South African Reserve Bank, as well as the facilitation
of the development of hedging instruments would assist in smoothing excessive
rand volatility over suitable timeframes. The National Treasury discourages the
adoption of a fixed exchange rate due to difficulty to implement and the range
of economic costs that will be incurred as a result. This would also imply that
The
Committee is of the view that the issues of the volatility of the exchange
rate, the interest rate, and its impact on the manufacturing sector should be
addressed at the highest level of government. It welcomed the Minister’s
response that “there is a sustained and serious engagement on this issue at the
highest level”. The success of IPAP2 will in the Committee’s opinion depend to
a great extent on the development of the micro-economy and the deepening of the
cohesion between the macro-economic and micro-economic policies.
4.3 Leveraging Public Procurement
Procurement
is a critical component of IPAP2. Both business and organised labour have
called for the overhaul of the Preferential Procurement Policy Framework Act
(PPPFA) (No. 5 of 2000) and have further added that procurement should be used
as an instrument for industrialisation. IPAP2 calls for the strategic
leveraging of public procurement to achieve industrial objectives[31].
The current implementation of procurement policy reflects the absence of
strategic industrial objectives that should benefit local industries[32].
The importance of “leveraging procurement” for industrialisation would be
dependent on the shift from “ad hoc procurement practices” towards “fleet type”[33]
purchasing arrangements[34].
The intention of leveraging procurement would not be to support uncompetitive
local industry but “to facilitate local production of ongoing repeat
procurement “fleets”, from locomotive to power-station components”[35].
IPAP2
calls for localisation targets for State-Owned Enterprises (SOE) and government
departments pursuing ongoing purchases of capital goods and infrastructure
service. Various strategic procurement
groups would be identified for the development of a long-term government
procurement plan with the emphasis on ensuring that tenders awarded to foreign
companies support increased domestic production and supplier development.
The
alignment of the Competitive Supplier Development Programme (CSDP) with the
National Industrial Participation Programme (NIPP) would support the movement
towards a long-term fleet-procurement process. This according to the Minister
of Trade and Industry, Dr R Davies, would improve opportunities for local
industries to supply a greater proportion of the inputs needed for the
transport, power, and water infrastructure programmes.
At present, procurement
promotes a “crony capitalist tendency which is increasingly losing credibility
in view of the wealth accumulation by the “new black elite”[36]. Prof S Roberts argues that “instead of addressing
this problem head on by ‘in-sourcing’ vital inputs, IPAP2 accepts the premise
of massive outsourcing, and merely attempts to gain cheaper inputs and more
domestic production. He questions Government’s decision to make coal-fired
electricity, nuclear electricity and defence aerospace central to the
procurement strategy. He argues that these industries should be phased out for
reasons associated with anti-corruption challenges, climate change, and
environmental health and safety issues.
COSATU
acknowledges that Government’s procurement policy could have a significant
impact in transforming the economy and creating decent jobs. An important element of local procurement
linked to a strategy of industrial diversification, is the use of the public
infrastructure programme to promote the development of our domestic capital and
intermediate goods sectors[37].
Business
Unity South Africa (BUSA)[38]
welcomes the detailed proposals on leveraging procurement. However, the
challenge remains the alignment between the Department of Trade and Industry
(DTI) and the National Treasury. Key to the success is achieving the correct
balance between the transformation and the promotion of local industries
through procurement opportunities. In response to a question regarding the
apparent lack of alignment between DTI and National Treasury, BUSA is of the
view that many of the proposals contained in IPAP2 would require legislative
amendments or a change in approach with regard to tender requirements. For
instance, awarding of tenders should take cognizance of the industrial policy
requirements for the promotion of local industries notwithstanding the legal
imperatives. National Treasury is concerned that some of the proposals may
prove to be unconstitutional, however business differs from this viewpoint,
therefore there is a call for closer interaction to resolve these
uncertainties.
The Federation of Unions of South Africa
(FEDUSA) supports the proposal to leverage procurement, as it would ensure that
local companies secure a greater share of contracts. This potential would
assist in local companies becoming more productive and thereby increasing the
supply of decent employment opportunities. FEDUSA however cautions against
shifting towards support for industries in the primary sector at the expense of
the service sector.
The
The Committee welcomed the input from the
Mr J Mackenzie, representing the City of Cape Town
Municipality, indicated that most of the materials utilised in its Integrated
Rapid Transit project, such as steel, aluminium, and glass, was produced and
assembled locally. Although some components within the manufacturing process
were imported, as the City was required to meet the tight demands for the 2010
World Cup, 60 per cent of the content of manufactured goods was produced
locally.
In
response to IPAP2, Transnet is migrating to programmatic fleet procurement
practices that would provide significant value opportunities for Transnet. The
standardisation of the local fleet procurement processes would ensure
sustainability and contribute to the local industry’s development[39].
One
of the main foci of IPAP2 was leveraging public procurement. The Committee was
of the opinion that in addition to this, private sector procurement should be
encouraged through strategies that promote buying South African products. Such
strategies should be linked to possible import substitution initiatives.
4.3.1
Amending Procurement Legislation
IPAP2 promises greater coordination and
standardisation across government and its SOEs in the area of procurement with
the aim of creating local industrialisation opportunities around
§
Alignment of discretionary points with
broad-based black economic empowerment (BBBEE) codes and local procurement.
§
The elimination of import fronting.
§
The designation of “fleets” and other “critical
industries” for domestic production.
§
The allowance of price matching by domestic
producers.
IPAP2 requires preferential procurement
regulations and legislation to be overhauled through a two-stage process.
First, amendment of the PPPFA’s regulations should be fast-tracked, and
secondly the broader amendment of the PPPFA.
COSATU in their submission is of the view that
the review of the PPPFA and the amendment of regulations should happen
simultaneously. Amending the regulations involves aligning the PPPFA with the
BBBEE codes as the current BBBEE legislation does not have industrialisation
and creation of employment as its primary objectives[40].
BBBEE legislation should be subordinated to the imperatives of the industrial
policy[41].
A concern for COSATU is that IPAP2 is silent on the promotion of collective
ownership in the form of co-operatives.
4.4 Industrial Financing
The lack
of private capital investment within the production sectors of the economy,
particularly those that may have a developmental return for the economy, is
highlighted in IPAP2. The acknowledgement that the cost of capital is high
relative to our trading partners requires an approach that would allow Government
to be the catalyst to unblock financial impediments to growth and employment
creation. IPAP2 clearly identifies the role for development finance
institutions in that it should mainly invest in the production sectors of the
economy, where there will also be developmental returns. The Minister concluded
that Government intends to develop proposals to enhance access to concessional
industrial financing for investment in IPAP2 priorities and other production
sectors on terms comparable to those of our major trading partners.
Many
stakeholders have highlighted the importance of concessional industrial
financing through the Industrial Development Corporation (IDC) and the IDC
should be seen as an industrial financing body for IPAP2[42]. BUSA is however not convinced that the IDC
would be able to play that role as a key challenge to the
success of IPAP2 is that the current approach of the IDC is similar to that of
private banks. In other words, its management of risk makes it very difficult,
if not impossible, for emerging entrepreneurs to obtain financing from the IDC.
During the IDC’s interaction with the Committee, it highlighted that the
management of risk remains important.
COSATU argues that Development Finance Institutions should promote a
developmental agenda and not be as risk averse as commercial banks. Strong
conditionalities for industrial financing should be in place in support of any
company[43].
The provision of finance at below market rates for key activities and the
acceptance that there would be failure and resource wastage are pivotal for the
success of the investment in the production sector[44].
Given limited access to concessional financing on international markets and no
forthcoming fiscal injections into the IDC, one can conclude that the lending
terms would not be dissimilar to those available commercially in the short-term[45].
This highlights a potentially serious impediment for the successful
implementation of IPAP2. In its recent budget report, the Committee called for
a significant recapitalisation of the IDC in order to support IPAP2. The
Committee had further called for the reviewing of IDC’s legislative framework
to align it to achieve the objectives of a developmental state.
The access to and cost of capital remains a major concern for the
Committee. The IDC, in conjunction with other national, provincial and
municipal development finance institutions, should be funding IPAP2. In
addition, Government should consider the recapitalisation of the IDC.
Concerns around the financing of IPAP2 have been raised by various
stakeholders. The Committee is of the view that private sector investment in
the production sectors of our economy would be necessary for the success of
IPAP2. Furthermore, the Committee is of the opinion that
No clear consensus could be reached on the use of pension funds as a
source of financing for IPAP2. However, there was some agreement that if the
use of pension funds was endorsed, a cap would need to be placed on the total
percentage of pension funds that could be accessed for this purpose as well as
strict criteria outlining the type of projects or programmes that could be
financed in this manner. The Committee suggested that further research on the
impact of loans and the implication of the use of pension funds were required
before these sources were utilised.
The Committee raised some of the challenges experienced by small, medium
and micro enterprises (SMMEs) and cooperatives in accessing capital. The
perception was that capital was not readily available to previously
disadvantaged and vulnerable groups at an affordable cost. The Committee was of the view that capital
should be available to SMMEs and cooperatives taking equity considerations into
account.
4.6
Competition Policy
IPAP2 recognises the continued challenges with respect to the
monopolistic provision of strategic goods and services, from both private and
public entities.
Competition policy attempts to address both
private anti-competitive behaviour and government practices and instruments
that influence competition in the market. The absence of effective competition
stifles innovation and product improvement with dominant firms taking advantage
of their market positions, with little or no off-setting benefits to society[46].
Generally, profit margins are achieved not by innovation and improved
productive capacity but rather from the historical position bequeathed to such
firms.
IPAP2 focuses on the role of competition
authorities, working alongside other regulatory bodies, in monitoring for
anti-competitive behaviour by the private sector. Lastly,
anti-competitive practices would be targeted, particularly where these concern
immediate inputs to downstream labour-absorbing production as well as consumer
goods to low-income households[47].
This applied especially to products such as carbon and stainless steel,
chemical polymers, fertilisers and aluminium, among others.
In his submission, Prof S Roberts[48]
purports that decisions of critical, monopolistic firms influence wider
socio-economic outcomes in terms of employment, investment, production, and
incomes. These patterns of competitiveness reflect past policy decisions, which
entrenched the positions and power of large firms within the South African
economy.
He further argued that exports are skewed towards resource and energy
based commodities, which make a limited contribution to employment creation.
Competition and industrial policy should be complementary and mutually
reinforcing to build competitive capabilities through:
§
Understanding market dynamics;
§
Dealing with the conduct of large
firms with negative industrial development consequences; and
§
Supporting new entries, through
development finance.
COSATU welcomes the focus on competition policy as anti-competitive
behaviour acts as a constraint to economic development. The enforcement of
outcomes of investigations by the Competition Authorities to eradicate decades long
anticompetitive may not have the desired impact as it does not
have the necessary capacity to discipline larger firms, and are very time and
resource intensive. COSATU is of the view that to address these structural
inefficiencies monopolistic firms should be dismantled.
In ensuring the achievement of more competitive outcomes and to address
the issue of monopolies, Prof S Roberts proposed amendments to the Competition
Act:
§
Classification of import parity pricing as an excessive
pricing which is detrimental to the economy;
§
Easier imposition of divestiture orders on abuse of
dominance and restrictive practices;
§
Empowerment of the Competition Authorities to impose
administrative penalties equal to the period of the anticompetitive conduct and
not to be limited to an annual turnover of companies;
§
Additional competition enforcement capacity, to
include acting on facilitating conduct for cartels; increased deterrence; ways
in which entrants are excluded;
§
Market enquiry provisions which provide more powers to
investigate industries where there are anti-competitive outcomes, and recommend
the necessary measures; and
§
Complex monopolies – to address ‘conscious parallel
conduct’.
According
to Dr Wessels, competition policy should be utilised to “prohibit the
systematic discrimination practiced by companies that export at lower prices
than the prices they charge South African consumers”[49].
Import tariffs should be removed on semi-processed inputs to labour-intensive
industries that do not export[50].
The absence of competition, or collusive pricing, by companies in the
value-chain and input suppliers, in particular, had constraining effects on
value-addition efforts and competitiveness of exporters[51].
The equity
principle seeks to balance the efficiency with the support for a developmental
economy. This picks up the challenges of small and medium enterprise
development, and the promotion of ownership. The high concentration of capital,
complex monopolies and conglomerates in
4.7 Developmental Trade Policy
IPAP2 refers to developmental trade policy as an instrument of
industrial policy, primarily through the implementation of tariffs. In this
regard, there is general support for the reduction of tariffs on intermediate
inputs into manufacturing and other production sectors, albeit on a
case-by-case basis. However, the selective use of tariffs should also take into
consideration
the potential for significant creation and/or retention of decent jobs and for
significant import replacement; the difference between bound and applied rates;
and the formalisation and strengthening of conditionalities related to tariff
increases.[52]
In addition, IPAP2 refers to the more effective enforcement of
BUSA welcomes the explicit reference to the SQAM institutions. However,
it cautions that these institutions would require sufficient capacity to meet
the additional demands placed on it by IPAP2. BUSA is also actively supporting
Government’s initiatives to customs fraud.[55]
COSATU also acknowledges the importance of SQAM institutions and calls for
these to be “linked to Government’s efforts to encourage import replacement
and displacement”. In addition, COSATU emphasizes that Government must embark
on detailed impact analyses and sectoral engagements before making new trade
offers, especially given the economic conditions due to the global economic
crisis.[56]
NUMSA highlights the need for timely and effective implementation of
trade policy, especially in terms of tariff reform applications. It mentions
that many companies have closed downs and jobs have been lost due to delays in
the International Trade Administration Commission’s processing of applications.
Furthermore, NUMSA calls for Government to actively engage in trade policy that
aims to selectively reverse the liberalization process that poses a threat to
the development of a coherent domestic productive base. It also calls for
increased surveillance and monitoring of borders by the South African Revenue
Service and the South African Police Service, as well as enforce trade
agreements with the Southern African Development Community (SADC) to eliminate
the scope for imports to flood the South African economy through alternative
channels and to avoid dumping.
The
Committee stressed that there must be a developmental approach to tariffs,
where tariffs are applied strategically to assist the development of local
industry where necessary. In this vein, the amount of time taken to respond to
tariff reform applications was of concern. The Committee is adamant that these
timeframes must be decreased to actively support industry and not undermine
their sustainability.
5.
Sectoral
Issues
IPAP2 identifies three clusters and 13 sectors, which it intends to
support directly. These 13 sectors were clustered as qualitatively new areas of focus,
existing IPAP sectors that will be scaled up and broadened or sectors with
potential for development of long-term advanced capabilities. Each of these
sectors is allocated a number of key action programmes, milestones and lead and
support departments and/or entities.
The sectors that were focused on during the public hearing the
following:
§
Metal fabrication, capital and
transport equipment, especially steel;
§
Green and energy saving issues;
§
Agro-processing;
§
Automotives, components and medium
and heavy vehicles;
§
Plastics, pharmaceutical and
chemicals, especially pharmaceuticals;
§
Clothing, textiles, leather and
footwear;
§
Biofuels; and
§
Advanced manufacturing.
5.1 Metal fabrication, capital and transport
equipment, especially steel
Officially,
the Metal fabrication, capital and transport equipment cluster of sectors
consists of metal products excluding machinery; machinery and equipment; other
transport equipment; and electrical machinery and apparatus. However, IPAP2
included basic iron and steel and basic non-ferrous metals, as these
sub-sectors underpin the supply of key intermediate inputs to the broader
cluster. The cluster plays a critical role in driving the manufacturing
sector’s competitiveness, as it produces products, applications and services
used across the entire economy such as infrastructure programmes, construction,
general engineering, mining, automotives and packaging.
During the
public hearings, the Committee focused on the steel industry,
given its widespread impact as a key intermediate input. The steel industry noted that it is fairly
diverse in terms of the products manufactured but also in terms of each
sector’s ability to compete globally.
In
ArcelorMittal’s view, the challenges experienced by South African downstream
industries are not primarily due to its export parity pricing practices. It
attributes these challenges to a number of deficiencies that it identified as
disadvantaging these industries, namely:
§
Non-competitive cost structures.
§
Uneconomical production units due to the absence of economies
of scale.
§
Old facilities which are inferior to current new
technologies.
§
Unfair competition in international markets, as
governments in the exporting markets provides subsidies and incentives for
steel products.
§
Unregulated imported sub-standard products that
compete with quality local products.
§
Other non-trade barriers such as rail and port
deficiencies.
Furthermore, it assured the Committee of the primary
steel industry’s willingness to support and assist Government to build the
economy to achieve a better life for all. It welcomed the IPAP’s support of
further investment in industry’s productive capacity and the identification of
a number of priority sectors, including the vehicle and component manufacturing
industries, which are all steel related. It advocates that the alignment of
macro- and micro-economic policies will promote investment in certain sectors
and will have a positive impact on steel sales to the construction sector.
Kumba Iron Ore Resources highlighted
that it complements IPAP2, as it forms part of a critical value chain that
provides inputs to value-added sectors that can have high employment and growth
multipliers. It highlighted that
§
Job creation and skills development.
§
Sustainable broad-based black economic empowerment.
§
Sufficient and competitively priced energy.
§
Reliable, efficient and affordable transport systems,
including rail and ports.
§
Competitive steel sector.
§
Greater transparency of key inputs into productive
processes.
Kumba outlined the role it had been playing to contribute to these
requirements, as well as the challenges it has been experiencing in this
regard. In addition, Kumba has been involved in a number of research and
development partnerships to improve mineral beneficiation within its
operations, as well as for downstream industries.
Furthermore, Kumba briefly described the history and context of its
current commercial dispute with ArcelorMittal regarding the cost of the iron
ore it supplies to ArcelorMittal. Kumba argues that even if ArcelorMittal had
paid export parity prices for its iron ore, it would still have made
substantial profits from its steel sales. In Kumba’s opinion, ArcelorMittal
should have raised its prices to match the sharp increase in the basket of
international steel prices since February 2010 that it tracks but have instead
added the R600 Sishen surcharge as of 1 May 2010.
In his response, the Minister of Trade and Industry highlighted the
matter of recent steel price increases implemented by ArcelorMittal due to
their dispute with Kumba Resources. He noted that the matter had been referred
to the Department by the Competition Commission, which was investigating
ArcelorMittal’s recent decision to raise steel prices despite the fact that the
cost of its iron ore purchases had not been increased. He assured the Committee
that the Department would vigorously pursue options to create the conditions
for capacity and competition within key inputs into the economy.
The Committee notes that the dispute between ArcelorMittal and Khumba
Resources around the relationship between the lapsed opportunity in obtaining
mineral rights, iron-ore and the consequent high steel price is currently in
arbitration. Further that the Competition Authority is also investigating the
possible presence of any anti-competitive behaviour with respect to the price
hike.
5.2 Green and energy saving industries
With the
release of IPAP2, Government has given indications that the current supply of
energy is not sustainable and that alternative energy sources to sustain the
economy should be invested in. IPAP2 outlines the direction in which our
industrial capacities are pushed. The DTI notes that the security of energy
supply posed a major threat to our industrial base, but recognises the
potential to develop new green energy efficient industries and related
services.
The
Minister of Science and Technology, Ms N Pandor, indicated that Government’s
economic sector and employment cluster would finalise a “green economy” plan
for submission to the Cabinet in July 2010.
The employment creation potential has been identified in the transport,
energy, building, manufacturing, agricultural and forestry sectors.
In their
submission, the Environmental Goods and Service (EGS) Forum, represented by Mr
P du Plooy, advocated for the creation of conditions for developing the latent
potential for investment, jobs and competitiveness in the local green sector.
It calls for the development of green industries with both employment creation
potential and a significant environmental pay-off. In this regard, the
development of new energy sources would potentially contribute to the
protection of our natural resources.
IPAP2
recognises the scope of the green industry to drive economic development and
provide employment creation opportunities, if the green industry enjoys a
preferred status[57].
Information provided by the EGS Forum indicates that the current share of the
market is between R15 billion and R22 billion and a minimum of 228 000 people
that are engaged in the sector. The EGS Forum[58]
argues that the sector has the potential to grow by 10 per cent annually over
the next five years and can provide alternative employment opportunities for
other sectors that are stagnating.
The
Committee acknowledges
5.3 Agro-processing
IPAP2 identifies the strong linkages between up- and
downstream[59]
industries in the agro-processing sector[60].
The food processing sector is the largest manufacturing sector with the
potential to increase employment opportunities beyond the million direct and
indirect jobs that already exist, if the primary agricultural sector is included.
IPAP2 highlighted that the economic impact of the proposed key action
programmes would be the retention of 216 000 jobs and the creation of
another 66 180 jobs over the ten years.
Agri-SA
expressed a view that IPAP2 focused only on horticulture, aquaculture, organic
products and niche products. Grain and field groups are listed as uncompetitive
and of low value. However, the products listed as uncompetitive and of low
value present the greatest potential for the sector[61].
Both IPAP2
and the SAFVCA (South African Fruit and Vegetable Canning Association)
recognise the competitive advantage in a number of fruit and beverage
sub-sectors which, if fully exploited, would place
The Fruit Canning Initiative, between Government and the
industry, created a platform for long-term growth and competitiveness of the
industry. This long-term growth is under threat due to the temporary
macroeconomic challenges such as the global financial crisis, an export
unfriendly exchange rate, competition with subsidised agricultural products and
adverse input cost pressures[63]. The creation of an enabling environment and
industrial policy intervention would be required to stimulate job creation and
support rural development. In the absence of support for the industry, there
would be factory closures, deindustrialisation, job losses and an adverse
impact on the rural community[64].
The Food and Allied Workers Union (FAWU) is of the view
that IPAP2 makes limited reference to the up-scaling of agro-processing and
only refers to niche markets. FAWU calls for a move toward more value-added
processing to “luxury” foods for the export market.
Agro-processing offers excellent foreign direct investment
opportunities, which must be supported and encouraged. Agro-industries are also
a mechanism for the sustained empowerment and revival of rural development.
Government should support the upgrading of the
quality of produce through adoption and enforcement of quality standards.
Assistance should be given to enable products to move along the value chain,
especially in respect to increased canning of agricultural products.
Land
reform is essential to ensure that agricultural productive capacity is fully
utilised, and a review of the principle of the “willing buyer – willing seller”
is required.
5.4 Automotives, components and medium and
heavy vehicles
IPAP2 identifies the
automotive sector as critical to the economy given its multiplier effect. The
automotive sector has shown significant production growth but a significant
trade deficit still exists. This presents major opportunities to leverage the
Automotive Production and Development Programme to strengthen the automotive
sector by focusing on key areas which would provide the greater economies of
scale in component sourcing[65].
The medium and heavy
commercial vehicle (MHCV) sector potential provides the opportunity to
resuscitate bus production in
The National Association of Automobile Manufacturers of South Africa
(NAAMSA) welcomed IPAP2 in that it supports investment in the
productive capacity of the economy, deepening and broadening localisation in
the domestic automotive industry. The National Association of Automotive
Component and Allied Manufacturers (NAACAM) also emphasised that the industry needed more downstream
beneficiation, because it is more labour intensive.
NAACAM
informed the Committee that economies of scale increased on vehicles and
components. Many global suppliers have access to capacity which they used to
control the market. The current macroeconomic environment negatively impacts on
the motor sector as it encourages imports and limit exports. Concerns for the
industry was that employment in this sector had decreased, as less than 30 to
35 per cent of vehicles produced locally were produced with local content[66].
Legislation is required that would compel manufacturers to stipulate their
local content ratio. This would assist the industry in becoming an employment
creator. More government incentives and encouragement is needed to promote and
support a higher local content in automotive manufacturing.
NAAMSA is
concerned about the impact of the dispute between Kumba Iron
5.5
Clothing, textiles, footwear and leather
The
sectors within manufacturing, especially the clothing, textiles, footwear and
leather industries have been under severe pressure for sometime. The sector’s
contribution to employment has declined significantly, especially for unskilled
and semi-skilled labour, as many factories have had to close down as a result
of productivity losses. Due to the sector’s labour-absorption capacity and its
current challenges to remain competitive, it required government
intervention. The Minister of Finance
allocated an additional R3.6 billion over the next three years to the
Department of Trade and Industry for industrial policy interventions related to
IPAP2. The clothing and textile sector will be receiving R1.75 billion of this
allocation or 48.6 per cent[67].
The
clothing, textiles, footwear and leather industry is the most labour intensive
sector within manufacturing with R38 billion in annual sales[68]. In its submission, the South African Clothing
and Textile Workers Union (SACTWU) welcomes government support through the
Clothing and Textiles Production Incentive (CTPI) and Clothing and Textiles
Competitiveness Programme (CTCP) as it would assist in stemming the decline in
the sector. The objectives of the CTPI and CTCP are to prevent further
closures, minimise job losses and to increase the competitiveness of the
industry.
SACTWU
informed the Committee that the implementation of IPAP2 programmes have
commenced in the industry with 36 potential companies in the pipeline due to
the Competitiveness programme. In line with a more strategic approach to tariff
reduction, clothing duties on 35 key products increased to World Trade
Organisation’s (WTO) bound rate levels, with the reduction on duties on certain
textiles not produced locally[69].
SACTWU
welcomes the commitment in IPAP2 to combat illegal imports which include the
following:
§
Under-invoicing;
§
Smuggling;
§
Rerouting via third countries;
§
Misuse of rebates and credits; and
§
Corrupt payments to officials.
Concerns
around the readiness of the South African Revenue Services (SARS) in dealing
with custom fraud have been expressed[70].
Failure to deal with illegal imports and customs fraud would undermine the
initiatives announced in IPAP2[71].
SACTWU acknowledges the focus on fleet procurement but argues that other
products especially within the clothing sector should be emphasised.
5.6 Bio-fuels industry
Currently, the majority of
IPAP2 acknowledges
The South African Petroleum Industry Association[74]
(SAPIA) supports the establishment of a world class, economically viable,
environmentally sustainable bio-fuels industry. It calls for an integrated
approach which should include a renewable energy strategy, energy security and
bio-fuels as part of the future fuel road map. A concern raised by SAPIA was
that the 2007 Bio-fuels Strategy fails to address the practical and economic
issues of integrating bio-fuels into the fuels supply chain.
The Southern African Bio-energy Association (SABA) - formerly known as
the Southern African Bio-fuels Association – welcomes the inclusion of
bio-fuels within IPAP2. A close link exists between renewable energy and
agriculture. The scope for crops for bio-fuel production is limited, as
Currently,
the operating cost for developing bio-fuels is high but great employment
opportunities exist within the industry. Initial indications suggest that
developing the bio-fuel sector would be costly but it could become as cost
effective as
Food security must be the
pre-condition for the development and support of the Bio-fuels industry in
In
terms of crop production for the bio-fuels industry, the Committee insists that
food security must be prioritised over bio-fuel production. Strategies need to
be developed and implemented to ensure that the over-supply of crops are first
used to promote food security in Africa before being considered for bio-fuel
production.
5.7 Advanced manufacturing
The
aerospace and defence sector has been identified by the Government in IPAP2 as
one of the sectors with potential for development of long-term advanced
capabilities. Government views this sector as a catalyst for new development
and innovation[77].
IPAP2
views the aerospace and defence sector as a “critical and pervasive generator
of new technologies” and that it would be instrumental for future innovation.
This contributes to the engagement across the substantial part of
manufacturing, services and primary sectors of the economy to advance the
industrialisation process and movement towards a knowledge economy. IPAP2 acknowledges the achievement of global
recognition and confidence from global original equipment manufacturers (OEM’s)
in aerospace that
In his submission, Mr R Louw[78]
expressed a view that IPAP2 did not sufficiently recognise the inherent
complexity of aerospace and advanced manufacturing. He further argues that the
fragmentation of efforts within the country also introduced risks and that the
sophistication of existing South African capabilities was also underrated. In
addition, there was a lack of recognition in IPAP2 of the importance of
continental African and global partnerships for the advancement of the local industry.
Government initiatives within the sector has a narrow focus,
as the aerospace industry is complex and consists of other areas such as
general aviation, traffic control, military aviation and other matters[79].
Although the employment opportunities within the sector were of a highly
technical nature, low level job opportunities were also created[80].
Another concern raised by Mr Louw was the absence of a
coherent integrated skills development strategy. Further Education and Training
Colleges (FET), universities and Universities of Technology were underfunded
and non-aligned[81].
Funding for the Sector Education and Training Authorities (SETAs), particularly
MERSETA[82],
should be increased to address the alleged shortage of trained candidates and
to meet the skill requirements.
5.8
Pharmaceutical sector
Employment in the pharmaceutical sector has declined by more than 40 per
cent between 1999 and 2007[83].
The
National Association of Pharmaceutical Manufacturers[85]
(NAPM) argues that no significant improvement in the trade balance would occur
as the trade balance for pharmaceuticals has remained constant since 1994. Job
creation potential is not mainly in the pharmaceutical producing sector, as it
is highly automated, but importers of pharmaceutical products contribute
significantly to employment through distribution networks[86].
NAPM raised a couple of concerns around the following:
§
Procurement.
§
The dominance of certain companies within the sector.
§
The alignment of discretionary points with BBBEE Codes of
local procurement as it would limit competition and inflate prices.
In its
submission, Aspen Pharmaceutical Holdings informed the Committee that it
currently supply 70 per cent of anti-retrovirals (ARV) locally. However, it had
a major concern that the public sector imported 53 per cent of all its tenders.
This has the potential to cause de-industrialisation, and loss of productive
capacity and jobs within the sector.
The
biopharmaceutical industry has the potential to be a major industry in that it
has predicted that the majority of medicine produced in future would be
biologic in nature[87].
Currently, the biotechnology sector in
Bio-clones
develop and produce biopharmaceutical or biological medicines including the
active pharmaceutical ingredients for renal failure and cancer biological
medications. It informed the Committee that its current strategy is to invest
profits into skills development thereby creating employment opportunities. The
biopharmaceutical industry has the potential to become a major market player if
it receives the necessary financial support and within the next five years it
could be able to commercialise the products manufactured. It also called for
intervention and support from the Department of Health and National Treasury
through the preferential procurement process.
6. Conclusion
The public and private sector and civil society including organised
labour all agreed on the urgent need for an Industrial Policy. This consensus
was visible around a number of core issues: employment creation, decent work,
the revival of the manufacturing sector, value of green agro industries. The
written and verbal submissions emphasized the importance of the
re-industrialisation of
However a number of horizontal and vertical challenges have been
identified among them: access and cost of capital, security of energy supply,
transport and logistical infrastructure including ports and communications as
well as the critical need for co-ordination between departments, spheres of
government and state-owned enterprises.
Other conclusions:
6.1.
The Committee will encourage and promote a regional
dimension for IPAP2, as it can contribute to regional integration.
6.2.
The Committee is of the view that the transport systems
(roads, rail, ports, etc.) and logistical infrastructure must be improved in
support of optimum industrial development and global competitiveness. This
would assist in reducing the cost of doing business.
6.3.
The Committee also acknowledges that telecommunication
infrastructure, including broadband, should be developed throughout
6.4.
The Committee would like to encourage private sector
procurement of locally produced products.
6.5.
The shortage of the critical skills required to make a
success of IPAP2 requires a coordinated approach between industry and higher
educational structures to ensure that the appropriate skills are produced for a
developmental economy. It is essential that skills are identified at different
levels to ensure the competitiveness of industry. The lack of coordination
among the institutions of higher learning, as well as with industry, remains a
challenge for producing the right skills for our economic development. The
Committee acknowledges that real economic empowerment is attained through the
transfer of knowledge, development of skills and retraining of workers.
6.6.
The Committee is of the view that a skills audit should be
commissioned which would lead to the establishment of a national skills
register. It acknowledges the challenge to ensure that those individuals
practising critical skills without formal qualifications are registered,
particularly those in the informal sector. This should be linked to the
competency (Recognition of Prior Learning) regulations. The cost of
registration may be an impediment to individuals to formally register
themselves and should be taken into consideration. This would assist industry
in identifying sector specific skills shortages and institutions of higher
learning to design and develop curricula to address this shortage
appropriately. Currently, a mismatch between skills demand and supply exists
that needs to be addressed.
6.7.
Continued support for infant and new industries should be
given taking the WTO rules into account while developing their efficiency and
competitiveness.
6.8.
The developmental strategies and objectives of
municipalities should be aligned to IPAP2, particularly in terms of leveraging
procurement and for the provision of bulk services to industry, and that South
African Local Government Association (SALGA) should play an active coordinating
role in this regard.
6.9.
The role of SMME’s and entrepreneurs in relation to
employment creation should be actively explored. The Committee believes that
the role of cooperatives and small and emerging enterprises should be
emphasised within IPAP2; the Committee should encourage that not only
established businesses benefit from the incentives programmes by utilising the
BBBEE process. Fair distribution of financial and other resources is required
as this can promote and encourage SMMEs. IPAP2 seeks to strengthen the
industrial base. Once industry has been strengthened, cooperatives can benefit
as part of the supply chain of a well structured industry.
6.10.
To ensure the success of IPAP2, the Committee is proposing a
national indaba to promote the objectives of IPAP2 so as to secure increased
participation and encourage investment in the production sector of our economy.
The DTI should have a broad public awareness programme/drive for IPAP2.
6.11.
There is a need to strengthen and integrate the coordination
among the agencies responsible for monitoring the implementation of IPAP2 key
action programmes at national, provincial and municipal level. This will be
essential to ensure IPAP2’s successful implementation.
6.12.
Where necessary and appropriate, legislative amendments
(including regulations) as well as policies should be aligned to enable the
implementation of IPAP2.
7. Acknowledgements
The
Committee acknowledges the contributions made by academic and research
institutions, organised business and labour, State Owned Entities, industry
specific associations and the DTI into IPAP2.
The Committee also wishes to thank its Committee support staff in
particular the Committee Secretary, Mr A Hermans, the Content Advisor, Ms M
Herling, Committee Assistant Ms A Kleyn and the Researcher, Mr L Mahlangu, for
their professional support and conscientious commitment to their work. The Chairperson thanks all Members of the
Committee for their active participation during the process of engagement and
deliberations and their constructive recommendations made in this report.
8. Recommendations
Informed by its deliberations, the Committee recommends that the House
request that:
8.1. The
DTI submits bi-annual progress reports in February and August of
each year to the Committee
on the:
a.
Implementation of the IPAP2’s key
action programmes, and measures proposed to address blockages identified during
implementation.
b.
New incentives and grants that would encourage and support
industrialisation and sustainable job creation.
c.
Monthly strategic monitoring of all
IPAP2 projects should be put in place by implementing government departments to
act as an early warning system to identify any risks facing these projects.
8.2.
The DTI tables a report to the Committee on the review of
the current tariff regime and how it could optimally support the domestic
manufacturing and job retention strategies.
8.3.
The DTI, in consultation with the
Department of Economic Development and the IDC, submits a progress report on
the review of the IDC’s mandate and on its recapitalisation to the Committee
within three months tabling of this report.
8.4.
The DTI, in consultation with the
Department of Economic Development, must present alternative models of
financing for industrialisation covering all development finance institutions.
8.5.
The DTI submits a research report on
the most optimal feed crop/s for bio-fuel production and the implications
thereof.
8.6.
The DTI submits a report on measures
being considered to increase the local content of vehicles assembled in
8.7.
The DTI submits a report on the
envisaged role of provincial and local government in the implementation of IPAP2.
8.8.
The role of state-owned enterprises in support of IPAP2
should be investigated and the implementation thereof defined.
Report to be
considered
References
Agri-SA (2010) Revised Industrial
Policy Action Plan (IPAP), Presentation to the Portfolio Committee on Trade
and Industry, 3 March.
ArcelorMittal (2010) Presentation to the Parliamentary Portfolio Committee on Trade and
Industry on the DTI’s Industrial Policy Action Plan (IPAP2), 17 March.
Aspen Pharmacare Holding Ltd (2010) Invitation
to address the Parliamentary Portfolio Committee on Trade and Industry on IPAP2,
Submission to Parliament by Aspen Pharmacare Holdings Ltd (Aspen). 10 March.
Bioclones (2010) Presentation to
the Committee on Trade and Industry, 17 March.
The Biovac Institutute (2010) Presentation
to the Portfolio Committee on Trade and Industry, 17 March.
Bond, P. (2010) Can the “new”
industrial policy resolve economic crises and prevent further bursting of SA’
financial bubble? (… in a climate constrained world). Presented to the
Portfolio Committee on Trade and Industry, South African Parliament, 2 March.
Brooks, D. (2005) Competition and
Development, Economic and Research Department, Series no 39, October, Asian
Development Bank.
Bureau of Economic Research (N.d) PMI
Survey, Online:
http://www.ber.ac.za/runtime/popcontentrun.aspx?Pageidref=1772 [Accessed 20 May
2010]
BUSA (2010) Industrial Policy
Action Plan – Submission to the Portfolio Committee on Trade and Industry by
Business Unity
Burnes, R. M. (ed.) (2006)
CEPPWAWU (2010) Presentation to
the Parliament Portfolio Committee on Trade and Industry – Industrial Policy
Action Plan (IPAP), 3 March
City of
COSATU (2010) COSATU submission on
the Industrial Policy Action Plan (IPAP2) – Presented to the Portfolio
Committee on Trade and industry, 3 March.
Creamer, T. (2010) Industrial plan to include
'stronger' localisation targets. Steel and
Engineering Industries Federation of
Economic Sectors and Employment Cluster (2010) 2010/11 – 2012/13 Industrial
Policy Action Plan.
Environmental Goods and Services Forum (2010) The Industrial Policy Action Plan – Input for the Environmental Goods
and Services Sector, Developed by Turner & Townsend with technical
support from World Wildlife Foundation (
Food and
Allied Workers Union (FAWU) (2010) Brief FAWU observation on the IPAP, 3
March.
The Federation of Unions of
Holman, J. (2010) Algal biofuels seen as having potential, but
much research still needed, 23 April.
IDC (2010) Implementing IPAP –
Support for the implementation of the Industrial Policy Action Plan. 12 May
Kumba Iron Ore Limited (2010) Presentation to the Trade and Industry
Portfolio Committee, 16 April.
Kganyago, L. (2010) Trade, Industrial Policies and the Exchange
Rate: The Economic Impact of the
Louw, R. (2010) Presentation to the
Parliamentary Portfolio Committee on Trade and Industry on the Industrial
Policy Action Plan 2010/11 – 2012/13. 5 March.
Maasdorp, G (2002) Economic Survey, 1970-2000. In: Jones S (ed) The decline of the South African economy,
In association with UNISA,
Minister of Finance (2010) Budget
Speech 2010. Parliament of the RSA:
Minister
of Trade and Industry (2010) National
Assembly Statement on IPAP2.
National Association of Automotive Component Allied Manufacturers
(NAACAM) (2010a) Presentation to the
Committee on Trade and Industry, 11 March.
National Association of Automotive Component Allied Manufacturers
(NAACAM) (2010b) Presentation to the
Committee on Trade and Industry on the revised IPAP in Parliament, 5 March
National Association of Pharmaceutical Manufacturers (NAPM) (2010) Trade and Industry Portfolio Committee,
17 March.
National Treasury (2010a) 2010
Budget Review.
National Treasury (2010b) The Exchange Rate and its Implications.
Presentation to the Committee on Trade and Industry, 6 April.
National
Treasury (2010) Estimates of National
Expenditure
National
Union of Metalworkers of
Nel, E, Rogerson C M, Marais L (2006) Restructuring
Manufacturing In
Peinke, L.
(2010)
Roberts,
S. (2010) Comments on IPAP, 2 March.
Southern
African Bioenergy Association (SABA) (2010) Public
hearings on IPAP, 16 April.
South
African Clothing and Textile Workers Union (SACWTU) (2010) Public hearings on the new Industrial Policy Action Plan – SACTWU
presentation to the Portfolio Committee on Trade and Industry, 3 March.
South
African Fruit and Vegetable Canning Association (SAFVCA) (2010) Presentation to the Portfolio Committee:
Trade and Industry – Revised IPAP: 2010/2011 – 2012/2013. 5 March.
South
African Institute of Steel Construction (SAISC) (2010) Impacts of Industrial Policy Action Plan on the Steel Construction
Industry, March.
South
African Petroleum Industry Association (SAPIA) (2010) Address to the Portfolio Committee on Trade and Industry on Industrial
Policy Action Plan (IPAP), 3 March.
South
African Reserve Bank (SARB) (2010a) Presentation
by the South African Reserve Bank to the Portfolio Committee on Trade and
Industry. 6 April.
South
African Reserve Bank (SARB) (2010b) Quarterly Economic Review. In: SARB. Quarterly Bulletin. 16 April.
Southern
African Stainless Steel Development Association (SASSDA) 2010 Submission to Parliament, 10 March.
Transnet
(2010) Transnet presentation on the
Industrial Policy Action Plan to the Portfolio Committee on Trade and Industry,
16 April.
Tregenna,
F. (2010) Comments on IPAP, 17 March.
Wessels,
E. (2010) Presentation to the
Parliamentary Portfolio Committee on Trade and Industry on the DTI’s Industrial
Policy Action Plan (IPAP2). 5 March.
Woolfrey, S (2010)
Annexure 1: List of Acronyms
|
ARV |
Anti-retroviral |
|
BBBEE |
Broad-based Black
Economic Empowerment |
|
BUSA |
Business Unity |
|
CEO |
Chief Executive Officer |
|
CO2 |
Carbon dioxide |
|
COSATU |
Congress of South
African Trade Unions |
|
CSDP |
Competitive
Supplier Development Programme |
|
CTCP |
Clothing and Textiles
Competitiveness Programme |
|
CTPI |
Clothing and Textiles
Production Incentive |
|
DTI |
Department of Trade and
Industry |
|
EGS |
Environment Goods and
Services |
|
FAWU |
Food and Allied Workers
|
|
FEDUSA |
The Federation of
Unions of |
|
FET |
Further Education and
Training |
|
GDP |
Gross Domestic Product |
|
IDC |
Industrial Development
Corporation |
|
IPAP2 |
revised Industrial
Policy Action Plan |
|
IT |
Information
Technology |
|
MERSETA |
Manufacturing,
Engineering and Related Services Education and Training Authority |
|
MHCV |
medium and heavy
commercial vehicle |
|
NAACAM |
National
Association of Automotive Component and Allied Manufacturers |
|
NAAMSA |
National Association of
Automobile Manufacturers of |
|
NAPM |
National Association of
Pharmaceutical Manufacturers |
|
NIPF |
National Industrial
Policy Framework |
|
NIPP |
National
Industrial Participation Programme |
|
NUMSA |
National Union of
Metalworkers of |
|
OEM |
original equipment
manufacturers |
|
PMI |
Purchasing Managers
Index |
|
PPPFA |
Preferential
Procurement Policy Framework Act |
|
REER |
Real Effective Exchange
Rate |
|
|
Southern African
Bioenergy Association |
|
SACTWU |
South African Clothing
and Textile Workers |
|
SADC |
Southern African
Development Community |
|
SAFVCA |
South African Fruit and
Vegetable Canning Association |
|
SALGA |
South African Local
Government Association |
|
SAPIA |
South
African Petroleum Industry Association |
|
SARB |
South African Reserve
Bank |
|
SARS |
South African Revenue
Service |
|
SETA |
Sector Education and Training
Authority |
|
SMME |
Small, Medium and Micro
Enterprises |
|
SOE |
State-owned Enterprises |
|
SQAM |
Standards, Quality
Assurance, Accreditation and Metrology |
|
WTO |
World Trade
Organisation |
Annexure 2: Purpose of the
Competition Act
The overall purpose of the Competition Act is to promote and maintain
competition, in order
‘(a) to promote the efficiency, adaptability and development of the
economy;
(b) to provide consumers with competitive prices and product choices;
(c) to promote employment and advance the social and economic welfare of
South Africans;
(d) to expand opportunities for South African participation in world
markets and recognise the role of foreign competition in the Republic;
(e) to ensure that small and medium-sized enterprises have an equitable
opportunity to participate in the economy; and
(f) to promote a greater spread of ownership, in particular to increase
the ownership stakes of historically disadvantaged persons.’
Source:
Government of