South Africa’s public procurement policies have stimulated a wide range of industries, but a structural change in the country’s economy is still needed, minister of trade and industry Rob Davies said.
The country needed to break out of commodity dependence and move to a more diversified economic base with greater focus on manufacturing, Davies said at the launch of the government’s 8th Industrial Policy Action Plan, its annual strategy for industry.
The government’s emphasis on developing close cooperation with a wide range of cutting-edge industrial and especially black-owned suppliers had reaped benefits for industry in the country, Davies explained.
Public procurement of locally produced clothing and textile products had increased from R264m in 2013/14 (£11.9m) to R479m in 2015/16 (£21.7m) - an increase of 82%.
Similar results had been seen in the leather and footwear sector where four new factories had opened in the last six months.
And the growth of South Africa’s bus industry meant that while in 2012 South Africa exported just R1.3bn (£58m) worth of these vehicles by 2014 it had risen to R3.7bn, or £167m.
The minister estimated the supply chain for this industry supports 14,000 jobs, and many supply companies have rebuilt plants and developed niche capabilities in high value and complex systems.
In addition, R7.8bn (£354m) in government incentives to the automotive sector has yielded R28.5bn (£1.2bn) of investments by OEMs. Exports grew to R151.5bn (£6.8bn) in 2015, while 113,360 jobs are currently supported in the sector.
By the end of 2015 a further 18,000 jobs had been created as a direct result of incentives, representing a growth rate of 26% per annum.
Davies said that economy growth could not be achieved by “sticking to an imbalanced and unsustainable economic model based on the service sectors growing at twice the rate of the productive sectors, on the back of credit-fuelled consumption and import-intensity”.
“Especially in tough times, there can be no retreat from Industrial Policy. It must be strengthened, deepened and embraced by all the social partners,” he added.