Trade and Industry Chamber Nedlac 03 October 2013 IPAP 2013/14 IMPLEMENTATION PROGRESS REPORT
2
CORE OBJECTIVES OF THE IPAP
South Africa’s long-term vision of an equitable society is provided by the
National Development Plan.
The IPAP is informed by this vision; and its interlocking transversal and sector-
specific interventions constitute key pillars of the programmatic perspectives
set out in a series of ‘drivers’ and ‘packages’ contained in the New Growth Path
(NGP).
Government policy set out in these and other documents seeks to ensure a
restructuring of the economy to set it on a more value-adding, labour-intensive
and environmentally sustainable growth path.
2
4
IPAP TRANSVERSAL INTERVENTIONS
Public Procurement
Section 9.3 of the PPPFA Regulations was used to specify minimum
thresholds for the local production of DTT Antennas and Satellite DTH
Dish Antennas which have been set at 100%
The City of Cape Town has awarded the tender to provide vehicles for its
extended MyCiTi bus routes to Volvo SA. Volvo SA would provide 40
buses for the N2 express routes at a cost of R180m
Mercedes-Benz SA‟s Sandown Motor Holdings has won the tender to
provide 134 busses for the phase 1B of JHB‟s Rea Vaya BRT system
MAN is supplying 80 new commuter buses to Great North Transport
Limpopo‟s largest public transit operator.
ESKOM re-advertised the SWH tender with amendments on local content
requirements (70% for the major components: tank and collector)
The instruction notes for Solar Water Heaters and valves & actuator
products were circulated by the NT
4
5
IPAP TRANSVERSAL INTERVENTIONS
Public Procurement Minister Davies officially launched SABS Local Content Verification Office on 5 July
2013
Renewable Energy Independent Power Producer Procurement
Programme
Department of Energy approved 19 bids in the second round.
The Solar photovoltaic sector accounts for 9 bids; wind for 7 bids; 2 Small
Hydro and 1 Concentrated Solar Power (CSP).
The total preferred bidders‟ investment is estimated at R28.1 billion with a local
content value of R11.8 billion and 7 385 jobs expected to be created
Monitoring and evaluation of the performance of designated sectors
SABS has finalised the verification framework for rail rolling stock and busses
Standard bidding documents and annexures for awarded transversal textile and
clothing tenders managed by the NT have been reviewed and forwarded to
SABS for local content verification.
The dti working with the South African Clothing and Textiles Workers Union
(SACTWU) in following up on tenders that are not compliant to the PPPFA
regulations. Letters to this effect have been written to affected departments and
Provincial Treasuries.
5
6
IPAP TRANSVERSAL INTERVENTIONS
Industrial Financing Manufacturing Competitiveness Enhancement Programme (MCEP)
Since inception a total of 387 enterprises have been approved for
funding to the value of R2.6bn.
By end of August 2013, R192.8m had been disbursed. It is expected
that there will be a significant increase in disbursements, due to the
enhancements made on the application and claim forms as well as
the interim IT System that has been successfully tested and
implemented with effect from 07 August 2013.
Entities that were approved for funding have projected an investment
value of R9.5bn and 118 193 jobs to be sustained in the agro-
processing, metals, chemicals, plastic, electro- technical, printing,
pharmaceuticals and film sectors
The IDC has approved Projects to the value of R350 million via the
MCEP loan facility; approximately R70 million has already been
disbursed
6
7
IPAP TRANSVERSAL INTERVENTIONS
Industrial Financing Continuing reorientation of the IDC to finance IPAP/NGP sectors
124 903 jobs were saved/created through IDC funding approvals
2009-2012
R12.9bn worth of approvals, expected to create/save ±14,500 jobs
R5.5bn committed for investment in the Green Economy
R1.1bn committed for investment in the agriculture & forestry value-
chains
R501m approved for clothing & textiles sector – forecast to save
2,400 jobs
R5bn private „green bond‟ concluded with the Public Investment
Corporation to facilitate funding for businesses looking to invest in
clean-energy infrastructure developments
The IDC sourced R4 billion from the Unemployment Insurance Fund
to lower the cost of capital.
Government's Green Fund, administered by the DBSA, has
processed 590 applications for sustainable development projects
worth R10.9bn
7
8
IPAP TRANSVERSAL INTERVENTIONS
Developmental Trade Policy ITAC has processed a variety of applications for a variety of products and some
have been implemented by SARS
Inclusion of boxer shorts under rebate item 311.40/5208.4/01.05
Reduction of duty on engine CV joints
Increase the general rate of customs duty on wire nails from 5% to 15%
Rebate provision for aluminium slugs for impact extrusion used in the
manufacture of aerosol cans
Insertion of rebate item 306.01/2815.11/02.06 for Sodium Hydroxide for use in
the manufacture of Sodium Metasilicates
Reduction of customs duty on polyether-polyols from 10% to free
Fraud, Illegal Imports, Sub-standard Goods
The new Automated Customs Management System was implemented by SARS
on 18 August 2013 with mote 39 000 import declarations and 55 000 export
declarations processed since inception.
Since the implementation of the new system, goods with a total trade value of
R40 billion moved through South Africa‟s borders with more than R2.5 billion
having been collected in duties
In KZN the Electrotech Division of NRCS has stationed two permanent
inspectors at the port and Durban accounted for 71.5% of the border
inspections in Q1.
8
9
IPAP TRANSVERSAL INTERVENTIONS
Developmental Trade Policy For Q1 Electrotech conducted 277 border inspections and other border
inspections were conducted at City Deep (19.9%), Port Elizabeth(6.5%) and
Cape Town(2.1%)
Non-compliant products valued at R23 Million, were impounded in Durban, in
addition to approximately 5,000 television sets embargoed at the Cape Town
port, valued at about R2.1 Million
A number of standards and compulsory specifications were finalised and published
New Compulsory Specification for processed meats
Review of Compulsory Specification (VC 8043) for coal stoves and heaters and
VC 9088) for shooting ranges completed.
The Legal Metrology Bill was certified and presented to Trade and Industry
Portfolio Committee
Fuel cells standards have been published to date and more will be published in
the next quarters
SANAS started with the development of an accreditation programme for
Certification Bodies of Energy Management
9
10
IPAP TRANSVERSAL INTERVENTIONS
Competition Policy Various settlements on price-fixing were reached, with the following companies and
values:
R148 million with Lafarge in the cement industry
R88.5 million with FoodCorp in the wheat flour and maize-meal sub-sector;
R16.7 million with Astral Operations.
Oceana was fined R35 million for price-fixing and
Telkom was fined R649 million for market abuse
Fuel: The Commission referred the SASOL; SANS; HOSAF abuse of
dominance case to the Tribunal and will be heard on the 20 May 2013
A major investigation into collusion and price-fixing in the construction industry
was carried out, with a settlement reached in June 2013
Steel: Excessive pricing – Progress report finalised.
Telecommunication: Telkom fined R649m for market abuse.
A market inquiry into pricing practices in the private healthcare sector has been
initiated
10
11
IPAP TRANSVERSAL INTERVENTIONS
Special Economic Zones
The SEZ Bill undergoing parliamentary processes and expected to be
concluded by Q4
Feasibility studies for the PGM beneficiation hub in Tubatse (Limpopo)
and Solar Corridor in Upington (NC) are underway.
Gauteng has finalised feasibility reports for the ICT hub and undergoing
consultation process
Technical feasibility study finalised for Dube Trade Port (KZN)
Platinum Valley Hub: Arrangements to commence with pre-feasibility
studies on the Platinum Valley and other identified SEZ are in progress
SEZ Capacity Building Programme has commenced with 30 officials from
dti,SARS,NT, hosting municipalities embarking on SEZ training
11
25 June 2013 IPAP 2013/14 - 2015/16 12
IPAP SECTORAL INTERVENTIONS 1
Sectors supported since 2007: scale up and broaden interventions
27 February 2013 IPAP 2013/14 - 2015/16 12
13
IPAP SECTORAL INTERVENTIONS 1
Automotives
The Electric Vehicle Industry Road Map was launched by Minister in May
2013
157 projects approved under the Automotives Incentive Scheme (AIS):
investments of R13bn; incentives of R3bn; currently sustaining 58,168
jobs
R600m truck and bus assembly plant under development in Rosslyn, a
joint venture between Iveco SA and the Larimar group. 1,000 new jobs
expected to be created
Draft National Automotive Value Chain proposal completed for a new
manufacturing competitiveness improvement support framework.
the dti created a "People Carrier" automotive incentive scheme for mini-
and midi-bus taxis, to grow local assembly and production
Confirmation by Toyota SA that the new Toyota Corolla will be
manufactured at the company‟s Durban plant.
13
14
IPAP SECTORAL INTERVENTIONS 1
Clothing, textiles, leather and footwear
Clothing & Textiles Competitiveness Programme (CTCP) has
stabilised sectoral production and employment:
A combined approval to date of more than R 2.1 bn has been
achieved and already over R1.27 bn disbursed to the participating
enterprises
To date more than 12,205 new decent permanent jobs have been
created, with a further 62,085 jobs saved
The Competitiveness Improvement cluster programme has secured
the participation of some notable local retailers such as Foschini &
Edcon
The National Leather and Footwear Cluster (housed under the Vaal
University of Technology) was established as a cooperative venture
between Vaal, shoe manufacturers and leather tanning enterprises
Proposal on Communal Hides beneficiation finalised undergoing
stakeholder consultations
Proposal on the establishment of the exotic leather cluster finalised by the
consortium which includes IDC, DTI and leather goods manufacturers
14
15
IPAP SECTORAL INTERVENTIONS 1
Metal fabrication, capital & rail transport equipment
New regulations on Scrap (i.e. price preferential system) was
implemented on 16 September 2013
Minerals and Petroleum Resource Development Act (MPRDA): inclusive
of Section 26, beneficiation provisions to support downstream
beneficiation currently subject of Parliamentary process.
Apprenticeship programme gazetted in April 2013 and 410
apprenticeship students enrolled under the National Tooling Initiative
Programme (NTIP).
85 students completed on the job training and 304 students completed
phase 2
127 workers were trained under the National Foundry Technology
Network
17 new foundries have enrolled on various Competitiveness Improvement
Initiatives.
15
16
IPAP SECTORAL INTERVENTIONS 1
Agro-processing 1
The Eat Safe, Eat Well, Eat Local Campaign was launched in
collaboration with Proudly South African (PSA) and other stakeholders
under the umbrella of the South African Fruits and Vegetables Canning
Association (SAFVCA)
Boland Pulp has launched 8 products since the campaign
the dti together with National Cleaner Production Centre has developed
an audit programme for the Resource Efficient Cleaning Production
Programme (RECPP) for the fruit and vegetable canning industry
R260m has been dedicated to the Small Scale milling project by Old
Mutual Masizane Fund an MoU has been signed between the DTI and
Old Mutual. 24 small scale maize mills have been ordered for this project
Since the launch of The Aquaculture Development and Enhancement
Programme:
4 projects have been approved to the value of R189m with investment of
R35.2m in Abalone and Tilapia.
292 jobs expected to be created in Western Cape and Gauteng
80 organic food farmers in Limpopo and KZN were trained for
participation in the retail supplier programme
16
17
IPAP SECTORAL INTERVENTIONS 1
Pharmaceuticals
50% of the total tender value of family planning tender has been awarded
to domestic manufacturers with Aspen receiving R33.14million &
Fresenius –Kabi receiving R82.9 million of the tender
R150 million loan secured from IDC for the facilitation of the Biovac
Project (manufacturing of vaccines)
100% of the blood fractions tender and 99.4% of the Large Volume
Parenterals tender (worth R294 million and more than R750 million
respectively) were awarded to South African manufacturers
65% of the ARV tender (code HP-13, value R 5.8bn ) awarded to SA
manufacturers
17
18
IPAP SECTORAL INTERVENTIONS 1
Film industry
“Long walk to freedom” which received support from dti was screened at
the Toronto Festival in September. The movie is to be released in South
Africa in November 2013
Other four dti-supported projects to a combined value of R31.1m (Blitz
Patrollie, Black South Easter, Kumba and Zulu) were screened at the
2013 Cannes Film Festival
The movie Mad Max 4 - Fury Road - one of the biggest ($125m) feature
films ever brought by Warner Bros to SA - was approved and filmed in SA
and Namibia, for projected release in 2014
On the basis of sustained dti support, South Africa has already attracted a
string of locally shot blockbuster films, including Chronicle and Safe
House, starring Denzel Washington and Ryan Reynolds, the 3D comic-
book adventure "Dredd," and the TV drama "Mary & Martha," starring
Hilary Swank
The Adventures of Zambezia, a locally-produced animated feature film,
was selected as the closing film and received outstanding nominations.
The film performed excellently at the box office, out-performing Judge
Dredd; and is said to be doing extraordinarily well in Russia
18
19
IPAP SECTORAL INTERVENTIONS 1
Business process services Monyetla Skills Programme
The National Skills Fund has approved further R71 million for the
phase 4 for financial year 2013/14.
Matched funding secured from the DBSA through Jobs Fund for
training of another 6000 learners T
Currently there are 26 signed consortia contracts and 1127 learners
in training.
10% of the total allocation was outside Gauteng, KZN and Western
Cape. R3.4 million has been disbursed to participating consortia thus
far
BPS incentive
The total amount of claims paid on the BPS incentive programme
since Jan 2011 is R384 million. The sustained jobs are a total of
7,196
SA was presented with the European Outsourcing Association (EOA)
Offshoring Destination of the Year Award
19
21
IPAP SECTORAL INTERVENTIONS 1
Green industries
The dti has commenced the process of small scale renewable energy
localisation strategy and wind energy localisation roadmap.
600 students enrolled for training at the recently launched Energy-
Efficiency Training Centre at the National Cleaner Production Centre.
In renewable energy, the IDC approved funding for 43 projects worth R3.8
billion in green industries such as solar water heater manufacturing, with
further investments set to follow in wind tower production; solar PV
structures and PV panel assembly
1st quarter 2013: DCD, an SA-owned OEM, will begin construction of a
wind tower manufacturing facility in the Coega IDC; expected to create
628 construction jobs and 200 full-time operational jobs
Global wind and solar power developer Mainstream Renewable Power
turned the sod on a 138MW wind energy plant in Jeffrey‟s Bay, Eastern
Cape in Feb 2013
Sun Edison South Africa broke ground on its first SA project, a 28MW
solar plant in Limpopo. This R1.2bn project will be followed by a 30MW,
R1.4bn project at Witkop, near Polokwane
21
22
IPAP SECTORAL INTERVENTIONS 1
Advanced manufacturing Localisation of Manufacturing of Electrical Prepayment Meter
Manufacturing (EPPMMs) through designation within the PPPFA
EXCO approved the designation proposal for the Residential
Electricity Meters in September
A formal application to ITAC to review tariffs on prepayment meter
components under way
Software Development Process Improvement Programme
Three entities: Barone, Budge & Dominick (Pty) LTD (in JHB), Wits
Centre for Network Services (in JHB) and Maitland Group (Cape
Town) undergoing training as part of the programme.
An agreement to conduct research (focusing on this project at PHD
and MBA level) has been signed between Wits University and
University of Cape Town
22
23
KEY CHALLENGES
Bunched up and sharply escalating electricity prices especially where large
premiums are added by municipalities where large disparities in and between
municipalities exist.
The slow recovery of the global economy, weak demand from South Africa‟s
traditional trading partners and slowing demand for commodities in China.
Continued currency volatility.
Large current account deficit together with a huge manufacturing trade deficit.
Limited allocation of capital to productive sectors such as the relatively more
labour-intensive and value-adding sectors of the economy.
The expeditious roll-out of the public infrastructure investment programme
being driven by the Presidential Infrastructure Co-ordinating Commission
(PICC) needs to be supported by robust localisation measures to ensure that
the infrastructure build does not 'suck in' unnecessary imports that could
impact negatively on the current account balance.
Slow progress has been registered with respect to addressing the difficult
problem of the skills deficit and mismatch in the economy
23
24
KEY CHALLENGES
Monopolistic pricing of privately owned key intermediate inputs such as steel,
plastics and polymers into the manufacturing sector continues to constitute a
major constraint to downstream sector development.
Apparent limited progress with respect to the implementation of new port
charges regime to favour the export of value-added goods, compounded by
serious inefficiencies in rail and port freight logistics. A more speedy
implementation of a commitment made by the Transnet National Ports
Authority (March 2013) to change its pricing model in favour of the export of
manufactured goods by lowering tariffs on tradable exports by about 40% will
be of significant benefit to South African manufacturing exporters.
Non-compliance with the Designations under the amended regulations of the
PPPFA by state entities and insufficient use of the mechanism provided by
Clause 9(3) of the Act, which enables localisation in all tenders. Non-
compliance by municipalities wrt to Designation in Clothing and Textile Sector
a major concern.
Securing greater support for localisation by the private sector in key sectors
especially mining to mirror developments in the CTLF sector where a quick
response framework by retailers has been adopted.
24
Appendix
Balance on Current and Financial Account and
REER
25
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
-80000
-60000
-40000
-20000
0
20000
40000
60000
80000
q12008
q22008
q32008
q42008
q12009
q22009
q32009
q42009
q12010
q22010
q32010
q42010
q12011
q22011
q32011
q42011
q12012
q22012
q32012
q42012
q12013
q22013
Balance on current account (Rm) Balance on fin account (Rm) REER (Index 2000=100)
Source: SARB
26
Appendix
Trade Balance
(US $ million)
-8000
-6000
-4000
-2000
0
2000
4000
1Q
1990
3Q
1990
1Q
1991
3Q
1991
1Q
1992
3Q
1992
1Q
1993
3Q
1993
1Q
1994
3Q
1994
1Q
1995
3Q
1995
1Q
1996
3Q
1996
1Q
1997
3Q
1997
1Q
1998
3Q
1998
1Q
1999
3Q
1999
1Q
2000
3Q
2000
1Q
2001
3Q
2001
1Q
2002
3Q
2002
1Q
2003
3Q
2003
1Q
2004
3Q
2004
1Q
2005
3Q
2005
1Q
2006
3Q
2006
1Q
2007
3Q
2007
1Q
2008
3Q
2008
1Q
2009
3Q
2009
1Q
2010
3Q
2010
1Q
2011
3Q
2011
1Q
2012
3Q
2012
1Q
2013
Agriculture Mining Manufacturing
Appendix
Manufacturing trade deficit: June 2012 to June 2013
(Rand million)
27
-12000
-10000
-8000
-6000
-4000
-2000
0
Jun2012 Jul2012 Aug2012 Sep2012 Oct2012 Nov2012 Dec2012 Jan2013 Feb2013 Mar2013 Apr2013 May2013 Jun2013
Machinery & equipment Motor vehicles, parts & accessories Coke & refined petroleum products
Appendix
Manufacturing trade surplus: June 2012 to June 2013
(Rand million)
28
0
2000
4000
6000
8000
10000
12000
14000
16000
Jun2012 Jul2012 Aug2012 Sep2012 Oct2012 Nov2012 Dec2012 Jan2013 Feb2013 Mar2013 Apr2013 May2013 Jun2013
Basic iron & steel Basic non-ferrous metals Beverages
Appendix
PMI January 2009 to August 2013
29
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Source: Economist
30
Appendix
Manufacturing Employment
(„000)
1110
1120
1130
1140
1150
1160
1170
1180
1190
1200
1210
q3 2009 q4 2009 q1 2010 q2 2010 q3 2010 q4 2010 q1 2011 q2 2011 q3 2011 q4 2011 q1 2012 q2 2012 q3 2012 q4 2012 q1 2013 q2 2013
Source: Stats SA