Table of Contents
Implications of Domestic and Foreign Investors
•All economic and development strategies, even if pre-existing the National Development Plan (NDP), now fall under the NDP umbrella.
•Aligned with the NDP objectives to achieve sustainable growth and to combat unemployment, the Industrial Policy Action Plan (IPAP) envisions how to reverse industrial decline in general, but specifically in xx sectors targeted for growth.
•Comparative long term projections by the Organisation for Economic Co-operation and Development (OECD) forecast an average of xx% GDP growth until 2030, versus the necessary xx% average growth envisaged in the NDP.
•Sustainable growth and development will require cross-sector measures and reforms, including fixing the education system, changing labour market regulations, undertaking spatial transformation, transitioning to a low carbon economy, implementing real social protection for all, and eradicating corruption.
•The industrialisation strategy is essentially a trade-off between factors contributing to economic growth and job creation.
•The compromise of key factors cumulates in the following: competition in niche labour intensive activities and pursuit of capital intensive manufacturing, diversification, and localization of industry, diffusion of technology, and research into the industrial sectors.
Purpose and Objectives of the Research Service
•This research service provides an overview of two high profile pieces of policy that carry implications for current and future investors
•To increase awareness among potential investors, especially foreign investors
•To provide a snapshot, capturing the essence of these two programmes, for those readers who do not have the time to study the entire NDP and IPAP in detail
•To identify sectors targeted for growth in South Africa
•National Development Plan 2030 (NDP)
•Industrial Policy Action Plan (IPAP)
“We have moved to the implementation phase of the [National Development] Plan, incorporating the economic strategies, the New Growth Path, the Industrial Policy Action Plan and the infrastructure development plan which now fall under the NDP umbrella.”
– President Zuma, 12 June 2013
South Africa is now growing slower than most other African economies. The World Economic Forum 2012 to 2013 report highlights a decline of South Africa’s competitiveness, both globally and relative to African economies. Not only does the economy need to become increasingly dynamic but also more inclusive. The country needs an economy in which the fruits of growth are shared more equitably. The crucial issue is the question of how this can be done.
In 2010, the National Planning Commission (NPC) was tasked with drafting a long term socio-economic vision for South Africa. In a broad consultative manner, the NPC developed a proposal to raise South Africa living standards over the next two decade. This plan is the NDP. The document, ultimately adopted by both the government and the ruling political party in December 2012, sets up ambitious targets and priorities for all sections of society to create a virtuous cycle of growth and development.
For the NDP to succeed, the national economic growth needs to average xx% per year by 2030. This is more than double the 2012 figure. Sustainable growth and development will require cross-sector measures and reforms, as significant as fixing the education system, changing labor market regulations, undertaking spatial transformation, transitioning to a low carbon economy, implementing real social protection for all, and eradicating government corruption. Endorsed shortly prior to the presidential election year, the NDP has inevitably unleashed political debate and controversies among its detractors. Yet, implementing the NDP is now crucial to reverse the economic decline of South Africa.
While the NDP and the Department of Trade and Industry’s (dti) IPAP both contribute to the long-term vision of South Africa’s development, the latter focuses specifically on the necessary reindustrialization of the country. With unemployment a serious challenge, the IPAP places labor intensive mid-level manufacturing at the center of attention. Championed by the dti, the diversification of industry is orientated around 3 key sector clusters covering 19 industrial sectors. The IPAP’s key areas of ongoing intervention include mineral beneficiation/value-add, the development of new export markets, diffusion of innovation and technology, and local procurement.
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