IPAP could create 700 000 jobs

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April 2010 News

The Department of Trade and Industry has unveiled South Africa’s 2010/11 Industrial Policy Framework Action Plan (IPAP). Growth consultants Frost & Sullivan expected this plan to have a direct and, hopefully, sustainable impact on the country’s manufacturing productivity.

The IPAP focus is on improving growth in key manufacturing sectors, with the main thrust being the need to create sustainable employment. Overall, Frost & Sullivan estimates that the 2010/11 could create over 700 000 jobs in the next 10 years through the various sector strategies and policy decisions.

“In order to meet these expectations, industrial capabilities need to be developed with an increasing focus on return on investments, skills development and export competitiveness,” says Frost & Sullivan analyst Laura Peinke. “If this IPAP is not successful, the local manufacturing economy cannot expect to compete in the new knowledge-driven global economy.

Manufacturing productivity in South Africa has continued to increase over the last 10 years, but Frost & Sullivan believes that this will not be sustainable. Peinke says that as productivity has increased, local competitiveness has declined. She believes that there are a number of reasons for this. They include the high cost and limited availability of capital, a weak skills system, and unreliable and expensive port and rail systems. These are exacerbated by the further expected electricity price hikes.

One of the core focus sectors in the 2010/11 IPAP is the automotive industry. Traditionally the industry has contributed 7% to the country’s GDP, and made up 13,5% of the country’s exports. In 2008, the industry employed 320 000 people.

“Government is expected to leverage the Automotive Production and Development Programme (APDP) to achieve targets outlined in the previous IPAP, and double production to 1,2 million units by 2020,” Peinke says. “It also wants to increase the local content of components in vehicle production substantially.”

At present, local content only makes up 35% of a vehicle, which adds to increasing manufacturing costs as a result of import tariffs and time delays. Frost & Sullivan believes this sector will have one of the largest impacts on job creation, with over 150 000 additional jobs being created in the next 10 years.

The nuclear, metal fabrication and capital equipment, chemicals and advanced manufacturing industries are also expected to benefit from the new IPAP.

For more information contact Patrick Cairns, Frost & Sullivan, +27 (0)18 464 2402, [email protected], www.frost.com

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