(AsgiSA) Annual Report 2008 - South African Government Information

Accelerated and Shared Growth Initiative for South Africa
ANNUAL REPORT
2008
6. Industrial policies
6.1 Background
AsgiSA proposed that the State adopted a more active industrial policy to move the economy
towards increasingly inclusive growth. Industrial policy refers to measures targeted at ensuring
a more efficient economy. A particular aim is to address the constraints to growth
in sectors that can diversify the economy and provide sustainable employment on a large
scale. Industrial policy in this sense relates not to manufacturing industry alone, but to the
economy as a whole, including agriculture, mining and services.
In South Africa, industrial policy has to take on two core challenges. On the one hand, products
of the mining value chain, including refined metals and coal-based chemicals, account
for substantially over half of all exports. This situation leaves the economy dependent on
world commodity prices. That was highly beneficial during the commodity boom between
2002 and 2007. However, it proved less desirable when, as in the past year, commodity
prices declined. Furthermore, the minerals value chain is mostly capital-intensive and unable
to create employment on a large scale.
On the other hand, South Africa has very low employment by world standards. Less than half
of all working-age adults have some kind of gainful employment, compared to an international
average of around two thirds. But new economic activities that could generate more
opportunities for lower-skilled and relatively inexperienced people require government support.
In particular, the State must often provide appropriate infrastructure and assist with
access to input, credit, technology, marketing systems and training.
AsgiSA pointed to cross-cutting strategies needed to improve the efficiency and equity of
the economy, including reductions in the cost and improvements in the quality of economic
infrastructure; reduced regulatory burdens and delays; a stronger competition policy to address
excessive concentration of ownership in upstream and some wage-goods industries,
where monopoly-pricing can inflate costs across the economy; and incentives for research
and development. In addition, it emphasised Broad-Based Black Economic Empowerment
(BBBEE) to encourage transformation of industries beyond the transfer of equity.
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