industrial policy action plan (ipap2) · progress report on implementation of the industrial policy...

IPAP 2014/15 – 16/17 ANNUAL REPORT

PROGRESS REPORT ON IMPLEMENTATION OF THE INDUSTRIAL POLICY ACTION PLAN (IPAP) FOR THE FINANCIAL YEAR APRIL 2014 TO MARCH 2015 TO THE TRADE AND INDUSTRY PORTFOLIO COMMITTEE OF THE NATIONAL ASSEMBLY


Selected transversal highlights for the financial year Procurement

Four pharmaceutical companies were jointly awarded a R10 billion tender to supply the Department of Health with antiretroviral (ARV) medication from 1 April 2015 to 31 March 2018. The tender had a conditional provision for designation of up to 70% of the tender volume for domestic manufacturers. Sonke Pharmaceuticals was awarded R3 billion, Mylan Pharmaceuticals R 2.8 billion, Aspen Pharma R 2.5 billion, and Cipla Medpro R2 billion.

The 2014-2016 OSD tender worth R 2.683 billion was awarded to 38 companies, including local manufacturers such as Aspen (38%), Adcock (2%), Sanofi-Aventis and its subsidiary Winthrop (11%), Sandoz (3%) and Be-Tabs (3%).

Transnet Freight Rail awarded a R 50 billion contract for the supply of 1,064 locomotives split amongst four successful bidders: 599 electric locomotives to be built by China South Rail Zhuzhou and Bombardier Transportation South Africa; and 465 diesel locomotives to be built by China North Rail Rolling Stock SA and General Electric SA Technologies.

A R 1.4bn tender for the procurement of tug boats was awarded to a South African company in support of local procurement.

In its effort to monitor compliance by organs of state and track and flag non-compliant bids from the Tender Bulletin and other modes of advertisement, the dti followed up 25 bids for the period under review; and out of the 25, 13 were reported to have been amended before the closing date.

Incentives and Industrial Financing Between April 2014 and March 2015, the IDC approved projects to the value of R10.1 billion

resulting in 20,260 new jobs being created. In the 2014/15 financial year, 346 enterprises were approved for funding under the

Manufacturing Competitiveness Enhancement Programme (MCEP), for a total grant value of R1.4 billion to leverage a projected investment value of R4.5 billion to sustain 39,721 jobs.

4% of total MCEP grant approved went to small entities with assets below R 5 million; 10% went to those with assets between R5 million and R30 million; 25% went to entities with assets between R30 million and R200 million; and 61% went to entities with assets above R 200 million.

30% of approvals were in the Agro-processing industries, 16% in Metals fabrication and associated industries, 16 % in Chemicals, Plastics and Pharmaceutical industries while the remainder covered a wide variety of industries.

Between April 2014 and March 2015, 16 projects under 12i Tax incentive programme with an investment value of R9.2 billion were approved. These are expected to create 533 direct and 4,047 indirect jobs.

Under THRIP, 1,602 projects to the value of R873 million and supporting 9,750 students have been approved since 2009 (up to December 2014).

Special Economic Zones The Dube Trade Port was launched and it attracted a R200 million investment from Samsung. Three of the five IDZs - Richards Bay, East London and Coega - are now fully operational and

have generated R 3.4 billion in investments and created more than 67,000 direct and indirect jobs. Further new investments worth several billion Rand are currently under negotiation.

Developmental Trade Policy ITAC consolidation and realignment to support strategic industrial development imperatives are

reflected in the completion of 17 applications for increases, rebates and reductions of duties across a range of sectors. 13 investigations have been implemented by SARS.

The scaling up of market surveillance by the NRCS, with an emphasis on the rigor with which the Letter of Authority process is applied, has borne fruit over the past two years under the NRCS border enforcement project and its risk-based approach.

To date, approximately R153-million worth of non-compliant and unsafe products have been seized and removed from the market.


Selected sectoral highlights for the financial year Automotives

The Automotive Investment Scheme (AIS) and the People-carrier Automotive Investment Scheme have together approved 50 projects, with total estimated investments of R 2.7 billion, and is expected to create 1 261 new jobs in the automotive sector.

Mercedes-Benz was the single largest investment project under the AIS with an estimated total investment of over R 5 billion.

FAW Group, a Chinese company, opened their truck assembly plant in Coega and Hyundai Automotive South Africa began assembling medium-duty trucks during 2014, following an investment of R110 million.

Vehicle and component exports increased to over R100 billion for the first time in 2013 and reached R115.7 billion in 2014.

Clothing, Textiles, Leather and Footwear Since inception for the period up to March 2015, the Clothing and Textiles Competitiveness

Programme, (CTCP) has approved 1 076 applications to the value of R3.7 billion under the Production Incentive of which R2.6 billion had been disbursed. This resulted in 68 380 jobs supported and 6 900 jobs created.

The share of employment in the sector by companies drawing on the CTCP has increased from 28.8% in the base year of 2009 to 38.7% in 2014. The Manufacturing Value Addition (MVA) increase attributable to the CTCP between the base of 2009 and 2014 is R 3.9 billion (exceeding the disbursements by 50% or R 1.3 billion).

the dti approved a grant of R69.2 million for the establishment of the National Footwear and Leather Cluster.

Leather and foot wear sector has established 22 new companies, created over 2,012 new jobs, and managed to reduce the trade deficit to the tune of R 1.4 billion last year.

Metal Fabrication, Capital & Rail Transport Equipment the dti’s designation policy supported the acquisition of South Africa’s Premier Valves

Group for R100 million by Denmark AVK. On the back of the dti support to the value of R11 million, Grindrod unveiled its cost-

effective shunting and short haul locomotive in October 2014. The locomotive boasts 80% local content.

The Gold Loan Scheme was launched in 2014 with R100 million allocated to support large jewellery manufacturers.

Under the National Tooling Initiative and the National Foundry Technology Network more than 300 foundry workers have been trained on various technical foundry courses and 10 foundries have been participating in various enterprise development initiatives.

The Nuclear Energy Corporation of South Africa’s Tooling Centre of Excellence was launched in partnership with the National Tooling Initiative aimed at the rehabilitation and growth of the Tool, Die and Mould making sector.

Agro-processing Since inception in 2013, 35 projects valued at R 530 million were approved for the

Aquaculture Development and Enhancement Programme (ADEP) with 1 168 new jobs expected to be created.

the dti supported Astral Foods with their R200 million chicken feed mill in order to boost South Africa’s agriculture sector.

Business Process Services the dti launched the revised Business Process Services incentive where the previous

incentive scheme led to the creation of 9 077 jobs on the back of financial disbursements of R 587 million. Since inception in 2011, R815,082,286 of claims were paid as part of the Business Process Services incentive. The current phase of the Monyetla Work Readiness Programme resulted in an additional 3 283 unemployed youth that have been recruited by 17 companies across 4 provinces.


Selected sectoral highlights for the financial year Green industries

the dti has strengthened the local content requirement under REIPPP from a target of 40% in Bid Window 1 to a target of 60% in Bid Window 4. The Department of Energy announced 13 projects, amounting to R23 billion for the fourth bidding window of the REIPPP. The 13 would make up 1 121 MW installed capacity on the national grid and are expected to create over 7 000 jobs during construction, with 1 000 permanent operational jobs.

These local content requirements, coupled with the dti’s trade and investment promotion activities, have resulted in a number of new investments establishing local manufacturing and assembly facilities for renewable energy components. These include:

o SMA Solar Technology South Africa, the market leader for solar inverters, officially launching its multi-million Rand manufacturing facility in Cape Town;

o Jinko Solar which opened its R80 million, 120MW p/a solar PV plant, also in Cape Town. The facility is expected to create 200 jobs;

o Juwi Renewable Energies, a subsidiary of the international Juwi group, which will build a solar park in the Northern Cape for an Independent Power Producer. The PV power plant has a total generation capacity of 86 MegaWatts (MW);

o A R1.5-billion, 100-hectare solar power photovoltaic (PV) plant facility – comprising 165,000 solar PV panels near Kimberly.

Film industry The film industry continues to grow on the back of support through the Film and Television

Production and Co-production Incentive. 536 productions were supported since inception of the incentive. Between April 2014 and March 2015, 137 film and TV productions were supported by the dti, with an estimated total investment of R3.7 billion. These included blockbusters such as Avengers 2, Grimsby and Back to School Mom.


Introduction This Industrial Policy Action Plan (IPAP) report focuses on the 2014/15 financial year. It is an

assessment of key achievements for the previous financial year and constraints which continue

to stifle the industrial sector. It is a synopsis of progress in our industrial efforts and challenges

that threaten to render our efforts fruitless. The achievements outlined in this report are a

collective effort of government, private sector and labour and thus reinforce the point that

industrial policy requires a coherent and co-ordinated approach for it to succeed.

1. Key Achievements 1.1. Public procurement

Public procurement is a critical lever for raising aggregate domestic demand in the domestic

economy in support of manufacturing. Government has determined that public procurement is

one important policy instrument and has set a 75% target for local procurement.

Key challenges

The on-going electricity supply constraints have negative consequences for the manufacturing industry and negatively impacts particularly the energy-intensive and energy reliant industrial sectors such as foundries and plastics.

The burden of high ports charges and freight and logistics inefficiencies remain a problem despite the recent reduction in South African port charges. There is an urgent need to adjust a pricing model in support of the exports of value-added manufactured goods without “unwinding” Transnet’s financial plan. However, Transnet National Ports Authority announced that more investment will be made in the economic infrastructure for marine manufacturing.

Monopolistic pricing of key intermediate inputs, especially steel and plastic remain a constraint for the downstream, value-adding manufacturing in both value chains. The global glut of steel has lowered prices in the recent period. However, the global glut now constitutes a threat to the domestic steel industry.

Coupled with the monopolistic pricing of intermediate inputs such as steel, is the recent influx of steel imports which can have a devastating impact on our domestic steel firms in terms of production and employment.

The volatility of industrial relations in some manufacturing sectors is a constraint. The regulatory burden and the cost of doing business in South Africa are also seen as a

constraint. To address this issue government is initiating a number of interventions to make doing business simpler e.g. “One stop Investment Centres’.

Lack of long-term investments in the manufacturing sector because of the cost and difficulty of mobilising industrial financing.

Operational problems and non-compliance with key policy levers e.g. Procurement and Supplier Development. However, stricter compliance, capacity building and the roll-out of additional measures to secure higher impact will be implemented.


Through the powers conferred to the dti by the revised Preferential Procurement Policy

Framework Act (PPPFA) regulations of 7 December 2011, a significant number of sectors, sub-

sector and products have been designated for local production, at specified levels of local

content. These include rail rolling stock; power pylons; bus bodies; canned/processed

vegetables; certain pharmaceutical products, furniture products; residential electricity meters;

valves and actuators; electrical and telecommunication cables; components of solar water

heaters; the Clothing, Textile, Leather and Footwear (CTLF) sector; and working vessels.

As a result of these designations a number of tenders have been awarded to domestic

companies. For instance in the Clothing and textile sector a tender for the ‘Supply and Delivery

of Linen Requirements’ for all Gauteng Health institutions was awarded to 12 Women Co-

operatives at an estimated value of R121 million. As a result of the dti’s intervention to ensure

local content requirements formed part of tender conditions, the Eastern Cape’s Department of

Health awarded a tender for the ‘Supply and Delivery of Hospital and Clinic Ward, Dorm,

Theatre, Kitchen and other Linen, Doctors and Nurses Theatre Clothing, Patients Clothing and

Certain Miscellaneous Protective Clothing’ to three local companies. Also, all transversal

tenders within Clothing, Textile, Leather and Footwear sector, issued by National Treasury to

the total value of R237.9 million for the period under review complied with the local content

requirements.

In the Furniture Industry tenders worth R8.8 million were awarded to local players by SAPS and

the Gauteng Department of Infrastructure. Since the implementation of local content regulations,

just more than 700 bus bodies have been manufactured and busses assembled in South Africa

as part of a drive to improve inner-city public transport.

Government also uses other policy levers such as the National Industrial Participation

Programme (NIPP) and the Competitive Supplier Development Programme (CSDP) to increase

domestic industrial capabilities. Other important instruments include the Defence Industry

Participation Programme (DIPP), and the Renewable Energy Independent Power Producer

Procurement Programme (REIPPPP). The new NIPP approved Guidelines strengthened and

improved alignment of NIPP with other procurement programmes, thus providing opportunities

for sector work to build and enhance capabilities in the different sectoral value chains. This new

approach compels state contracted companies to fulfill their NIPP obligations within the sectors


from which the obligation arose, unless it is not possible to apply Direct NIPP due to the

challenge of short-term capability.

In the period under review, efforts were made to strengthen capabilities and compliance

throughout the organs of state. Capacity building continued to be rolled out in all provinces and

to many municipalities. Training on Local Content was provided to supply chain officials at all

levels of government including participation in tender briefings (e.g. Prasa for the Office

Furniture, Armscor for the Navy vessels under Project Hotel and Biro).

the dti continued to track and flag non-compliant bids from the Tender Bulletin and other modes

of advertisement to monitor compliance by organs of state. 177 bids were followed-up for the

period under review. In order to ensure compliance, the dti requested the Auditor General

to commence with an audit of expenditure during 2014/15 relating to tenders designated for

local procurement. The department also worked closely closely with the South African Clothing

& Textile Workers Union (SACTWU) in tracing, following-up and correcting non-compliant

tenders especially in the Clothing, Textile, Leather & Footwear sector.

1.2. Industrial Financing

the dti’s suite of incentives are designed to achieve a better mix of public and private sector

funding in support of diversification of the manufacturing sector. Thus incentives are

strengthened over time through successive IPAP iterations to align them more strongly with the

industrial financing programme of the Industrial Development Corporation (IDC). They also

incorporate progressively stronger conditions to be met by beneficiaries with respect to a range

of criteria, including increased competitiveness, and consistently highlight shortcomings in the

industrial financing sphere which continue to be a constraint to the growth of the manufacturing

sector.

Over the past 20 years, the IDC has approved funding of projects in excess of R128 billion

(R204 billion in 2013 prices) with an impact of 360 000 direct jobs created and an additional 43

000 jobs saved. Between April 2014 and 31 March 2015, IDC approved projects to the value of

R10.1 billion, resulting in 20 260 jobs created. The following IPAP sectors benefitted from the

funding:

R 1.7 billion in Mining and Minerals Beneficiation;

R 1.2 billion in Green Industries;


R 1.2 billion in Shipbuilding;

R 1.3 billion in Chemical & Allied Industries;

R 523 million in Textiles;

R 1.4 billion in Forestry and Wood Products;

R 1.4 billion in Metals, Transport & Machinery Products;

R 358 million in Agro-industries;

R 294 million in Healthcare ;

R 100 million in Media & Motion Pictures;

R 178 million in Tourism; and

R 109 million in Venture Capital

The newly revised Manufacturing Competitiveness Enhancement Programme (MCEP)

guidelines approved by the dti tightened up potential imbalances in the awarding of

manufacturing support grants. For the 2014/15 financial year, 346 enterprises were approved

for funding under the MCEP, with a total grant value of R 1.4 billion and a projected investment

of R4.5 billion to sustain 39 721 projected jobs. 34% of approvals were in the Agro-processing

industries, 29% in Metals fabrication and associated industries, 20 % in Chemicals, Plastics and

Pharmaceutical Industries while the remainder covered a wide variety of industries.

4% of total MCEP grants approved went to small entities with assets below R5

million;

10% went to those with assets between R 5 million and R 30 million;

25% went to entities with assets between R 30 million and R 200 million; and

61% went to entities with assets above R 200 million.

In terms of the geographic spread 36% approvals were in Gauteng, followed by Western Cape

with 31%, then KwaZulu-Natal at 16% and Eastern Cape at 8%.

With regards to other incentives provided by the dti, between April 2014 and March 2015, 16

projects under 12i Tax incentive programme with an investment value of R 9.2 billion were

approved. These are expected to create 533 direct and 4 047 indirect jobs. Under the

Technology for Human Resource in Industry Programme (THRIP), 1602 projects to the value of

R 873 million and supported 9,750 students have been approved since 2009 (up to December


2014). Government support for manufacturing played a critical role in retaining both strategic

industrial capabilities and the diversity of manufacturing capacity in the domestic economy.

1.3. Special Economic Zones (SEZ) and Industrial Development Zones (IDZ)

1.3.1 SEZ

The SEZ Programme is an important tool in support of long-term industrialisation objectives and

the development of new industrial capabilities, aiming at a) increasing the flow of domestic and

foreign direct investment; b) developing, strengthening and deepening key domestic value

chains and suppliers; and c) increasing the volume and diversity of exports. To date the

regulatory framework has been largely completed, a package of incentives developed, and

feasibility studies to determine the long-term economic viability of zones is near completion.

Other localities have been identified for designation as SEZ’s, and an announcement in this

regard will be made before the end of the financial year.

Efforts have recently been intensified regarding the development and promotion of SEZs. The

Dube Trade Port, launched as an SEZ in October 2014, secured investments during the period

under review from the South Korean electronics giant, Samsung (R 200 million), and Brenco

Reelin, the largest rail component manufacturer in the world (R 70 million).

1.3.2. IDZ

The SEZ programme was preceded by the designation of 5 IDZ’s, 3 of which - Richards Bay,

East London and Coega - are now fully operational. They have collectively generated R 3.4

billion in investments and created more than 67,000 direct and indirect jobs.

During the 2014/15 financial year, the Richards Bay IDZ’s secured two significant investments.

These included Sizabantu Piping Systems (Pty) Ltd, with an investment of R 300 million and RB

Energy Services Pty (Ltd) with a total investment of R 20 million. These investments are

expected to create 112 direct and 130 indirect jobs respectively.

East London IDZ (ELIDZ), secured R 4.4 billion in value of private sector investment were

attracted, with more than 80% of this being FDI, thus growing the total number of secured

investors to 34, with 25 of those investors already operating from the zone. As a result direct

manufacturing and related services jobs have grown to more than 2 992. Coega IDZ located in


the same province as ELIDZ secured a total investment to the value of R 1.54 billion, with an

estimated 646 jobs expected to be created.

1.4. Developmental Trade Policies

The technical infrastructure system, also known as technical infrastructure, plays an important

economic role as it promotes competitiveness and fair trade in domestic and international

markets; building business confidence and consumer confidence in products and services;

protecting consumer health; safety and environment; ensuring product safety and providing

assurance of reliability and quality. The technical infrastructure institutions in collaboration with

the International Trade and Administration Commission (ITAC) and the South African Revenue

Service (SARS), fight to keep the marketplace free of non-compliant and unsafe products,

limiting customs fraud and illegal imports, smuggling and under-invoicing – all of which hamper

productive capacity, and industrial growth; thus impacting negatively on employment creation.

At the same time, the technical infrastructure institutions encourage industry to achieve the

international quality standards that must be met in order to gain market access into foreign

markets. The scaling up on market surveillance by the NRCS; with an emphasis on the rigor

with which the Letter of Authority process is applied has borne fruit over the past two years

under the NRCS border enforcement project and its risk-based approach. To date,

approximately R 153-million worth of non-compliant and unsafe products have been seized and

removed from the market. More than 300,000 non-compliant products were destroyed, at the

third Destruction-of-Goods function conducted in Bon Accord, Pretoria.

The South African Bureau of Standards (SABS) commenced with the expansion of its capacity

of the Appliances Laboratory to enable it to test for energy efficiency in response to the Energy

Efficiency Regulations. Various South African National Standards (SANS) were finalised and

published in support of the IPAP priority sectors. The Legal Metrology Act, Act 9 of 2014 was

promulgated on 1 August 2014. This Act expands the scope of trade metrology to legal

metrology and strengthens the enforcement thereof.

The National Metrology Institute of South Africa (NMISA) has embarked on various multiyear

projects to improve its testing capabilities in support of IPAP. Highlights include: the

commencement of the upgrade of the Materials Characterisation Capabilities in support of

beneficiation, automotive, freight and rail and advanced manufacturing; providing reference

measurement capabilities in support of Agro-processing and food safety for pesticides and in


organic elements as well as toxins. The South African National Accreditation System (SANAS)

developed and launched 3 new accreditation programmes for: road transport management,

food safety management and organic agriculture production and processing certification,

respectively.

1.5. International Trade and Administration Commission (ITAC)

ITAC continued to consolidate and realign itself to support strategic industrial development

imperatives using import duties and tariffs. This was reflected in the completion of 17

applications for increases, rebates and reductions of duties across a range of sectors. 13

investigations have been implemented by SARS.

1.6. Competition Policy

The Competition Commission, continued to stem anti-competitive behaviour, and imposed

penalties on a number of companies in contravention of the Competition Act. These included,

amongst others, a penalty of R534 million imposed on Sasol for over-charging local customers

for plastic products; Saldanha Foods (R4 million) for being involved in the price fixing of

pilchards and anchovies, Columbus Stainless (R32.5 million) for entering into a price-fixing

agreement with its competitors. Hendrik Pistorius & Co was fined 10% of its turnover for price

fixing, and ATC agreed to pay R80.7 million for collusion in cable manufacturing.

1.7. Automotive Sector

The automotive sector plays a crucial role in the domestic economy and is a key spillover sector

that drives competitiveness and job creation. The automotive market in South Africa is

competitive with seven Original Equipment Manufacturers (OEM’s) based here, and a further

120 1st tier component manufacturers, of which 75% of them are multinationals. South Africa is

seen as providing the largest automotive market and the most significant automotive centre and

supply chain cluster in Africa. In 2014 it accounted for 7.2% of Gross Domestic Product (GDP),

30.2% of manufacturing output and its share of total exports is 11.7%. Apart from its sizeable

contribution to output, OEM’s invested R6.9 billion in 2014. Vehicle and component exports

increased by 8.2%, from R94.9 billion in 2012 to R102.7 billion in 2013 and R115.7 billion in

2014. 2013 was the first time the industry exceeded the R100 billion mark in exports. The

catalytic converter, which reduces harmful emissions from vehicles, remains the most popular

component exported from South Africa. Catalytic converter exports were valued at R19.5 billion,

or 42.7%, in value, of all parts exported in 2014, up from the R17.64 billion recorded in 2013.


The approval of the newly-revised guidelines for the Automotive Investment Scheme (AIS) and

the People-carrier Automotive Investment Scheme (P-AIS) facilitated investments to an

estimated value of R2.7 billion. In 2014/15, 50 projects were approved with estimated incentives

to the value of R687 million and it is expected that 1 261 new jobs will be created over a 3 year

period. These facilitated investments by various OEM’s with Mercedes Benz being the largest

single investor. This investment facilitated investments down the value chain with the

component manufacturing sector investing over R890 million in plant and equipment. Ten new

components firms set up in the wake of the C-Class investment programme with 800 new jobs

created in the MBSA value chain.

As a result of the P-AIS, the Medium Heavy Commercial Vehicles subsector has seen massive

investments. These include investments from Volvo Southern Africa based in Durban which

started to build 1 800 trucks and buses, up 500 units from the last eight years’ average of 1 300

units a year. This investment has also fostered localisation of components, such as tyres, fifth

wheels and chevrons. FAW Group opened a new plant in Coega and is expected to produce

5,000 trucks a year and to supply its entire range of trucks to the domestic market and into the

rest of Africa. By 2016 FAW expects to be sustaining an employee complement of 750, up from

the current 285, on the back of both the newly commissioned Coega plant and the expansion of

its existing facility in Johannesburg.

2014/15 also saw the opening of a new truck plant when Hyundai Automotive South Africa

(HASA) began assembling medium-duty trucks at its plant in Benoni. The R110 million

investment will concentrate on the assembly of five and six - ton trucks for the local market and

will create around 40 new jobs. During the same period Hino South Africa, a subsidiary of

Toyota, opened its new truck plant in a R54 million investment. Other investments included

Iveco SA Works which invested R800 million to build buses for Putco.

1.8. Clothing and Textiles Sector

The Clothing and Textile Competitiveness Programme (CTCP) was introduced to assist

companies to compete sustainably and effectively against international competitors in both

domestic and export markets. Since inception of the Programme approvals worth R 3.7 billion

have been facilitated under the Production Incentive Programme (PIP), based on 1 076

applications approved and disbursements to date of R2.6 billion. In the process, 68 380 jobs


have been supported with 6 900 jobs created. Manufacturing value add over the period was

R3.9 billion. Approvals under the Cluster programme are R672 million, with disbursements to

the value of R373 million1.

As part of its efforts to support the Clothing, Textile and Leather sector, the dti approved a

R200 million grant where the Southern Africa Sustainable Textile and Apparel Cluster

(SASTAC) was launched in October 2014. The localisation efforts within the sector are starting

to bear fruits .Companies such as Gelvenor Textiles have emerged, who manufacture technical

fabrics for state organs which were all imported previously. These include fire fighting uniforms

and other specialised garments used where chemical protection is required. Evidently, they are

working with local garment manufacturers such as Field Wear, Stepahead and many more to

manufacture the garments to ISO Standards, which are international standards and SABS is the

custodian of those standards. The sector has seen an expansion and growth in garment

manufacturing as local manufacturers are beneficiaries of state tenders.

Furthermore, the dti approved a grant of R69.2 million for the establishment of National

Footwear and Leather Cluster through the Competitiveness Improvement Programme (CIP).

The footwear industry has also benefited from the Designation as they have the advantage of

sourcing their leather from the local tanneries using local hides from local feedlots. To this end,

the sector has established 22 new companies, created over 2,012 new jobs, and managed to

reduce the trade deficit to the tune of R 1.4 billion last year. Footwear exports grew by 41% and

the leather exports grew by 45%.

1.9. Metal Fabrication, Capital and Transport Equipment

the dti’s designation policy supported the acquisition of South Africa’s Premier Valves Group

(PVG) for R100 million by Denmark AVK. The transaction is expected to introduce a new

international standard for local production capability at the facility. AVK will also set up a resilient

seal valve (RSV) manufacturing unit at the Alrode-based facility, producing up to 80, 000 RSVs

a year.

The government’s increasing demand for localisation in infrastructure contracts, led to General

Electric’s announcement of a R700 million commitment to support innovation through the CSDP,

1 Disbursements under the Cluster programme are over the life span of the project which varies between 3 to 5 years and

disbursements are dependent upon achieving set milestones


enterprise- and skills- development in South Africa. On the back of the dti’s support to the value

of R11 million, Grindrod unveiled its cost-effective shunting and short haul locomotive in

October 2014. The locomotive boasts 80% local content.

As a result of Government’s efforts to promote beneficiation, the Gold Loan Scheme was

launched on 30 September 2014, with R100 million allocated to support large jewellery

manufacturers to finance gold for jewellery manufacturing at a cost of 3%.

Competitiveness improvements were undertaken through the National Tooling Initiative and the

National Foundry Technology Network with more than 300 foundry workers trained in various

technical foundry courses and 10 foundries have been participating in various enterprise

development initiatives. As part of the rehabilitation and growth of the Tool, Die and Mould

making sector, the Nuclear Energy Corporation of South Africa’s Tooling Centre of Excellence

was launched in partnership with the National Tooling Initiative.

1.10. Agro-processing

The agro-processing sector has been identified as one of the key sectors earmarked under the

President’s 9 point plan. Since 2009 the dti has supported agro-processing industries to the

tune of R1.2 billion through various schemes such as the MCEP, the Manufacturing Investment

Programme and the Enterprise Investment Programme. As part of this initiative, various

interventions have been supported in this regard.

In July 2014, the dti supported Astral Foods with their R200 million chicken feed mill in order to

boost South Africa’s agriculture sector. the dti has contributed R28 million towards the 40,000

ton per month mill, with the remainder of the costs being carried by Astral Foods, South Africa’s

largest poultry producer. Other examples of support by the dti, to the agro-processing sector,

was carried out in collaboration with FABCOS, where it assisted in developing an incubator farm

for barley production and supported Cape Malting House to the tune of R20 million. the dti has

funded an R86 million multipurpose agro-processing facility announced by Coega Development

Corporation (CDC).

As part of the South African Fruit and Vegetable Canning Association PPP initiative, a new 10-

hectare peach orchard was opened in Robertson. The orchard is 70% owned by a group of

black women who have an off-take agreement with the Rhodes Food Group. This is part of the


dti’s Action Plans agreed upon with various big companies. Rooibos tea was granted a

geographical indication (GI) status and this provides a way for South Africa to leverage the

value of this geographically unique product, and to aggressively expand the export of rooibos

into new markets. This new development was part of the announcement on the Economic

Partnership Agreement between Southern African nations and the EU by the dti.

The Aquaculture Development and Enhancement Programme (ADEP) has supported 35

projects, with an incentive value of R142 million. Projected investment leveraged as a result is

R530 million and these projects are expected to create 1 168 new jobs. During the 2014/15

financial year, 8 aquaculture projects were approved to the value of R75 million in support of

investment of R96 million. This is an important sub-sector which has been identified under

Operation Phakisa as a priority that will contribute to its development.

1.11. Business Process Services (BPS)

After a comprehensive review of the Business Process Services (BPS) incentive in 2014, the dti launched the new programme guidelines at South Africa House in London in October 2014.

The revision introduced a two-tier differential approach for non-complex and complex jobs and

extended the payment period to five years. The revised incentive scheme builds upon the

success of the previous scheme which led to the creation of 9 077 jobs on the back of financial

disbursements of R587 million. For the period 2014/15, 7 projects of the new programme have

been approved with a 5 year projected investment of R18,4 billion and 6361 projected jobs. The

total amount of claims paid during that period were R301 million.

Significant investments that materialised on the back of support to the industry include the

launch by the Minister of Trade and Industry, Dr Rob Davies, and King Goodwill Zwelithini of the

CCI Call Centres in Umhlanga, KwaZulu-Natal with an investment value of R200m. This will

increase the number of jobs from 3,000 to over 5,500. CCI Call Centres is a beneficiary of the dti’s BPS incentive and has participated in the Monyetla Work Readiness Programme which

prepares those under 35 and previously unemployed for the workplace through training and

development. Webhelp, a French-owned Global Contact Centre company, was launched. The

investment is expected to rise to R300 million over three years and has thus far created 200

jobs.


Since its inception in 2008, the Monyetla Work-Readiness Programme which is a skills

development programme for the sector, provided training and a total of 9 664 competent

learners received job placements as BPS agents. As part of the talent development component

under Monyetla, 17 companies were contracted to train and employ 3 283 unemployed learners

from Johannesburg, Durban, Cape Town and the Eastern Cape.

1.12. Green industries

Government has embarked on a renewable energy roll-out programme which started in 2011.

The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has

so far made a determination to procure 6 925 MW of renewable energy power by 2020. So far,

3 916 MW has already been procured by the preferred bidders in Bid Windows 1 to 3. During

the fourth bidding window, 13 projects have been accepted which would make up 1 121 MW of

installed capacity on the national grid. The value of those bids amount to around R23-billion,

and is expected to create over 7 000 jobs during the construction phase and 1 000 permanent

operational jobs. With regards to the various types of energy, the largest slice of the bids was

allocated to onshore wind energy, at 676 MW; Solar photovoltaic (PV) energy made up 415

MW; with 25 MW being allocated to biomass and 4.7 MW to small hydro. In terms of the

provincial spread, about 62% of the successful projects in the fourth round were situated in the

Northern Cape.

the dti has strengthened the local content requirement, with every successive bidding round

scaling up thresholds and targets. The local content requirements for renewable energy have

progressed from a threshold of 25% in bid window 1, to a threshold of 40% in bid window 4, and

a target of 40% and 60% in Bid Windows 1 and 4 respectively. These local content

requirements, coupled with the dti’s trade and investment promotion activities, have resulted in

a number of new investments establishing local manufacturing and assembly facilities for

renewable energy components. These include:

SMA Solar Technology South Africa, the market leader for solar inverters, officially

launching its multi-million Rand manufacturing facility in Cape Town;

Jinko Solar which opened its R80 million, 120MW p/a solar PV plant, also in Cape

Town. The facility is expected to create 200 jobs;

Juwi Renewable Energies, a subsidiary of the international Juwi group, which will

build a solar park in the Northern Cape for an Independent Power Producer. The PV

power plant has a total generation capacity of 86 MegaWatts (MW);


A R1.5-billion, 100-hectare solar power photovoltaic (PV) plant facility – comprising

165,000 solar PV panels near Kimberly.

South Africa’s first ever Wind Atlas has been developed. The Wind Atlas, developed in

conjunction with the Danish government and the United Nations Development Programme, as

well as several other partners, will help industry and government identify excellent wind

development zones. Across South Africa, five wind farms are in full production, 15-large-scale

wind farms are under construction and another seven are approaching financial close. Three

utility-scale wind farms have begun exporting electricity to the grid for the first time. This is a

significant development in the context of electricity supply constraints.

1.13. Creative industries

The Minister of Trade and Industry launched the newly developed R1 million threshold South

African Emerging Black Film-Makers Incentive Programme. The objective of the programme is

to support emerging black filmmakers with the intention to nurture and grow them to take up big

productions and thus contribute towards employment creation. In addition, the IDC and the

National Film and Video Foundation (NFVF) launched the Emerging Black Filmmakers

Transformation Fund (EBFTF) aimed at assisting new black filmmakers.

The incentive support received by production houses continues to put the South African film

industry on the world map. Testament to that is foreign blockbusters such as Avengers 2,

Grimsby, Back to School Mom and Eye in the Sky, which have been produced in South Africa.

Local productions supported included Andani and the Mechanic, Schuster 2015, Chemo Club,

and Mandela's Children. Between April 2014 and March 2015, 137 projects were supported to

the value of R3.7 billion under the Film incentive.

1.14. Aerospace and Nuclear

In efforts to build the long term capabilities within the Aerospace and nuclear sectors, the dti officially launched a new Training Centre at the Nuclear Energy Corporation of South Africa that

will take South Africa’s nuclear safety management status to a new, significantly higher, level. In

the Aerospace sector, Denel Aero-structures was awarded a R200 million contract to make

parts for the Airbus A400M military transport and air-to-air refuelling aircraft.


1.15. White goods

The white goods sector provides an opportunity to increase exports particularly into the SADC

region given the investments by LG Electronics and HiSense. This was given further impetus

when the dti supported the expansion of the Defy ‘Side-by-Side’ refrigerator production facility –

worth more than R120 million – in East London. The local manufacturing of the Side-by-Side

refrigerators will reduce some of the imports of these types of refrigerators. the dti also provided

a grant of R30 million in support of an investment of around R200 million in upgrading Defy’s

Ezakheni factory in Ladysmith.

1.16. Maritime sector

This sector received a much needed boost as one of the oceans economy sectors earmarked

for growth and development under the banner of Operation Phakisa. As part of the Operation

Phakisa initiatives, Transnet National Ports Authority (TNPA) announced a R9.65-billion

investment in infrastructure projects at Saldanha Bay, aimed at enhancing the deep-water port's

ability to service the offshore oil and gas industry. According to TNPA the projects would create

an estimated 6 300 new direct jobs and 25 200 new indirect jobs, contributing an estimated

R4.74-billion to South Africa's gross domestic product. The project is due to be completed by

January 2018. A positive development within Saldanha Bay is that Oiltanking MOGS Saldanha

has been granted environmental authorisation for the development and construction of a R2

billion commercial crude oil blending and storage terminal. Southey Holdings and Nautic Africa

have invested R289.9 million and R63.4 million respectively and have been approved under the

12I tax incentive. These investments are expected to create 355 direct jobs.

2. Overview of all the KAPs

The progress of the Key Action Programmes (KAPs) identified in IPAP 2014/15 was monitored

and evaluated on a quarterly basis at meetings chaired by the Minister of Trade and Industry.

These meetings served to review progress and also employed a bottleneck solving mechanism

for the implementation of the KAPs. A colour coded matrix which includes the KAPs was used to

monitor the implementation (Appendix 1).

2.1. Green-coded KAPs represent those milestones that have been largely achieved. This

applies to 147 KAPs.


2.2. Orange-coded KAPs represent milestones that have been partially met with some parts of

the total KAP still facing blockages. With respect to the 2014/15 matrix, this applies to 56 KAPs.

In some of these instances milestones in the KAP have been carried over to the next iteration of

IPAP as some were held back in order to allow for further stakeholder consultations and on-

going processing. These are as follows:

Developmental Trade Policy: Finalise Amendment of Compulsory Specifications VC

8022, 8023, 8024 and 8025, to add additional safety features to automotive vehicles and

align SA requirements with latest UN (ECE) requirements.

Developmental Trade Policy: Finalise Amendment of Compulsory Specifications VC 8056

and 8059 for pneumatic tyres for passenger and commercial vehicles.

Developmental Trade Policy: Strengthening the enforcement system of NRCS

Innovation and Technology: Large R&D programmes in knowledge-intensive areas

Plastic and Pharmaceuticals: Development of plastic production and innovation cluster

Boatbuilding and Associated Services Industry: Skills Development Strategy.

2.3. Red-coded KAPs denote areas where there are significant delays (for 5 KAPs). The

majority of these relate to funding constraints that have caused delays:

Metal Fabrication, Capital &Rail Transport Equipment: National Tooling Equipment –

Enrolment of tooling engineering students.

Advanced Manufacturing: Software Development Process Improvement Programme.

The following programme was seriously delayed due to difficult investment processes:

Plastic and Pharmaceuticals: domestic production of vaccines and ARV APIs (Facilitation

of “Project Ketlaphela”).

Table 1 provides an overview of progress across all the Key Action Plans for the

implementation of IPAP.


Table 1 – IPAP Key Action Plans

Breakdown of KAPs

Total Transferred to other Depts.

Deleted from IPAP 2014/15

Revised Total

Percentage

Green 147 0 0 147 71%

Orange 56 0 0 56 27%

Red 5 0 0 5 2%

Total 208 0 0 208 100%

3. Economic environment

3.1. Growth

The South African economy’s growth takes its cue from the performance of the global economy.

In 2014, the global economic grew at 3.4%, with the growth of advanced economies marginally

picking up relative to the previous year. The emerging markets and developing economies

recorded a slowdown in growth, with a number of factors contributing to this trend. The year

under review witnessed low and volatile commodity prices, quantitative easing by the European

Central Bank and large exchange rate fluctuations in particular large depreciations in emerging

markets.

Falling commodity prices reflect a drop in global demand linked to ongoing recessionary

conditions in the Eurozone and a structural slow-down in the People’s Republic of China. For

instance, from September 2014 commodity prices declined by 28%. Metal prices fell by 15%

because of slowing demand from China and agricultural commodities declined by 6% mostly on

account of favourable harvests. Due to slowing demand in China, tumbling crude oil prices

mostly contributed to the decline in commodity prices where the decrease registered was 43%.

The domestic economy is still struggling to shake off the effects of the Great Recession with

growth rates remaining well below pre-crisis levels. This is reflected in the domestic economy’s

growth of 1.5 per cent in 2014, which was well below the global growth rate over the same

period. The domestic economy bore the brunt of the five-month-long labour strike in the

platinum-mining sector and the industrial action in the steel and engineering sector. These

coupled with a lack of stable electricity supply and lower prices of key export commodities

meant that the economy performed at less than optimal levels. The fall in oil prices was


beneficial to South Africa as oil is used as an input, the lower oil prices translated into lower

costs and boosting profits. However the fall in a range of commodities placed the mining sector

under stress with knock –on effects for the manufacturing sector.

The low growth rates are a reflection of the performance of the various economic sectors.

Output in the mining sector contracted by 1.6%, and agricultural sector posted solid growth of

5.6% largely due to an extraordinary maize crop. Value add by the services sector improved

during the first three quarters of 2014, reflecting increased activity in trade and finance,

insurance, real-estate and business services sectors. 3. 2. The domestic manufacturing economy

3.2.1 External balance

The African continent remains an important market for locally produced manufactured goods.

The manufacturing export basket remains highly concentrated with a few main sub-sectors

accounting for the bulk of manufactured exports. The top ten export categories accounted for

63% of all manufactured exports in 2014. Manufactured exports increased by 13.3% in 2014 on

the back of increased exports to Africa, as well as a weakening rand against the dollar and the

growth momentum in the US economy. Exports of basic iron and steel and motor vehicles were

the biggest contributions to the growth in exports. Although China remains South Africa’s

biggest export destination, overall exports to China fell by 19.1% to R94.7 billion in 2014. The

decline in exports to China was largely attributed to the decline in the price of iron ore.

Manufactured exports to Africa in 2014 totalled R143 billion, compared to manufactured exports

to Europe of R122 billion. It should also be noted that manufactured goods represented

approximately 92% of South Africa’s merchandise exports to other African countries in 2014, as

compared to 74% and 60% in the case of the United States and the European Union

respectively.

Foreign Direct Investment flows into South Africa have been generally robust since 2007, with

the country being the leading recipient of FDI on the African continent in 2013. A breakdown of

investment flows by source country and recipient sector shows that inward investment is still

predominantly from our traditional trading partners, the UK and US, with India and China

starting to make a significant showing. Significant capex inflow was recorded into the renewable


energy sector which is attributable to the success of the REIPPPP. Metals, Automotives and

Chemicals sector also registered positive investment in the year under review.

3.2.2. Manufacturing production

An increasingly competitive environment globally and substantially weaker demand conditions in

key external markets in advanced economies have negatively affected the performance of the

local manufacturing industry. Certain domestic factors such as the unstable supply and high

cost of electricity and exchange rate volatility have aggravated the situation.

The manufacturing sector is linked to the mining sector. The prolonged industrial action in the

mining sector had spill-over effects on manufacturing as the sector supplies inputs into the

mining sector. For example, a number of manufacturing sub-sectors such as rubber, machinery

& equipment, metal products and other transport equipment, supply a substantial portion of their

output to the mining sector. Furthermore, the link between the two sectors is very important

because of their substantial upstream and downstream linkages and the multiplier effects they

generate.

Lower levels of output were recorded by more than half of all manufacturing sub-sectors in the

first 11 months of 2014. As a result, in 2014 as a whole, manufacturing value add remained

unchanged at 0.0% compared to the 0.7% increase in value add in the previous year. Various

sub-sectors in manufacturing such as non-metallic mineral products, metals and machinery and

electrical machinery reported lower output levels in 2014 compared to 2013.

Capacity utilisation in the manufacturing sector declined in quarter 2 of 2014 due to lower levels

of production although it picked up in quarter 4 to 81.5% utilisation. As in previous quarters,

insufficient demand is cited as the main reason for the underutilisation of capacity in the sector.

3.2.3. Manufacturing employment

The adverse trends in manufacturing production and investment activity resulted in continued

job shedding on a net basis. Formal employment in the manufacturing sector remains under

pressure, having declined over a number of years. The contribution of the manufacturing sector

to overall employment fell from 14.6% in the first quarter of 2008 to 11.5% by the third quarter of

2014 and amounted to a substantial loss of some 370 000 employment opportunities. Job

losses accelerated during the third quarter of 2014 following the industrial action in the metals


and engineering sectors in July 2014. During the first 3 quarters of 2014 the industry lost almost

18 700 formal job opportunities.

3.3 Fixed investment

Fixed capital formation (land improvements, plant, machinery and equipment amongst others) is

vital to the productive sectors of the economy as it increases the real productive assets and in

turn leads to more production. The infrastructure development programme rolled out by the

public sector, including both general government and public corporations was designed in part

to provide a substantial counter-cyclical effect to the Great Recession of 2008/09.

Capital spending by public corporations started to increase from the middle of 2014, with entities

such as Transnet, the South African National Roads Agency Limited (SANRAL) and the Trans-

Caledon Tunnel Authority raising their capital investment in the final quarter of 2014.The

Passenger Rail Agency of South Africa (PRASA) also embarked on the roll-out of its new fleet

passenger locomotives. Despite these higher capital outlays in the 4th quarter of 2014, growth

in real fixed capital formation by public corporations only increased by 1.6% in 2014 as a whole.

Capital spending by general government rose rapidly by 10.3% in 2014 as a result of

investments in economic and social infrastructure. That is in contrast to capital spending by

private business enterprises which declined by 3.4% in 2014 brought about by lacklustre

economic growth during the year, structural bottlenecks and low business confidence levels. In

terms of the manufacturing sector, capital outlays contracted by 0.5% in 2014 compared to the

previous year. Factors affecting investment decisions included weak demand conditions,

surplus production capacity in a number of sub-sectors, concerns over electricity supply

especially for energy-intensive projects and high levels of industrial action.

4. Conclusions and the importance of Parliamentary oversight Consecutive iterations of IPAP including the 2014/15-16/17 iteration set out ambitious cross-

cutting and sector specific refinements to the programmes and implementation plans of our

industrial policy approach. IPAP is a product of the Economic Cluster of Government and is

underpinned by continuous adjustment and strengthening of government plans and

modifications of its focus areas and instruments. IPAP has demonstrated that in areas where

there are dedicated interventions such as automotives; textiles, clothing, footwear and leather

and Business Process Services and film, that industrial policy can be effective. Amendment of

the PPPFA Regulations, continue to give impetus to the strengthening and deepening of


industrial development through localisation. IPAP perspectives and interventions have

strengthened the claims of manufacturing and further developed the case for its strategic

importance.

A key constraint is also the lack of policy & programme alignment and integration across the

spheres of government. In addition, the implementation of IPAP 2014/15 coincided with a set of

global economic conditions which are complex and volatile. The global economic climate

remains fragile with falling commodity prices posing a threat. Weak manufacturing sector

performance compounded by a volatile currency, unstable supply of water and electricity and

other shocks such as low and volatile commodity prices have contributed to the vulnerability of

the manufacturing sector. High port charges and inefficiencies continue to be a constraint with

regards to the promotion of value-added exports.

The Industrial Policy Action Plan is firmly embedded in the national development discourse. The

Medium Term Strategic Framework positions IPAP as one of the key pillars of radical economic

transformation predicated on rapid and inclusive growth in the productive sectors. Achievements

registered across a range of transversal and sector specific interventions demonstrate that

industrial policy is key to our national industrialisation effort. New policy platforms and

programmes and implementation lessons built a foundation upon which broader and deeper

industrial development can be achieved. IPAP also reflects the significant progress that has

been achieved with respect to the building of partnerships with key private sector players;

stronger integrated government actions at the back of comprehensive research that advanced

our industrial policy objectives.

IPAP 2014/15 – 16/17 ANNUAL REPORT Page 1

APPENDIX A: IPAP KAP MATRIX

IPAP Ref No

Programme/Project Key actions/quarterly milestones Progress to date

1 Public Procurement Monitoring and evaluation of the performance of designated sectors

2014/15 Q1-Q4: Implement a monitoring and evaluation tool for designated sectors.

The report on local content verification of Solar Water Heaters was finalised in June 2014 and given to the dti and Department of Energy. Some of the challenges uncovered in the verification led to the amendment of the SWH Instruction Note.

The local content verification of bus bodies with Marcopolo SA, subcontractor of Sandown Motor Holdings, for the City of Joburg (Rea Vaya programme) has been finalised.

the dti is part of the task team working with the Southern African Sustainable Textile and Apparel Cluster (SASTAC) on developing the government portal to assist in streamlining the tender process for Clothing, Textiles, Footwear and Leather (CTFL).

10 local content workshops and training were conducted with procuring entities throughout the country.

the dti assisted other government departments and state owned companies with local content requirements in tenders. The following government entities have been assisted:

eThekwini Municipality,

Cape Town Municipality,

Sol Plaatjie Municipality,

Western Cape Provincial Treasury,

Department of Agriculture,

Fisheries and Forestry,

Eastern Cape: Treasury and Department of Health.

the dti also accompanied the National Treasury to the provincial training on Supply Chain Management in the Western Cape, Kwa-Zulu Natal and North West.


IPAP Ref No


the dti continues to track and flag non-compliant bids from the Tender Bulletin and other modes of advertisement to monitor compliance by organs of state. 25 bids were followed up for the period under review. Out of the 25, 13 were reported to have been amended before closing.

2 Public Procurement Annual Re-prioritisation of the Procurement Plan

2014/15 Q1-Q4: Review of research work done by Sector Desks for further designation of sectors/sub-sectors for local procurement. 2014/15 Q1-Q4: Issue Procurement Instruction Notes for designated sectors. 2014/15-2015/16: Work with other government departments and public entities to identify opportunities for further designation. 2014/15-2015/16: Implement section 9.3 of the PPPFA Regulations, 2011. Consult with other government departments, state entities and business to identify opportunities for promoting local procurement in non-designated sectors. 2014/15 Q1-Q4: Working in consultation with other government departments, review the PPPFA and other public procurement levers. 2014/15 Q1-Q4: Support professionalisation of supply chain/procurement/ localisation practitioners. Work with NT, PALAMA and other training institutions to empower officials to be in a position to verify local content declarations before final awards and provide a support function to bidders/potential suppliers.

Four designation proposals were approved and recommended to Minister:

Mining and Construction Vehicles (Yellow Metals)

Construction Materials

Transformers and Shunt Reactors

Two-way Radios Two Instruction Notes: Rail Rolling Stock and Solar Water Heaters were amended in April 2014 and recirculated by the National Treasury on 17 June 2014. Steel Conveyance Pipes was approved in April 2014 for designation and the Instruction Note is being finalised. the dti participated in the following Bid Evaluation Committees:

DWA's BEC meeting on 3 February 2015 for the Protective Clothing tender (none of the bidders was found to be responsive) and the tender was re-advertised with clear instructions

PRASA for Office Furniture tender on 20 February 2015, two local companies were recommended

City Power for both Smart Meters and Cables on 13 March 2013, representative number of companies complied with local content requirements

the dti has made a follow up with the Office of the Chief Procurement Officer on the circulation of guidelines for Regulation 9.3 of the PPPFA Amended Regulations. This deals with local procurement of non-designated products and is important in achieving 75% of local procurement set-up by the government. Public entities are being advised to invoke Section 9.3 in promoting localisation for the non-designated products.


IPAP Ref No


3 Public Procurement Roll-out of the new NIPP Guidelines

2014/15 Q1: Obtain capital expenditure projections of major procuring entities and develop tender-specific strategies on how to exploit the direct NIPP option to leverage investment and competitiveness upgrading in the value chain of the tenders 2014-15 Q2: Complete NIPP/DIP policy review and obtain Cabinet approval of the dislodgement of the NIPP requirement from Armscor procurement 2014-15 Q1-Q2: Ensure that existing PFMA, MFMA and associated regulations, including practice notes, are amended to make NIPP compliance unambiguous and explicit. 2014-15 Q1-Q3: Create awareness and secure compliance in Government and the private sector through NIPP presentations on the revised NIPP policy and Direct NIPP as a preferred method of fulfilling NIPP obligations. 2014-15 Q1-Q4: Create a culture of compliance with the NIPP requirements through presentations of the revised NIPP policy at strategic procurement forums and industry workshops so as to minimize the levels of non-compliance and import leakage through government tenders.

NIPP/DIP policy review document developed and presented to the dti principals. It was decided that the policy review was not necessary and the process was closed.

4 Industrial Financing Re-calibration of existing dti incentives

2014/15 Q3: Scope the design, range, quantum, conditions, take-up and impact of the full suite of government industrial financing packages and incentives across and in consultation with other departments and institutions. 2014/15 Q4: Develop and design a set of proposals for expanding the suite of existing support mechanisms, including fine-tuning the MCEP and designing a specialised incentive to support BEE in the manufacturing sector. 2014/15 Q4: Develop and design further sector-specific incentives for strategic sectors - in particular Green Industries, Agro-processing and the Metals, Capital and Rail Transport Equipment Sectors.

the dti has approved the newly revised Manufacturing Competitiveness Enhancement Programme (MCEP) guidelines for implementation from April 1 in a bid to tighten up potential imbalances in the awarding of manufacturing support grants. From the beginning of the financial year to date 236 enterprises were approved for funding under MCEP with a total grant value of R1 billion. The investment leveraged as a result is R 3.7 billion in support of 28,093 jobs.

4% of total MCEP grant approved went to small entities with assets below R 5 million;

10% went to those with assets between R 5 million and R 30 million;

25% went to entities with assets between R 30 million and R 200 million; and

61% went to entities with assets above R 200 million.


IPAP Ref No


5 Developmental trade policy Re-alignment of technical infrastructure activities with IPAP sectors: Green industries

2014/15 Q2 - 2016/17 Q4: Second phase upgrade of the electrical power and energy measurement standards by NMISA to support measurements required by ESKOM for the maintenance of the national power grid. 2014/15 Q3: SANS 53165 on thermal insulation products for buildings; specification for factory-made rigid polyurethane foam (PUR) products. Expand the capacity of the Appliances Laboratory to enable it to test for energy efficiency. 2014/15 Q4: Revision of SANS 204 - Energy Efficiency in Buildings. 2014/15 Q4: Provide national measurement standards for building efficiency (energy saving). 2014/15 Q4 – 2015/16 Q4: New upgraded national measurement standards for energy efficient lighting. 2014/15 Q4 - 2016/17 Q4: Provide national measurement standards for air pollution monitoring. 2014/15 Q4: Air quality testing accreditation programme to be expanded to include stack testing emissions monitoring.

SANS 53165 for thermal insulation products for buildings - Specification for factory-made rigid polyurethane foam products was published. Revision of SANS 204 (Energy efficiency in buildings): The project is the first revision of this critical but complex standard after its initial introduction. Therefore its review and revision has proved to require longer time to ensure sufficient scientific rigour. The development of the standard has been divided into several working groups where significant progress has been made. The revision is progressing well and the draft will be completed by 2015 Q2.

6 Developmental trade policy Re-alignment of technical infrastructure activities with IPAP sectors: Agro-processing

2014/15 Q2: Publication of SANS 1377 on olive oil and pomace oil. 2014/15 Q4: Revision of SANS 1675 for canned meat products. 2014/15 Q4: New SANS for Live Rock Lobster. 2014/15 Q4: Organic Agriculture Production food accreditation programme to be developed and rolled out. 2014/15 Q4: Roadmap for the traceability of bio-analytical measurements in South Africa. 2014/15 Q4 - 2016/17 Q4: Provide reference measurement capability for pesticides and inorganic elements in environmental and food matrices, including fish, in support of food safety. 2014/15 Q4 - 2016/17 Q4: Provide reference measurement capability for dioxins and furans and dioxin-like toxic substances in environmental and food matrices in support of food safety and EHS.

SANS 1377 on olive oil and pomace oil was published. Revision of SANS 1675 for canned meat products progress has been hampered by apparent lack of interest by the stakeholders to actively participate in the development this standard. Several working group meetings have been cancelled during the 2014/15 financial year. Currently some comments were received on parts of the draft. The standard (SANS 1680 on live rock lobster) was published.


IPAP Ref No


7 Developmental trade policy Re-alignment of technical infrastructure activities with IPAP sectors: Metal Fabrication, Capital and Rail Transport Equipment

2014/15 Q3: Upgrade the laser tracker dimensional facility at NMISA to ensure traceability of large dimensional measurements for locomotives and coaches. 2014/15 Q4: Establish an X-ray Diffraction Facility for advanced stress and strain measurement. This initiative will also be in support of cutting edge nano-technology.

The new Coordinate Measuring Machine (CMM) has been installed. The new CMM will provide support for the advanced manufacturing sectors, such as automotive component manufacturing, mining equipment manufacturing, and aerospace industry with improved accuracy for high precision machining. The electron back scatter diffraction (EBSD) unit on The scanning electron microscope (SEM) was upgraded as the first step to establish a XRD capability with The focus on nano- technology

8 Developmental trade policy Re-alignment of technical infrastructure activities with IPAP sectors: Automotive Products and Components

2014/15 Q4: Upgrade safety standards for passenger and commercial category vehicles: amendment of Compulsory Specifications VC 8023 and 8025 for M and N category vehicles to make ABS braking systems compulsory. 2014/15 Q4: Finalise Amendment of Compulsory Specifications VC 8022, 8023, 8024 and 8025, to add additional safety features to automotive vehicles and align SA requirements with latest UN (ECE) requirements. 2014/15 Q4: Finalise Amendment of Compulsory Specifications VC 8056 and 8059 for pneumatic tyres for passenger and commercial vehicles. 2014/15 Q4: Develop and roll out the Road Transport Management Accreditation Programme.

NRCS project proposal to make ABS braking systems compulsory for all vehicles was approved. Finalisation of the amendment of Compulsory Specifications VC 8022, 8023, 8024 and 8025, to add additional safety features to automotive vehicles and align SA requirements with latest UN (ECE) requirements has been moved to Q4 2015/16. Finalisation of the amendment of Compulsory Specifications VC 8056 and 8059 for pneumatic tyres for passenger and commercial vehicles has been moved to Q4 2015/16.

9 Developmental trade policy Re-alignment of technical infrastructure activities with IPAP sectors: Biofuels

2014/15 Q4 – 2016/17 Q4: Develop or improve measurement standards, certified reference materials and standard methods for accurate measurement needs for biofuels.

A comprehensive report has been compiled on the current measurement standards and certified reference materials available internationally to support the biofuel sector. The biodiesel water determination is finalised. Training and implementation of GC-MS methods are currently underway. The Viscosity standard is being commissioned that will also allow for biofuel testing. The viscosity laboratory will be capacitated in 2015/16 to accommodate provision of traceability for viscosity. NMISA Chemistry Division has an NRF intern dedicated to the implementation of standard specifications for the determination of water and fatty acid methyl ester content of biodiesel. A comprehensive report has been compiled on the current measurement standards and certified reference materials available internationally to support the biofuel sector. Water in biodiesel


IPAP Ref No


measurements were finalised in Q4.

10 Developmental trade policy Re-alignment of technical infrastructure activities with IPAP sectors: Plastics, Pharmaceuticals, Chemicals, Cosmetics

2014/15 Q1: Revision of SANS 597 on sterilized components sodium lactate intravenous infusion (Ringer-lactate solution for injection). 2014/15 Q2: SANS 721 on polypropylene (PP) pipes and fittings for soil, waste and vent applications for above ground use. 2014/15 Q4: SANS 1631 on plastic based push-fit fittings for copper tubes. 2014/15 Q4: Revision of SANS 1526 on thermoplastics sheeting for use as a geo-membrane. 2014/15 Q4: Revision of SANS 1557 on sunscreen products. 2014/15 Q4: Revision of SANS 368 on aloe products.

The standard (SANS 597 – Sterilised compound sodium lactate intravenous infusion (Ringer-lactate solution for injection)) was published. SANS 721 on polypropylene (PP) pipes and fittings: The standard (SANS 721) was published. SANS 1631 (Plastic based push-fit fittings for copper tubes): The standard (SANS 1631 on plastic based push-fit fittings for copper tubes) was published. Revision of SANS 1526 (Thermoplastics sheeting for use as a geomembrane): The standard (SANS 1526 on thermoplastics sheeting for use as a geo-membrane) was published. Revision of SANS 1557 (Sunscreen products): The standard (SANS 1557 – sunscreen products) was published. SANS 368 on Aloe products was published on 20 February 2015.

11 Developmental trade policy Re-alignment of technical infrastructure activities with IPAP sectors: Clothing, textiles and footwear

2014/15 Q4: Amendment of Compulsory Specification VC 9002 for safety footwear finalised. 2014/15 Q4: Development of a standard for wild land fire-fighting personal protective equipment SANS 16073).

The compulsory specification was published for public comment on 24 April 2015. SANS 16073: The standard (SANS 16073 - Wild land fire-fighting personal protective equipment) was published.

12 Developmental trade policy Re-alignment of technical infrastructure activities with IPAP sectors: Advanced manufacturing-Advanced materials

2014/15 Q4 – 2016/17 Q4: Establish nano-traceability facility to address accurate measurements in nano manufacturing.

The project is on track and the first upgrade has been done on the SEM for nano-particle analysis. The technical specifications are being developed for a new SEM (procured Q4).

13 Developmental trade policy Re-alignment of technical infrastructure activities with IPAP sectors: Advanced manufacturing-

2014/15 Q2: Testing of power tools: following the upgrading of the now fully equipped laboratory, increase the drive to ensure testing of all power tools as required by the compulsory standard. 2014/15 Q2: Electric meter testing and verification: upgrade the laboratory to enable it to test to the full requirements of the

The laboratory is fully equipped to perform the testing of power tools. The laboratory had a constrained power supply making testing on the newly developed capacity not feasible. The lab power supply has been improved and testing is now being conducted.


IPAP Ref No


Electro-technical Specification. 2014/15 Q3: Expansion of NETFA-SABS Electro-technical Testing Facility [e.g. High Voltage Direct Current (HVDC)]. 2014/15 Q4: Finalise new Compulsory Specification for electrical luminaires (includes LEDs).

Electricity payment systems (Part 1: Payment meters) has been completed. Test equipment and training requirements have been identified. The UPS system was acquired. Training of employees was conducted and the test workflow was reorganised, resulting in improved turnaround times and additional new tests are performed. The High Power Plant of Short-circuit Laboratory at NETFA was upgraded to cater for industry development by replacing outdated and unsupported equipment. The Modicon Programmable Logic Controller together with its associated SCADA system was replaced. Furthermore the old measurement system was replaced with a set of state of the art measurement system. A proposal to raise funds from government, i.e. eNational Treasury through the dti, and to Eskom was unsuccessful. Therefore, during the process of implementing this deliverable the implementation strategy has shifted from a single large investment to a staggered gradual investment in the light of the failure to attract investment from the state and Eskom. Now, a service provider was appointed to assess the required upgrade, to scope it and provide a phased implementation plan that aligns with SABS internally available capital. Industry and customer engagements were held with stakeholders to determine and understand the testing needs and sources of funding. The proposed upgrades were compiled and a proposal to raise funds from government, i.e. National Treasury through the dti and to Eskom was made. The proposal was not met with favourable result. While the SABS still understand strategic importance of this upgrade, with its own internally raised capital it can only undertake the required upgrade in a gradual phased in manner. The implementation strategy has shifted from a single large investment to a staggered gradual investment in light of the failure to attract investment from the state and Eskom. A service provider was appointed to assess the required upgrade, to scope it and provide a phased implementation plan that aligns with SABS internally available capital. This deliverable will now only be met in Q1 2017/18.


IPAP Ref No


14 Developmental trade policy Re-alignment of technical infrastructure activities with IPAP sectors: Advanced manufacturing-Information & Communications Technology

2014/15 Q4 - 2016/17 Q4: Upgrade the national measurement standards required to perform diagnostic network tests on fibre optic and wireless telecommunication systems. 2014/15 Q4: Conduct a feasibility study on developing a full Accreditation Programme for Information Security Management Systems and Information Technology Services Management systems. 2014/15 Q3: SANS 1466 series on Information technology: process benchmarking framework (parts 1 and 2).

New equipment to develop a new facility for fibre optic responsively, was purchased. These will be commissioned and implemented on delivery. Feasibility study for the development of an accreditation programme for Information Security Systems and Information Technology Management Systems completed. The programme will be developed in 2015/16. SANS 1466 series on Information technology: process benchmarking framework (parts 1 and 2) developed.

15 Developmental trade policy Re-alignment of technical infrastructure activities with IPAP sectors: Nuclear energy

2014/15 Q2 - 2015/16 Q2: Procurement, installation and commissioning of an X-ray system in support of the South African Nuclear Industry: traceability for radiation dosimetry and radiation protection. 2014/15 Q4: Support the South African nuclear regulatory bodies (DOH and NNR) in fulfilling their mandate through improved traceable measurements and technical expertise.

The X-ray system has been installed and is being commissioned. Alterations for the radio analytical laboratory in support of the NNR have been finalised. Instruments were reinstalled, reconnected and the verification process has started to confirm if all equipment is working optimally. Staff members attended the advanced gamma-spectrometry training course offered by the supplier of the equipment at the NNR in Pretoria.

16 Developmental trade policy Re-alignment of technical infrastructure activities with IPAP sectors: Business Process Services

2014/15 Q4 - 2016/17 Q4: Upgrade the national measurement standards required to perform diagnostic network tests on fibre optic and wireless telecommunication systems.

During 2014/15, a new traceability link was established to the national measurement standards for spectral responsivity at telecommunication wavelengths (in the near-infrared). Previously, fibre optic power meters were sent overseas to another NMI to be calibrated (following the de-commissioning of the room-temperature absolute standard radiometer). This calibration can now be done internally, reducing cost and eliminating the risk of breakage during transport. The accuracy of this measurement capability will be further refined from 2015/16 onwards by directly linking the calibration to NMISA’s primary standard cryogenic radiometer.

17 Developmental trade policy Strengthen the technical infrastructure to support industrial development: Movement from Trade Metrology to Legal Metrology

2014/15 Q1: Promulgation of the Legal Metrology Act. The Legal Metrology Act was promulgated on 19 May 2014. Processes are in place to effect the necessary institutional changes.

18 Developmental trade policy 2014/15 Q4: Finalise National Building Regulations and Building The policy paper was drafted, the dti has embarked on an extensive


IPAP Ref No


Strengthen the technical infrastructure to support industrial development: Updating of the National Building Regulations and Building Standards Act

Standards Policy Paper for new legislation.

consultation process on this policy paper with stakeholders.

19 Developmental trade policy Strengthen the technical infrastructure to support industrial development: Strengthening the enforcement system of NRCS

2014/15 Q4: Prepare a report benchmarking SA border enforcement against international best practice and calibrating the NRCS’s enforcement strategy.

NRCS did not conduct the benchmarking exercise as planned. This activity was moved to Q4 2015/16.

20 Developmental trade policy On-going developmental tariff reform

2014/15 – 2016/17 on-going: Scope for industries to apply to ITAC for selective tariff increases on products with significant potential for the creation and retention of sustainable jobs, import replacement and “water” between bound & applied rates. 2014/15 – 2016/17 on-going: Scope for further selected decreases in tariffs, particularly in monopolistic sectors that manufacture intermediate inputs into manufacturing and other productive sectors, in order to support downstream value-addition. 2014/15 – 2016/17 on-going: Scope for selective creation of rebates for manufacturing products that attract duties, particularly where these are intermediate products in manufacturing, in support of the value-adding manufacturing sectors.

ITAC continued to consolidate and realign itself to support strategic industrial development imperatives. This was reflected in the completion of 17 applications for increases, rebates and reductions of duties across a range of sectors. 13 investigations have been implemented by SARS.

21 Developmental trade policy Clampdown on customs fraud, illegal imports and sub-standard products.

2014/15 – 2016/17: Strengthening of a range of measures – including closer collaboration between the dti , industry, NCRS, SABS and SARS – through multi-sectoral forums. 2014/15 – 2016/17: Extend application of the Indicative Reference Price System to other vulnerable sectors to provide an increasingly effective early warning system. 2014/15 – 2016/17: Ongoing development of programmes aimed at improving compliance within industry and contributing to the formulation of best practice in the facilitation of trade, in accordance with all the Acts administered by SARS. 2014/15 – 2016/17: Conduct continuous targeted investigations

More than 300,000 non-compliant products valued at R8 million were destroyed at the third Destruction-of-Goods function conducted in Bon Accord, Pretoria. To date, approximately R 153 million worth of non-compliant and unsafe products have been seized and removed from the market.


IPAP Ref No


and raids on non-compliant products; confiscation of substandard and illegal products in the possession of individuals and companies.

22 Competition Policy Strengthening implementation of competition policy

2014/15 - 2016/17: Continued active focus of competition authorities on investigation, prosecution and policy advocacy with regard to: - Intermediate industrial and energy-intensive products, such as steel, chemicals, coal, fuel and cement; - Air transport, information technology; - Food and agro-processing; - Banking and insurance; - Infrastructure and construction. 2014/15 - 2016/17: Annual reporting on the impact of competition enforcement in these sectors, and identification of appropriate complementary measures to be taken by Government and public institutions to improve competitive outcomes. 2014/15 – 2016/17: A number of strategically identified market enquiries initiated by the Competition Commission into priority areas identified in consultation with Government.

In an effort to stem anti-competitive behaviour, the Competition Commission fined a number of companies transgressing the Competition Act. These included:

A penalty of R 534 million was imposed on a subsidiary of Sasol for over-charging local customers for plastic products. A penalty of R 205.2 million was imposed in the case of purified propylene and R328.8 million in respect of polypropylene.

R 4 million was imposed on Saldanha Foods for being involved in the price fixing of pilchards and anchovies.

Oceana Brands Limited and Premier Fishing SA previously paid penalties of R 34.7 million and R 2.1 million respectively.

Columbus Stainless was fined R 32.57 million for entering into a price-fixing agreement or engaging in a concerted practice with its competitors to directly or indirectly fix the purchase price of scrap metal.

Cargolux International has been fined $ 941,561 (R 10.97 million) for being part of a cartel with four other airlines, including South African Airways (SAA) that directly or indirectly fixed elements of the selling prices for cargo services.

Hendrik Pistorius & Co fined an administrative penalty of 10 per cent of its turnover over the period of the alleged price-fixing fixing prices in the agricultural industry since 1995.

Electric cable manufacturing company ATC has agreed to pay R 80.7 million after admitting to collusion.

23 Innovation and Technology Large R&D programmes in knowledge-intensive areas

2014/15 Q2: Finalise the EIAP instrument and Terms of Reference. 2014/15 Q4: Secure stakeholder support and commitment for the evaluation of the first EIAP flagship project.

The Emerging Industry Action Plan (EIAP) concept was presented to a number of stakeholders commencing in late 2014 and Q1 of 2015. A proposal was made in late 2014/15 that the implementation of the DST's Commercialisation Framework could comprise an initiation modality for the EIAP and will be developed in Q2 and Q3 2015/16.

24 Innovation and Technology Enhancing the participation

2014/15 Q1: Commission a study to identify the key constraints currently blocking the conversion of prototypes into marketable

Process to identify the service provider to conduct a study to identify the key constraints currently blocking the conversion of prototypes into marketable


IPAP Ref No


of innovative enterprises and high-technology SMEs

products. 2014/15 Q2: Approved Memoranda of Understanding between rural communities/townships and 3 identified industry partners. 2014/15 Q3: Support 5 incubators in rural communities and / or townships. 2014/15 Q4: Support 3 university- or science council-based incubators. 2014/15 Q4: Implement recommendations on increased prototype-to-product conversion.

products will be completed in March 2016. Three MoUs signed with the Agricultural Research (ARC) and South African Supplier Diversity Council (SASDC) to establish 5 incubators in rural communities and townships. Applications for support for 3 university-or science council based incubators were received, however they were of poor quality as a result they were referred back to the universities. Will be completed in March 2016.

25 Innovation and Technology Technology Commercialisation Strategy

2014/15 Q1: Finalise the Terms of Reference for the Technology Commercialisation Strategy. 2014/15 Q3: Hold workshops with relevant stakeholders and consolidate inputs.

Terms of Reference were finalised within Q1 and the process for the appointment of the service provider to conduct the study started completed. Stakeholder workshops were held with relevant stakeholders and inputs consolidated.

26 Innovation and Technology Harmonisation of innovation support programmes

2014/15 Q2: Finalise the Review of Innovation Support Programmes; identify potential for coordination across innovation support programmes and implement steps to facilitate harmonisation in the system. 2014/15 Q4: Establish and develop the requirements for a web-based platform to serve as a “one-stop-shop” for innovation support instruments.

A web-based platform for innovation support instruments was developed by the dti IT unit. Between December and March the platform was tested to determine whether it met the user requirements or not. The platform is currently operational.

27 Special Economic Zones (SEZ) and Industrial Development Establishment of Industrial Clusters through SEZs

2014/15 Q1-Q4: Rollout of Saldanha Bay IDZ (SBIDZ): Infrastructure support provided within the IDZ 2014/15 Q1-Q4 Establish SBIDZ Board 2014/15 Q3: Sign MOU between the dti and Indonesia to facilitate collaboration on the establishment of Oil and Gas industry at Saldanha Bay 2014/15 Q1-Q4: Secure 8 Investments into Saldanha Bay IDZ within Oil & Gas and Marine Repair Cluster.

the dti has provided SBIDZ with R300 million to date for infrastructure development. By June 2015, SBIDZ had placed tenders to this value for the development of zone infrastructure. The main contract is for preparation of the site (clearing, leveling, internal roads, utilities), it has been awarded, and contractors started on site in July 2015. A permanent Board is in place. By agreement with all parties, the composition of the Board was reduced from 16 to 8. the dti appointed two Directors, a dti official and a representative from the IDC, the province and the municipality each appointed two officials. The Board has a quorum and one of its first tasks is to appropriately fill the two positions assigned for broader community representation.


IPAP Ref No


SBIDZ has a pipeline of 26 potential investors and has reached various stages of negotiation with each. However, it is still too early for the organisation to finalise lease agreements.

28 Special Economic Zones (SEZ) and Industrial Development Implementation of SEZ Bill proposals

2014/15 Q2: SEZ Regulations and Guidelines (in line with the promulgation of the SEZ Act) 2014/15 Q2: Establishment of the SEZ Board (Once the SEZ Act has been promulgated) 2014/15 Q1-Q3: Implementation Protocols entered into by the Minister (the dti ) and 4 government departments that are critical to the success of the SEZs 2014/15 Q3: Testing of the SEZ One Stop Shop Model. 2014/15 – 15/16: On-going establishment of SEZs.

Regulations have been developed, and Public consultations were held, currently waiting for the final version from the lawyers for Minister’s approval. The SEZ Board has been appointed and inducted. An Investment Promotion and Inter-Governmental Clearing House is being established, and a process of setting-up a One-Stop-Shop initiated. The SEZ One-Stop-Shop work programme is being integrated into that process. Dube TradePort has been designated as an IDZ, and Maluti A Phofung (MAP) is going through the approval process of being designated.

29 Special Economic Zones (SEZ) and Industrial Development Special economic zones: planning and development

2014/15 Q1: Pre-feasibility study reports for 8 proposed special economic zones 2014/15 Q4: 5 technical feasibility reports (from Q2).

Technical Feasibility reports were finalised for 7 proposed SEZ

Rustenburg Platinum hub (North West)

Musina Logistic hub (Limpopo)

Nkomazi Logistics hub (Mpumalanga)

Maluti A Phofung (MAP) Agro-processing and Logistics hub (Free State)

Upington solar corridor (Northern Cape)

Platinum hub (Limpopo)

Dube Trade Port (KZN)

30 Special Economic Zones (SEZ) and Industrial Development SEZ Capacity Building Programme

2014/15 Q1: Planning and finalisation of logistical arrangements with the Chinese government on the training of South African officials on SEZ in China 2014/15 Q2: Recruitment of 30 candidates, across the country, to be trained in China on special economic zones planning, development and management. 2014/15 Q3: Training of 30 officials in China on the planning, development and management of special economic zones

30 SA Government officials to be trained on SEZ in China, the training took place in May 2015.


IPAP Ref No


31 Regional integration Work programme of the Regional Economic Communities

2014 - 2018: Work with fellow member states to implement the approved SADC Industrial Development Implementation Matrix to build on the Regional Industrial Development Strategy, prioritising agro-processing, mineral beneficiation and pharmaceuticals as initial sectors of focus. 2014 - 2016: Work with member states to concretise areas of collaboration on the identified projects that support development of regional value chains in the region. 2014 - 2016: Work with fellow member states to concretise areas of collaboration to promote productive capacity in the tripartite region.

On the SADC Work Programme -The Regional Strategy and Roadmap for Industrialization has been developed. The Strategy has a longer term perspective, covering the years 2015 to 2063 and is aligned to the African Union Agenda 2063. The Strategy is anchored on three pillars: industrialisation as a champion of economic and technological transformation, competitiveness as an active process to move from comparative advantage to competitive advantage and regional integration and geography as the context for industrial development and prosperity. On the COMESA-EAC-SADC Tripartite work - The Tripartite Technical Committee on Industrial Development (TTCID) prepared the draft Roadmap and Programme of Work on the Industrial Development Pillar as well as the Draft Modalities for Cooperation in Industrial Development. These documents will be considered by the joint Tripartite Sectorial Ministerial Committee for approval as part of the concrete action to expedite work under this pillar.

32 Regional integration Cross-border infrastructure and sector development

2014 - 2016: Consolidate project preparation and development facilities, working with Development Finance Institutions. 2014 - 2016: Promote regional sourcing in all regional infrastructure development programmes. 2014 - 2018: Promote participation of South African manufacturers in mutually beneficial regional value chains particularly in agro-processing, mineral beneficiation and pharmaceuticals. 2014 – 2018: Identify viable regional value chains and relevant levers to promote their development.

The SADC Industrialization Strategy and Roadmap seeks to drive development of Regional value chains work in the three prioritised sectors: agro-processing, mineral beneficiation and pharmaceuticals. South Africa-Namibia Bilateral work currently underway. A Technical Task team that consists of IDC and DBSA has been formed in order to facilitate the work that will focus on the development of Regional value chains and facilitate resolution of cross border trade concerns between the two countries. The South African side of the Technical team has identified projects for cooperation and these are yet to be discussed with the Namibian counterparts.

33 Regional integration Technical Assistance

2014 - 2016: Continue to cooperate with countries across the continent on capacity building programmes.

Received a request from Namibia for capacity building on the Automotive Production Development Programme. The Automotives sector desk has availed their services as soon as Namibia is ready to engage.


IPAP Ref No


34 Regional integration Co-operation on Standards, Quality Assurance, Metrology and Accreditation (Technical Infrastructure)

2014/15 Q4: 4 AFRAC pre- and peer evaluations carried out in order to obtain mutual recognition of conformity assessment of results in Africa. Also secure joint peer evaluation with ILAC and AFRAC to obtain international recognition for the SADC Accreditation Services. 2014/15 Q4: Regional integration of electricity transmission networks through African power pools (specifically Southern African and East African power pools (SAPP and EAPP). Both are affiliate members of AFSEC and support common adoption of standards for rural electrification using distributed generation - in particular photovoltaic (PV) systems. 2014/15 Q4: Work with AFRIMETS member states to further the adoption of OIML (Legal metrology) and CIPM (scientific metrology) directives and publications as the main strategy to implement the CIPM Mutual Recognition Arrangement and facilitate the harmonization of technical regulation on the continent.

SANAS signed the first AFRAC MRA with EGAC and TUNAC in September 2014 for Calibration, Inspection, Testing and Certification (QMS, EMS & Management Systems). AFRAC peer evaluation of SANAS undertaken from 1-5 December 2014. Peer evaluation of SADCAS secured with ILAC/AFRAC on 2 February 2015, and took place from 25 – 29 May 2015. The IEC 61970 series (Energy management system application program interface) and the IEC 61850 series (Communication networks and systems for power utility automation) have been recommended for common adoption, which are directly relevant to regional integration of electricity networks. South Africa has already adopted the IEC 61850 series as national standards. More standards were recommended for common adoption at the fourth AFSEC general assembly (GA) held in September 2014; these will be progressively considered in 2015 by the relevant SABS TCs for inclusion in their programmes of work for adoption as SA national standards. The first meeting of the AFSEC project team to develop guidelines for application of standards for rural electrification in Africa was hosted in South Africa in July 2014. The agreed completion date for the guidelines is March 2016. Provided training to the associates of the General Conference on Weights and Measures in SADC, Namibia, Zambia, Seychelles, etc. on how to implement the CIPM MRA and submit calibration and measurement capabilities. Also got the Quality Systems of NMISA, KEBS (Kenya) , NIS (Nigeria) accepted internationally in support of Calibration and Measurement Capabilities (CMC)s.

35 Clothing, Textiles, Leather & Footwear Clothing, Textiles, Footwear and Leather Competitiveness Programme

2014/15 Q1-Q4: On-going roll-out of the PIP and CIP programmes. There will be a concerted focus on the cluster programmes, where successful impact is beginning to be realised.

Since inception of the CTCP programme approvals worth R 2.7 billion have been facilitated under the Production Incentive Programme (PIP), and disbursements to date are R 2.1 billion. Approvals under the Cluster programme are R 712 million, with disbursements to the value of R310 million.


IPAP Ref No


36 Clothing, Textiles, Leather & Footwear Illegal imports programme

2014/15 – 2016/17: On-going and targeted campaigns against under-invoicing and other illegal activities in the sector.

The Compliance Centre was established at the Southern African Sustainable Textiles and Apparel Cluster which will assist the SARS Customs with technical capacity for the identification of imports coming into the country.

37

Clothing, Textiles, Leather & Footwear Skills development programme

2014/15 Q1- Q4: On-going roll-out of skills development programmes through CSIR Textiles and Clothing Centre of Excellence (TCCoE) based in Port Elizabeth, the FPM SETA, and on-going collaboration with China in technical training programmes.

Bilateral between South Africa and Peoples Democratic Republic of China was signed and 30 students attended training in China.

38 Clothing, Textiles, Leather & Footwear Communal Hides Beneficiation

2014/15 Q2: Finalise negotiations with Provincial government to extend programmes to the provinces concerned. 2014/15 Q4: Implementation of the research recommendations after sourcing the necessary funding.

Communal hides beneficiation programme implemented in collaboration with Midland Tanner. Six municipalities have been identified as pilot areas and training for 80 people finalised. Communal Hides Hub established in KwaZulu Natal in Pietermaritzburg and the project in Free State fully functional.

39 Clothing, Textiles, Leather & Footwear Innovation and technology

2014/15 Q1: Finalise the data consolidation using the 3 D Body Scanner Technology. 2014/15 Q4: Implementation of the Sizing Data by South African garment manufacturers. Commercial manufacturing of linen garments and home textiles implemented.

Data collection finalised and database currently being utilised in women bras and children wear. Commercial manufacturing of linen garments and home textiles implemented.

40 Clothing, Textiles, Leather & Footwear Exotic Leather Cluster

2014/15 Q1: Bring the ostrich industry association fully on board as a member of the National Exotic Leather Cluster 2014/15 Q2 – Q4: Establish partnerships between the National Exotic Leather Cluster and the FETs and begin the development of syllabi in collaboration with the Vaal University of Technology and the FDDI of India.

The Ostrich Industry was incorporated fully into the Exotic Leather Subnational Cluster.

41 Automotives Review of the Automotive Production Development Programme (APDP) - Light Vehicle Review

2014/15 Q1-Q3: Gathering of economic data, modelling and analysis of the subsector. 2014-2015: Engagement with all stakeholders to identify and analyse all the data and key strategic options, including measures needed to achieve Programme objectives and scale these up where possible and appropriate. 2014/15 Q3: Development of possible amendments and enhancements to the Programme to address issues and

Submission of draft proposal of the APDP-Light Vehicle Review was submitted to the Minister.


IPAP Ref No


shortcomings, including identification of component sub-sectors which provide growth potential and the implementation of measures to assist these. 2014/15 Q4: Submission of draft proposals to the Minister/Executive.

42 Automotives Competitiveness Improvement Initiatives

2014/15 Q1: Concept Note and scoped Project Plan: base operating standards 2014/15 Q3: Approved Report and Implementation Plan. 2014/15 Q4 Project Implementation 2014/15 Q4: Preliminary project evaluation.

Concept note and scoped project plan for the Competitiveness Improvement Initiative completed, work already commenced towards report approval and implementation. However the Project could not be implemented because the dti is still awaiting feedback on the survey questionnaire sent to MHCV truck companies.

43 Metal Fabrication, Capital & Rail Transport Equipment Leveraging the government’s capital (CAPEX) and operational (OPEX) expenditure programmes and promoting localisation in the private sector

2014/2015 Q3: Completed detailed analysis for possible designation of overhead track equipment. 2014/2015 Q4: Analysis of the SA tariff structure and stage consignment facilities for products relevant to the localisation programme, in consultation with the industry; make recommendations to ITAC and SARS 2014/2015 Q4: Rail Transport Equipment cluster enhancement programme developed 2014/2015 Q4: Consolidated report on local manufacturers’ capabilities to supply capital goods into the minerals value chain.

The work on designation of overhead track equipment is progressing. Key products have been identified and engagements held with PRASA, Transnet and Gautrain to understand the demand, procurement patterns and the products’ lifespan. The report will be finalised in 2015/16. A joint SARS-DTI-Industry was held in Q3 where it was established that no stage consignments have been granted in the past 3 years. Evidence was provided by industry on the imports of fabricated structural steel which do not appear in the HS codes. It was agreed that SARS will investigate the alleged mis-declarations and the dti will be consulted on all new applications for stage consignment in order to support the localisation drive. Work around the resuscitation of the rail transport equipment cluster (rolling stock and rail infrastructure) is on-going and the focus is now on the establishment of Original Equipment Manufacturers supply forums. All OEMs which signed contracts with PRASA and Transnet are in discussions with the local industry. During 2014/15, CSR signed with Prembro for supply of braking resistors and Timken for the bearings; GE signed with Howden for motor bowlers and Knorr Bremse for supply of braking system. Negotiations are on-going on other designated components.

44 Metal Fabrication, Capital & Rail Transport Equipment National Tooling Initiative

2014/2015 Q1: Master Toolmaker Trade Test developed. 2014/2015 Q4: Tooling Engineer Modules and Curriculum developed. 2014/2015 Q2: Launch of NECSA Tooling Centre of Excellence 2014/2015 Q3: Launch of Western Cape Tooling Centre of

The new Toolmaker Trade Test was completed approved for implementation). Development of modules and curriculum is progressing as per schedule with the 1st 3 modules concluded.


IPAP Ref No


Excellence. 2014/2015 Q4: 540 students enrolled on the different levels of the apprenticeship programme 2014/2015 Q4: 50 tooling engineering students enrolled on Level I 2014/2015 Q3: Launch of Tshwane Tooling Centre of Excellence. 2014/2015 Q2: Launch of KZN Tooling Centre of Excellence.

NECSA was launched by Minister in November as the first tooling centre of excellence in South Africa The Western Cape TCOE was not launched. However the centre is established. The official launch is awaiting confirmation dates from the various stakeholders. 632 students were enrolled in January 2015 in various levels of the new apprenticeship programme Due to funding challenges and outstanding engagements with Universities, engineering students will be only enrolled in 2017/18. These changes have been effected in the new business plan and MoA Tshwane TCOE was not launched due to delays in transfer of funding from City of Tshwane. However the first phase of the centre is established. The KZN TCOE was not launched due to management issues with Coastal TVET where the established KZN Tooling Centre is situated. Negotiations with Toyota in progress as alternative host for a TCOE in KZN. Discussions between the newly appointed RTI and provincial stakeholders to find long term solution on management of TCOE at FET are on-going.

45 Metal Fabrication, Capital & Rail Transport Equipment National Foundry Technology Network

2014/15 Q1-Q4: 15 young foundry men/women enrolled on the New Foundry Generation Forum programme aimed at developing future managers and address the aging skills challenge in the sector 2014/15 Q1-Q4: 250 workers trained on the formal foundry qualifications(NQF2-4) 2014/15 Q1-Q4: 20 foundries assisted under the competitiveness programme 2014/15 Q1-Q4: 3 new localisation and/or casting opportunities

17 young foundry men/women from various foundries completed phase 1 (modules 1, 2 and 3) of the New Foundry Generation Forum. 426 workers completed various modules towards being trained on the foundry qualification (NQF 2-4). 6 foundries have been enrolled to date: Auto Industrial, Xmeco, Micro finish, Viking, Malleable & Umgeni, to be assisted in the following areas: facility lay-out; simulation; product development; pattern and tool design; sand testing; and scrap reduction programmes. Technical assessments have been done at 28 foundries and management has signed the review assessment intervention forms, awaiting CSIR procurement process to roll-out the interventions.


IPAP Ref No


Through the NFTN programme, Transnet Engineering is being assisted with foundry optimisation support at Koedoespoort and Bloemfontein foundries in preparation for localisation of wagon and locomotives castings. Due to designation of valves, a number of foundries have secured orders from the valve manufacturers. However, in the recent foundry-valve industry forum, it was reiterated that the foundries need to be ISO9001 certified and those supplying castings for the petro-chemical and oil & gas need International Pressure Equipment Directive accreditation. On-going engagements between NFTN and the local renewable energy suppliers to identify foundries that can supply castings and components into the local energy projects.

46 Mineral Beneficiation (Upstream and Downstream) Leveraging state tariffs for mineral value addition

2014/15 Q2: Analysis of current mineral exports from SA and the tariffs applied. 2014/15 Q3: Research and determine the stages of beneficiation for all exported minerals and/or mineral products with recommended minimum levels of beneficiation. 2014/15 Q4: Report providing clear definitions and criteria for the stages of beneficiation for each mineral and/or mineral product with recommendations for the level of tariff reduction.

Analysis of the top 15 mineral exports in terms of beneficiation potential (jobs and industrial development) has been completed. Beneficiation stages 1-4 have been identified for all major value chains within the top 15 mineral exports. Detailed research on stages of beneficiation has been completed and a report providing clear definitions of the beneficiation stages prepared. Framework on the stages of beneficiation has been completed and presented to TNPA in Jan 2015. Framework accepted in principle but implementation will be long term process.

47 Mineral Beneficiation (Upstream and Downstream) Viability of an Iron/Steel and Titanium Pigment Industrial Complex

2014/15 Q1: Development of the terms of reference. 2014/15 Q2: Initiate study and engage with key stakeholders. 2014/15 Q3-Q4: Assess the economic viability and determine requisite interventions for the establishment of the putative Fe/Ti industrial complex.

Service provider has been appointed and project commenced in April 2015

48 Agro-Processing Development of emerging broiler producers

2014/15 Q1-Q2: Mapping of existing hatcheries and contract growers towards the development of new broiler clusters. 2014/15 Q3-Q4: Review and package for funding at least 1 broiler investment project targeting small scale producers. 2014/15 Q4: Implement at least one small scale project

Mapping done towards the development of new broiler clusters Limpopo province (Lebowagomo) project have been identified for development of a broiler cluster. IDC has invested in a chicken abattoir in the Free State. The abattoir includes small broilers as part of their supply chain.


IPAP Ref No


The acquisition of an abattoir in Cullinan didn't make economic sense, due to high transaction costs involved. the dti facilitated the renting of poultry processing facilities at Tshwane Market which slaughters approximately 4000 chickens per day.

49 Agro-Processing Development of a small-scale dry and wet milling industry

2014/15 Q1: the dti , FABCOS, and the National Milling Chamber (NMC) to facilitate the roll-out of small-scale maize milling in one additional province. 2014/15 Q3: the dti , FoodBev Seta and the NMC to develop a milling skills programme. 2014/15 Q4: the dti to facilitate the roll-out of small-scale maize milling and branding of the in-house products of FABCOS (home-grown) in one additional province.

One more small-scale mill project has been identified in KZN in collaboration with KZN DED. So far 3 small scale mills have been launched (Isigayo in JHB; Kuvusa Mill in KZN and Umqanduli plant in Umthatha). The IDC has pro-actively increased its investments in a number of smaller scale milling projects. As this is a low margin industry, the IDC mainly utilised funding from the Agro-Processing Competiveness Fund. Small Enterprise Finance Agency (Sefa) is involved with the FABCOS/Old Mutual Initiative to develop small-scale mills. the dti facilitated the roll-out of small-scale milling in collaboration with FABCOS (home grown) and National Milling Chamber.

50 Agro-Processing Enhancement of production efficiency in the fruit and vegetable Canning industry

2014/15 Q1: In collaboration with the NCPC-SA, the dti will identify and recruit companies from the South African Fruits and Vegetables Canners Association (SAFVCA) to participate in the Resource Efficient and Cleaner Production Programme (RECPP). It will then conduct RECPP training and awareness courses for employees at the companies and roll out the programme in the identified companies. 2014/15 Q1-2: the dti will support initiatives of SAFVCA in terms of market access and recruit 6 companies to participate in the RECPP. 2014/15 Q2: In further collaboration with the NCPC-SA, the dti will facilitate the application processes of companies seeking to access the incentive grants of the MCEP for implementation of the Resource Efficient and Cleaner Production (RECP) Recommendation. 2014/15 Q3: In collaboration with SAFVCA, the dti will facilitate a transformation programme that will establish new fruit orchards in the Western Cape.

IDC made a proposal to dti with regards to a vegetable canning facility in the eastern Free State. 6 companies identified and recruited to participate in the programme

HQ Foods - Cape Town

EuroChoc - Cape Town

Rooibos Ltd - Clanwilliam

Zeekoevlei Tea Production - Clanwilliam

Meerlust Farms Grapes - De Doorns

Jochwe (Pty) Ltd Popcorn - Hope Town (Northern Cape)

the dti in collaboration with SAFVCA launched a new handling fruit depo and fruit orchard as part of the Private Public Partnership (PPP) transformation programme in the Western Cape.


IPAP Ref No


51 Agro-Processing Food-processing sector skills programme

2014/15 Q1: the dti , FoodBev Seta and DHE to develop a proposal for a skills programme to be implemented by food processing companies. 2014/15 Q2: the dti , to recruit, select youth and participating companies for the food skills programme. 2014/15 Q3-Q4: Implementation of the food skills programme

Proposal developed for the food processing companies. Appointed 26 employees for Pakco to do the Khulisa Skills development programme for unemployed graduates. A MOU was signed with FoodBev Seta and the skills programme was implemented.

52 Agro-Processing Commercialisation of industrial cassava starch

2014/15 Q1: Conduct a feasibility study to determine the commercial viability of a cassava starch industry. 2014/15 Q2: Identify small scale farmers to participate in the programme. 2014/15 Q3-Q4: Conduct field trials for cassava production in selected areas in South Africa.

Cassava research study completed. Small scale farmers identified in KZN & Mpumalanga to participate in the programme The Agriculture Research Council has been appointed as the service provider for the development of a new cultivate for industrial starch An MOA between TIA and the dti signed by DG for the conducting of cassava trials in selected areas such as KZN, Mpumalanga and Limpopo

53 Aquaculture Promote public and private investments in aquaculture

2014/15 Q1-Q2: Review and package 1 investment proposal targeting new black entrants into the aquaculture sector. 2014/15 Q3-Q4: Project preparation towards implementation of at least 1 project commences. 2014/15 Q4: Implementation and Monitoring of at least 1 project commences.

Since the beginning of the 2014/15 financial year to date, the Aquaculture Development and Enhancement Programme (ADEP) has supported 8 projects, with an incentive value of R 75 million. Investment leveraged as a result is R96 million and these projects are expected to create 121 new jobs. A list of 10 Black companies has been compiled, which will form part of operation Phakisa Aquaculture initiative.

54 Forestry, Timber, Paper, Pulp and Furniture Productivity improvement through technology upgrading

2014/15 Q1: the dti to identify and consult 4 small-scale sawmilling companies and conduct a SWOT Analysis of these enterprises. 2014/15 Q2: the dti to develop an action plan report for the identified companies. 2014/15 Q3-Q4: the dti to facilitate the application process for funding of equipment and machinery.

Four sawmills identified and consultation done with 2 sawmills for company based action plans (White River, York Timbers, Singisi & Elegant Line Trading) and Action plans developed for the identified sawmills. Facilitation for funding done and Sawmills are in the process of applying.


IPAP Ref No


55 Forestry, Timber, Paper, Pulp and Furniture Furniture Design Program

2014/15 Q1: To develop a roadmap for furniture design workshops. 2014/15 Q2: the dti , SABS Design Institute and FPM Seta to collaborate on implementing the design workshop. 2014/15 Q3/4: Design program rolled out in the industry.

Furniture design course developed. SLA signed with Qualification Partner. Competition rolled out and winners announced on 27 February 2015 at the Design Indaba. New competition launched on the same day.

56 Forestry, Timber, Paper, Pulp and Furniture Furniture Cluster Development

2014/15 Q1: Develop TOR for the cluster management 2014/15 Q2: Development Business Plan and Marketing Plan for cluster product 2014/15 Q3-Q4: Implementation of the business plan. 2014/15 Q4: Facilitate acquisition of resources for the functioning of the cluster.

ToR was developed for the cluster management. The Eastern Cape marketing and business plans have been developed. Ugu (KZN) Furniture Business plan completed EC clusters will not be registered as separate legal entities, they are now hosted by Eastern Cape Development Corporation (ECDC). WC clusters not registered. Other potential cluster members have since closed down. EC Economic Development appointed a service provider for EC clusters.

57 Biofuels Accelerated development in the biofuels sector

2014/15 Q1: the dti , with Grain SA, to support the increase in the capacity of biofuels feedstock in seed production for Soy bean and Sorghum. 2014/15 Q2: the dti , with Grain SA, to increase research capacity into the development of suitable cultivars in the biofuels feedstock in SA. 2014/15 Q3: the dti , with DAFF, to link small-holder farmers to markets via a supplier development programme and sign take-off agreements with industry players in the biofuels industry in time for the arrival of mandatory blending in 2015. 2014/15 Q4: the dti and DoE to host an industry stakeholder seminar on Biofuels.

Production strategy completed for Bothaville plant. The IDC is involved in all of the aspects of this initiative. Specific support (mainly linked to the Cradock Ethanol project) included:

collaboration with GrainSA and other institutions to increase grain sorghum production for biofuels;

IDC financially supported the grain laboratory with equipment to determine suitability of cultivars;

The IDC works with DRDLR and EC Rural Development Agency to link small holder farmers in the program;

The IDC provided inputs into the policy formulation process to DoE.

the dti and DoE hosted an industry stakeholder seminar on Biofuels, 20 March 2015 in Centurion, Pretoria.

58 Plastics, pharmaceuticals, chemicals and cosmetics Development of plastic production and innovation cluster

2014/15 Q1-Q2: the dti to facilitate establishment of the cluster management structure. 2014/15 Q3: the dti to facilitate the acquisition of operational resources for the cluster through the MCEP.

Cluster was not established due to lack of Funds. the dti is in the process to secure alternative sources of funding. The new initiative would be accommodated under the new Cluster Development Programme


IPAP Ref No


59 Plastics, pharmaceuticals, chemicals and cosmetics Plastics trade policy measures

2014/15 Q2-Q3: Conduct an awareness campaign amongst plastic manufacturers in all provinces to bring them up to speed on available dti support measures and the structure of import duties related to intermediate and finished products.

The awareness campaigns on available dti support measures and the structure of import duties related to intermediate and finished products, have been rolled out to North West, Gauteng, Limpopo, KZN and Western Cape.

60 Plastics, pharmaceuticals, chemicals and cosmetics Development of strategy for the medical devices sector

2014/15 Q1: Completing the study of the SA medical devices sector. 2014/15 Q1: The study presented to a broad stakeholder forum. 2014/15 Q2: Draft strategy for the medical devices sector completed, presented to (i) the Ministerial cluster and (ii) the private health sector stakeholders. 2014/15 Q3: Final strategy completed, presented as a Cabinet Memorandum.

Medical device sector study by Deloitte completed in June 2014. Task team established (Treasury, DTI, DoH and SABS) to implement Phase I of mandatory specifications for public sector procurement of medical devices . The Task team led by the National Treasury has delayed the drafting of the medical devices strategy.

61 Plastics, pharmaceuticals, chemicals and cosmetics Designation of pharmaceutical tenders in the 2014-2015 tender cycle

2014/15 Q1: Analysis of the performance of suppliers in the 2012 - 2013 tender cycle; lessons from the designated tenders; analysis of the DoH’s procurement programme for 2014-2015 vis-à-vis the capabilities of the domestic industry. 2014/15 Q1: Update of dti’s position document on the designation of pharmaceuticals, including a new cost-benefit analysis. 2014/15 Q1: Tender designation framework for 2014-2015 agreed upon with industry and the DoH. 2014/15 Q1-Q2: Submission to the Minister requesting designation of specific pharmaceutical tenders and products in the 2014-2015 tender cycle. 2014 - 2015: Monitoring of the performance of suppliers in the designated tenders: on-going throughout.

The 2014-2016 Oral Solid Dosage tender worth R 2.7 billion was published with a provision for designation in April, and contracts awarded in September. 42.5% of the tender by value was awarded to the SA manufacturers (the same % as in the 2012 Oral Solid Dosage tender). Preparations for designation of the 2015 ARV tender in progress (collating manufacturing capacity data from industry). Analysis of domestic manufacturing capacity to meet DoH demand for pharmaceuticals completed. Cost-benefit analysis of designation updated and Designation submission to Minister prepared and approved.

62 Plastics, pharmaceuticals, chemicals and cosmetics Facilitation of Project Ketlaphela

2014/15 Q1: Selection of the preferred bidder, negotiations and signing of contract. 2014-2015: Commencement of project (detailed design, followed by construction).

The second attempt at implementing Ketlaphela (the establishment of a fully backward integrated pharmaceutical company bridging the gap between research and development capabilities in SA with API and finished formulation manufacture), included an open call for proposals. However, this was also unsuccessful - four proposals were received, with only one being a full proposal which unfortunately did not meet the criteria stipulated in the RFI.


IPAP Ref No


63 Plastics, pharmaceuticals, chemicals and cosmetics Development of the cosmetics sector strategy

2014-2015: Develop & implement a Key Action Plan as informed by recommendations from the Sector Strategy.

Cosmetic Sector Strategy presented at EXCO and was approved. KAPs developed and are being implemented.

64 Plastics, pharmaceuticals, chemicals and cosmetics Cosmetics Products Safety Assessment

2014/2015: Work with University of Pretoria, TOXSA and DST to develop the two-year Safety Assessment Course; establish the Hair Testing and Cosmetics Testing Laboratory at UCT. 2015-2017: Two-year Safety Assessment Course commences, targeted at 75% South Africans and 25% from other African countries

Two year safety assessment course developed. Funding for equipment for the UCT Hair Testing and Cosmetics laboratory secured, lab being upgraded currently. The course has been advertised in the 2015 curriculum of UP. With the help of the Skills unit and TOXSA, the CHIETA submitted an addition of Toxicologist as an occupation to DHET. Promotion of toxicologist as an occupation and career option (1 of 10 occupations chosen); through the development of a video clip and brochure done by CHIETA in collaboration with TOXSA, facilitated by the dti .

65 Business Process Services Implementation of the Business Process Services (BPS) incentive programme

2014/15 Q1: Launch of the new BPS incentive guidelines. 2014/15 Q1-Q4: On-going implementation of the BPS incentive

The BPS Incentive was launched in London on 14 October 2014. Road show to Australia was done during the week of the 27th of October 2014. The revised incentive scheme will build upon the success of the previous scheme which led to the creation of 9,077 jobs on the back of financial disbursements of R 587 million. The scheme will further support the South African Value Proposition, which has already seen South Africa named “Best Offshoring Destination 2012” by the UK’s National Outsourcing Association (NOA).

66 Business Process Services Talent development for the BPS sector

2014/15 Q2-Q4: Training of 3,000 unemployed youth at NQF Level 3. 2014/15 Q3: Training of 500 supervisors, team leaders and provision of other industry-specific skills. 2014/15 Q4: Minimum of 11% targeted for tier 2 and tier 3 towns, townships and rural areas is achieved. 2014/15 Q4: 70% of trained learners contracted into employment for a minimum 12 month contract.

17 Companies in 4 Provinces (EC,Gauteng, KZN and WC) have contracted 3318 unemployed youth (including 506 supervisors paid for by the employers) into learner agreements and employment contracts of a minimum period of 12 months. These employers are in turn legally contracted to the dti through the Implementing agent, Letsema Consulting to fulfil their obligations.


IPAP Ref No


67 Green industries Adaption of South Africa’s GHG emission commitments

2014/15 Q4: Agreement within government and in consultation with industry on Desired Emission Reduction Outcomes for the South African manufacturing sector.

The draft study report on climate change legislation impacting on industry in South Africa has been completed. With regards to the pilot study on Analysis of viable sector specific GHG Mitigation options for the dti industrial sectors, The metals sector was selected a priority sector, terms of reference were compiled for appointment of the consultants and were further discussed with the Department of Environmental Affairs for alignment.

68 Green industries Development of the local wind and solar industry through the REIPPPP

2014/15/16: Adjustment of local content requirements with every successive REIPPPP bidding round, based on the developmental status of the component industry and demand conditions created by the REIPPPP. 2014/15 Q1: Analysis of actual local content achieved in previous bid rounds, and analysis of possible new technologies to be employed in the REIPPPP. 2014/15/16 Q2: Review the local content targets on an annual basis and make recommendations to the DoE on local content targets for future bidding rounds.

The DOE has appointed 2 dedicated personnel to deal with local content issues, since then the communication has improved and dti’s input is being considered at all levels of the bids. the dti and DOE will establish a high level bilateral structure for approval of local content targets. All these action will improve compliance with local content requirements.

69 Green industries Designation of Solar Photovoltaic Panels

2014/15 Q2: Data collection, stakeholder engagement and market research. 2014/15 Q4: Decision to designate solar PV components under the PPPFA.

The designation of solar panels was approved by the IDD EXCO in May 2015 and the Instruction note is being prepared for the attention of National Treasury.

70 Green industries Development of Waste Management and Recycling Industry Strategy

2014/15 Q2: Data collection, stakeholder engagement and market research. 2014/15 Q4: Waste Management and Recycling Industry Strategy.

The Waste Management and Recycling position has been developed.

71 Upstream and Midstream Oil and Gas Strategy to leverage opportunities presented by SA’s shale gas resources

2014/15 Q1: Identification and analysis of the shale gas upstream localisation opportunities 2014/15. 2014/15 Q2: Identification and analysis of the downstream localisation opportunities. 2014/15 Q3: Analysis of gas as a potential low cost energy source and infrastructure requirements (distribution, reticulation, compression, liquefaction etc.) 2014/15 Q4: Analysis of the regulatory, policy requirements and mechanisms of support.

The ToR that seeks to establish a national task team with the aim of maximising the Industrial Potential of Southern Africa's Petroleum Resources was put out to tender by the IDC. On 24 November 2014 the tender evaluation committee selected the preferred service provider. The procurement process is in the contracting phase.


IPAP Ref No


72 Upstream and Midstream Oil and Gas Developing a ship/rig repair implementation strategy

2014/15 Q2: The DPE/dti/TNPA joint task team will develop a ship/rig repair implementation strategy that seeks to address short, medium and long term constraints through the implementation of tangible projects. Arising from this a “product offering” and requisite marketing material to drive an investment promotion programme will be developed. 2014/15 Q4: Launch of an Investor Conference that will showcase South African capabilities within this sector.

The report prepared by the joint task team (dti, DPE and TNPA) was an important input into the Maritime, Transport and Manufacturing lab at Operation Phakisa. the dti are the owners of implementing the solutions/strategies agreed to at Operation Phakisa. the dti’s boatbuilding/shipbuilding sector desk is currently in charge of delivering on the milestones arising from Operation Phakisa.

73 Boatbuilding and Associated Services Industry Boatbuilding Skills Development Programme

2014/15 Q1 - Q2: Development of a skills strategy with options that will inform the development of demand-led skills programme. 2014/15 Q3: Industry consultations on the architecture of the skills programme. 2014/15 Q4 - 2015/16 Q1: Development of the institutional arrangements that will govern the implementation of the skills plan.

The study is in its final stage with a workshop as instrument to present the findings to the industry and get feedback and buy in. The workshop, with the participation of the ship/ Boatbuilding industry and training institutions, will take place in Cape Town on the 7th July 2015 at SAMSA offices. The process will be informed by the final report after inputs from the industry at the workshop on 7th July 2015. The process will take place following the industry consultation which will take place in Q3 2015/16.

74 Boatbuilding and Associated Services Industry Formation of a ship/boatbuilding/repair cluster

2014/15 Q1 - Q2: Conduct research into clustering opportunities in the shipbuilding/ repair industry in locations that can offer suitable space for ship/boatbuilding and repair. 2014/15 Q3 – Q4: Commence consultation process with relevant stakeholders on the feasibility of establishing a ship repair cluster. Facilitate workshops to inform ship/boatbuilding industry about the cluster idea and identify potential cluster participation.

Research was conducted into clustering opportunities in the ship building/repair industry. However the establishment of the cluster did not take place because the work undertaken within the dti included the development of a cluster strategy for all IPAP sectors. The Cluster Programme is looking into piloting a few sectors and funding to this effect has been secured.

75 Boatbuilding and Associated Services Industry Industry Standards and Accreditation

2014/15 Q1-Q2: the dti and industry to review the current Accreditation system and look at necessary changes to structure and implementation. 2014/15 Q3 - 2015/2016 Q3: the dti in conjunction with SABS to develop standards of phased approach to the implementation of international standards across the industry. 2016/2017: Phased implementation of standards and review of the accreditation programme.

the dti consulted with industry and SABS and it was decided that the current accreditation system does not have to be reviewed, because of the financial burden it would be for an already cash strapped industry. However, plans are currently underway to ensure that local industry manufacture according to certain class/international standards.

76 Advanced Manufacturing Commercialisation of Natural

2014/15: Implement the Management Response to the independent panel review of the BCC’s value proposition.

The trial manufacture of the Nedbank sign and Eco-wash machine by Global Composites using locally grown kenaf was successfully completed.


IPAP Ref No


Fibre Reinforced Composites 2014/15: Undertake several techno-economic studies to assess the viability of new bio-composite products. 2014/15: Upscale agricultural processing of natural fibres suitable for bio-composite products. 2014/15: Development of composite manufacturing and testing capability to support industry adoption of natural fibres into composite applications. 2014/15-2015/16: Prototyping, trial manufacture and limited manufacturing in partnership with industry.

Discussions with Mercedes Benz SA are well advanced for the introduction of locally-grown kenaf fibre into the door liner of their C-Class vehicle. Toyota SA and Smiths / Auto Moulders in Durban are working with the BCC on defining a project that will include short natural fibre blended injection moulded components for automotive and appliance (Defy) applications. The trial manufacture of Model roof sheets using flax, agave and kenaf non-woven fibre blends is currently under way."

77 Advanced Manufacturing Additive Manufacturing

2014/15 Q1: Finalisation of the Additive Manufacturing Technology Roadmap. 2014/15 Q4: Launch of an Integrated Additive Manufacturing Industry Support Pilot Project

The Additive Manufacturing Technology Roadmap (AMTR) was developed in a collaborative fashion through extensive consultation with the South African Additive Manufacturing (AM) community. The roadmap has been submitted to the DST and will be approved by the end of 2015/16 Q3.

78 Advanced Manufacturing Development of a Titanium Production Capability Roadmap with the focus on downstream manufacturing technologies and products

2014/15 Q2: Approval of the Industrialisation Roadmap. 2014/15 Q3: Development of a Titanium Production Capability Roadmap - other than using additive manufacturing - for the local aerospace and defence industry. 2014/15 Q4: Introduction of the Titanium Production Capability Roadmap to the relevant stakeholders, including industry.

The Industry could not be consulted due to the fact that the project is put on hold until the TRLs are on 6. This is the level of commercialisation.

79 Advanced Manufacturing Broadening industry participation through a supplier development scheme offered by IDAP

2014/2015 Q1: Scope and design the range and quantum of the support mechanism based on a consultative identification of qualifying SMMEs by the dti , industry associations and system integrators. 2014/2015 Q4: Evaluate the take-up and impact of the mechanism with a view to further development and fine-tuning and to ensure effective support and broadening of the BB-BEE supplier base in the aerospace sector.

The Scheme will focus on broadening industry participation by enabling SMMEs to increase their involvement within the aerospace manufacturing industry. Scoping and designing of the scheme has been completed. The scheme is being managed and implemented by the AISI.

80 Advanced Manufacturing Advocacy and promotion of aerospace and defence products and capabilities in global markets

2014/15 Q1: Establishment of an Export Council.

The Export Council under the Aerospace Maritime and Defence Association (AMD), industry association was approved. Contractual Obligations have been discussed and finalised by TISA and AMD. The TORs for the feasibility study for the formation of the Concept of a Permanent Exhibition has been developed and finalised.

81 Advanced Manufacturing Building a competitive

2014/2015 Q3: Conclusion of uptake agreements with prospective tenants and industry investors.

Submission for developing an Addendum allowing CAV to sublet has been approved. Agreement with DPW to develop such an Addendum to the Head


IPAP Ref No


industry through advanced manufacturing, aerospace and defence cluster development

2014/2015 Q4: Completion of the prioritised core CAV landside bulk utility services and infrastructure, including water and sanitation, roads and storm-water drainage, electricity and land management.

has been reached. Process to appoint the CEO and key staff is being finalised to roll out further activities of the programme.

82 Advanced Manufacturing Software Development Process Improvement Programme

2014/2015 Q1: Agreement on alignment of the SA Electro-technical Export Council mandate, EMIA and the Joint Action Group for the Software Industry to support export-ready companies. Performance Review of the first four software development entities; refinements made to Operations Manual and training curriculum. 2014/2015 Q2: Two additional software development entities identified and participating in the process improvement programme. 2014/2015 Q3: Establishment of an Advisory Council, comprised of government and private sector representatives, to oversee the roll-out.

Two additional teams identified (Software development entities in Bloemfontein and Durban) but can't be contracted due to unavailability of funding from ECF. The project was vetted/audited by both PWC and KPMG (Wits University Auditors) as instructed by the dti but funding has not yet come through. The UCT is finalising the manual but, suspended research due to funding problems. Project still experiencing financial challenges.

83 Advanced Manufacturing Localisation of electrification components through designation as per amended Preferential Procurement Policy Framework Act (PPPFA)

2014/15 Q2: Comprehensive list of identified products/components intended for use in the government Housing Electrification Programme. 2014/15 Q4: Designation of products for the electrification system as identified above.

Designation Report approved by EXCO and DAP. Instruction note developed and issued by National Treasury.

84 Advanced Manufacturing To develop an action plan to support broadband roll-out

2014/2015 Q2: Develop an Action Plan to support broadband roll-out, inclusive of tariff policy, standards, industrial incentives and export promotion. 2014/2015 Q4: Develop an approach that supports both electronics and contract manufacturing.

The action plan for the broadband roll-out has been developed to support both the electronics and contract manufacturing.

85 Advanced Manufacturing Development of a White Goods Export Strategy

2014/15 – Q3: White Goods Export Strategy developed. White Goods Export Strategy has been developed.


IPAP Ref No


86 Advanced Manufacturing Facilitate technological upgrading within the Industry through MCEP financial elements

2014/15 Q4: Applications for financing considered; recapitalisation process started.

Regular visits and interactions to industry conducted, and Zero Appliances advised on a number of Incentives to consider for upgrading their outdated technology.

87 Advanced Manufacturing Facilitate a favourable tariff regime and introduce a rebate mechanism for local manufacturers

2014/15 Q4: Finalise the review of tariffs for the white goods industry.

All imported White goods are from the EU, which is covered by a Free Trade Agreement which cannot be changed as a result, no rebate necessary.

industrial policy action plan (ipap2) · progress report on implementation of the industrial policy...

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