Economy needs urgent structural change, says Davies

Cape Town - There is a pressing need for South Africa to break away from a commodity dependent economy, said Trade and Industry Minister Rob Davies at the launch of the latest industrial policy action plan (Ipap).

Davies said there should be a move to a more diversified base in which increasing manufacturing-based value addition, employment creation and export-intensity come to define South Africa’s growth trajectory.

He said economic growth should not be based on unsustainable models and that the new Ipap for 2016-17 to 2018-19 is key for inclusive growth.

“Inclusive growth cannot be achieved by sticking to an imbalanced and unsustainable economic model based on the service sectors growing at twice the rate of the productive sectors, on the back of credit-fuelled consumption and import-intensity,” he said.  

“Especially in tough times, there can be no retreat from Industrial Policy. It must be strengthened, deepened and embraced by all the social partners.”

Davies highlighted key areas of the new plan. These included growing exports, cutting red tape to open up space for much more streamlined and business-friendly governance processes, introducing a medium term plan to ensure that gas-based industrialisation develops into one of the spines of the country’s industrial strategy and leveraging the devaluation of the rand to make locally manufactured products more globally competitive.