SA to produce more capital goods
12 February 2007South Africa needs to produce more of its own capital goods to take advantage of increasing investment in fixed infrastructure in the country, says President Thabo Mbeki.
Delivering his State of the Nation address to Parliament in Cape Town on Friday, Mbeki said South Africa was making major investments in energy, transport and communications ahead of the 2010 Fifa World Cup, with government spending alone set to reach R400-billion.
"These projects demand massive input of supplies and machinery, but our international trade balance shows that we have not succeeded in building the capacity to produce the consumer and capital goods that our country needs," Mbeki said.
Most of these goods are being imported. This not only worsens the country's current account deficit, it also means that local businesses lose out on opportunities for growth.
Promoting investment
To counteract this, Mbeki said that
implementation of the government's Accelerated and Shared Growth Initiative for South Africa (Asgi-SA) would be speeded up "... within the context of a determined drive to increase our national capacity to produce capital goods."
Mbeki said Asgi-SA would promote investments in business process outsourcing, tourism, biofuels and chemicals. It will also develop programmes for sectors such as forestry and paper, clothing and textiles, and metals and engineering.
In addition, the government will review the country's experience of macro-economic indicators such as the exchange rate, inflation targeting and interest rates.
"This so as to put in place measures that will facilitate the growth of industries which produce tradables for both the domestic and export markets, and have the potential to absorb large pools of semi-skilled workers," Mbeki said.
Mbeki also pointed to the need for interventions into mining and mineral beneficiation, due the decline in investment in the sector, despite high current prices for commodities on global markets.
Similar interventions will be targeted at agriculture, agro-processing, the so-called white goods sector – which includes most household appliances - the creative industries, pharmaceuticals, and social and community services.
Infrastructure upgrades
State energy utility Eskom is to spend just under R100-billion on infrastructure expansion over the next three years to cater for increased demand, while ensuring a greater reliance on nuclear energy, natural gas and renewable energies.
In telecommunications, Mbeki said the Department of Communications and industry players were finalising plans to address call termination rates, while Telkom will provide 10 development call centres - each employing 1 000 people - with low-cost bandwidth as part of efforts to expand the business process outsourcing sector.
"The development of high-speed national and international broadband capacity is another imperative," he said.
Another sector that will benefit immensely from South Africa's hosting of the 2010 World Cup will be public transport, with several new programmes already under way around the country.
The R7-billion taxi recapitalisation programme is aimed at replacing ageing vehicles with new and safer minibuses, while also enabling better regulation. Mbeki warned that government would not be "bullied" into abandoning this programme by the country's taxi operators.
Regional rail initiatives under way include the Gautrain rapid rail link, which will join Johannesburg, Pretoria with the OR Tambo International Airport, the Moloto Rail Corridor in Mpumalanga, and the Klipfontein Corridor in Cape Town.
"We will attend to the urgent implementation of these programmes to improve the quality of life of especially the working people," Mbeki said.
Source: BuaNews
