South Africa to invest $15.4 billion to boost industrial sector

In this photo: Automobile production in South Africa. Currently, the government lends support to the industry under the Motor Industry Development Programme (MIDP), which will be replaced from 2013 onwards by the Automotive Production and Development Programme (APDP), as the country tries to ramp up motor vehicle production and investment. (Photo: Wheels24.co.za)

CAPE TOWN – South Africa’s state-owned Industrial Development Corporation will invest 102 billion rand ($15.4 billion) over the next five years to boost the industrial sector, Economic Development Minister Ebrahim Patel said on Tuesday.

Patel said during a budget vote speech in parliament that he expected the IDC would also consider setting up a distressed sector fund to help shield South African companies from the strong rand — which has rallied almost 30 percent against the dollar since the start of 2009.

“The IDC will substantially increase the level of industrial funding and will make available 102 billion rand over the next five years for investment in New Growth Path priorities,” Patel said.

The New Growth Path is the government’s flagship job creation programme, which is aimed at creating 5 million jobs in Africa’s largest economy over the next 10 years.

The 102 billion rand investment by IDC represents a 160 percent increase over actual approvals in the last five years, and was revised up from 66 billion rand in IDC’s current five-year projections, Patel said of the development finance body.

Green energy industries and the mining and manufacturing sectors will receive the lion’s share of the funds with each receiving about 20 billion rand over the next five years. Money will also be set aside for agriculture and tourism.

“The past 18 months of GDP recovery and, at the end of 2010, the increase in employment point to the realism of our objective,” Patel said.

He said South Africa planned to approach local and foreign institutional investors to promote investment in key sectors of the economy and said the country planned to hold an investment roadshow in the United States later this year to promote investment.

South Africa has been recovering from a recession in 2009 but official unemployment has remained stubbornly high with 25 percent of the 17.3 million workforce jobless.

InformAfrica reports

Source: Reuters

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