Finance Minister Pravin Gordhan unveiled additional allocations of more than R2-billion to support industrial and economic development for the three-year period from April 1, 2011, through to March 31, 2014.

In his Budget address to Parliament, Gordhan added that, over the full Medium-Term Expenditure Framework period, about R10-billion would be spent on Industrial Policy Action Plan (Ipap) investment promotion, covering sectors such as automotives, clothing and textiles, film and television production and support for small manufacturing and tourism enterprises.

Ipap is a core component of the emerging New Growth Path (NGP) framework, which seeks to create five-million new jobs by 2020 and lower South Africa’s official unemployment rate from 25% to around 15% over the same period. The NGP is targeting more labour-absorbing activities in the agricultural and mining value chains, manufacturing, construction and services.

The R10-billion in incentives has been broken down by the National Treasury as follows: R3-billion for the automotive production and development programme, R2,3-billion for enterprise investment in manufacturing and tourism, R2,1-billion for clothing and textiles production incentives, R912-million for small and medium-sized enterprise development, and R844-million for film and television production incentives.

Both Ipap and the NGP are also supported by the R20-billion 12i tax incentive, which was announced last year to support large-scale greenfield and brownfied productive investments.

CARTEL CRACKDOWN

Of the new funds announced by Gordhan, R1,5-billion had been allocated to six public entities, including the Competition Commission, which has been allocated R461-million to upscale its work on anticompetitive practices in four priority sectors and to create a unit focusing on cartels.

Another R274-million was set aside for five new agencies falling under the Department of Trade and Industry, including the Companies and Intellectual Property Commission, the Companies and Intellectual Property Tribunal, the Takeover Regulation Panel, the Financial Reporting Standards Council and the National Consumer Commission. All these entities will be established in 2011/12.

Gordhan also confirmed R600-million more for enterprise investment incentives, an additional R250-million to the Industrial Development Corporation to support agroprocessing businesses, R120-million in additional funding for the National Tooling Initiative, R282-million for the Micro-finance Apex Fund, and R55-million for Khula Enterprises to pilot a new approach to small business lending.

“To support the objectives of the industrial policy action plan and the New Growth Path, certain investments qualify for tax relief,” Gordhan announced, adding that consideration would be given to expanding such incentives for labour-intensive projects in industrial development zones.

The additional R2-billion was announced against the backdrop of a R979,3-billion total 2011 Budget, which included material additional allocations for education, youth job creation, healthcare, housing, social security and infrastructure.

As a result of the additional expenditure and slightly slower growth in revenue, the deficit for next year is a half a percentage point of gross domestic product (GDP) higher than projected in October. The deficit is expected to remain at 5,3% of GDP in 2011/12 and fall to 4,8% and 3,8% in 2012/13 and 2013/14 respectively.

Revenue collection is expected to be R824,5-billion in 2011/12, R908,7-billion in 2012/13 and R1 017-billion in 2013/14.