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The South African government will spend R840 billion to develop the country’s infrastructure in the next three years because it sees the infrastructure development programme as a major source of industrialisation. This was said by the Minister of Trade and Industry, Dr Rob Davies. He was speaking at the official opening of the Grindrod Locomotives Expanded Workshop in Pretoria West today.

“The sixth iteration of the Industrial Policy Action Plan (IPAP), which will be launched in Johannesburg on 7 April 2014 highlights infrastructure development, localisation and regional integration as three of the major drivers of industrial development and as part of the broader process of industrialising the African continent,” said Minister Davies.

He added that the fact that the current political administration has identified infrastructure development in South Africa as a major driver of industrialisation was underscored by the R1 trillion it would have spent on infrastructure development when its term comes to an end in May.

“That amount is more than any other administration has ever spent in the history of our country. And we will be also be rolling out infrastructure valued at R840 billion over the next three years in line with the Medium Term Expenditure Framework period,” said Minister Davies.

He identified metals, fabrication and transport equipment as one of the sectors that have benefitted from the infrastructure development programme development.

“The second driver is related to the deliberate policy decision that government has taken to insist on localisation. This refers to all the things that we need to take our economy forward but also using the construction of the infrastructure as a tool to build our industrial capacity. We introduced designations requiring any organ of state that procures anything related to the infrastructure programme and other regular purchases by government departments,  to come from local sources according to prescribed percentages such as the 65% prescribed for rail locomotives,” said Minister Davies.

Minister Davies also mentioned regional integration as another major economic driver highlighted by IPAP.

“The South African industrialisation efforts cannot take place in isolation from the ambition set by all leaders of the African continent to make the next phase of African development led by industrialisation. We can no longer afford to simply be producers and exporters of raw products and importers of finished goods. We have got to move up the value chain and Africa is now poised to make a leap towards industrialisation.  But for that we need to build regional markets that can sustain industrialisation,” emphasised Minister Davies.

He indicated that the fact of the matter was that all successful emerging industrial countries were now turning towards their domestic markets as a source of growth and industrial development.

“Colonialism divided Africa into 54 different small economies, each of which is too small to sustain industrialisation but if we move to create large regional markets, we will actually be starting on a scale that makes sense. We have been prioritising the development of regional integration in the direction of broadening integration across the existing regional communities with the SADC (Southern Africa Development Conference), COMESA (Common Market for Eastern and Southern Africa), EAC (East Africa Community) free trade area process as a flagship and the trailblazer of an eventual continental free trade area,” said Minister Davies

The Chairman of Grindrod Mr Ivan Clark said an industrialised economy would go a long way in generating skills and boosting job creation.