The South African currency was currently not "competitive" and was also not conducive to industrial development, Trade and Industry Minister Dr Rob Davies said on Monday.

He added that the South African government stood ready to "defend" what it saw as "strategic industrial capacity", as well as job-rich downstream manufacturing through both incentives and tariff-policy reform.

Speaking on Radio 702, Davies said that the rand was "definitely" not competitive at current levels and that actions should be taken "urgently" to achieve a more stable and competitive exchange rate.

He stressed that government would not seek to "target" a specific level, but argued that the current rate of better than R7,40 to the US dollar was "rendering a lot of our industry uncompetitive".

The South African unit had been one of the world's best performing currencies in 2009, improving not only against the weakening greenback, but also against many other currencies. At one stage, on Monday, it traded at better than R7,30/$1, a vast improvement from the beginning of the year when the currency had traded weaker than R9,50/$1.

Speaking earlier at an event organised by the South African Institute of International Affairs (SAIIA), Davies insisted that South Africa had to be vigilant against further de-industrialisation and that government stood ready to defend the country's value-adding industrial base.

However, government would also demand greater reciprocity from those industries that it intervened to support, with such reciprocity to be included into a new support measure for the clothing and textile sector that would go before Cabinet soon.

The scheme would overhaul the discredited duty credit certificates, made ineffective by the fact that exporters traded these with clothing-importing retailers, and would instead shift the incentive focus toward investments, or productivity increases.

"The work we have done shows that, if we do that, we can actually expand employment in the clothing sector. So yes, we are defending strategic industrial capacity, because . . . if a factory closes it is very difficult to get that capacity going again," Davies said.

Tariff reform would also be more closely calibrated to industrial policy, but changes would only be implemented after thorough evidence-based reviews. Tariff adjustments (higher or lower) would be made, Davies said, were the evidence indicated that these would be supportive of South Africa's employment aspirations, or in helping to shift production and exports away from the prevailing commodity dependency towards sophisticated, value-added production.

Currently, all of South Africa's top 25 exports were mineral products.

On a simple average, South Africa's bound rates currently stood at 20,9%, while its applied rates had declined from 15% in 1997 to 8,2 % in 2006. Some 54% of South Africa's tariff lines, which had been reduced from over 13 600 lines to around 6 400 lines, were also duty free.

"Trade policy has to make a meaningful and positive contribution towards desired developmental outcomes," Davies concluded.