Transcript CONTEXT ISSUES

Industrial Policy Context and
Strategic Direction
DTT Roll-Out and Local Content
Development Workshop
28 May 2014, CSIR
Mhlanganisi Masoga: Director - Creative Industries
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Objectives of the Industrial Policy Action Plan
South Africa’s long term vision of an equitable society is defined by the National Development
Plan (NDP). The IPAP is informed by this vision and is both framed by and constitutes a key
pillar of the programmatic perspectives set out in the New Growth Path (NGP). Its core
objectives remain as set out in the National Industrial Policy Framework (NIPF) of August
2007:
• To facilitate diversification beyond our current reliance on traditional commodities and non-
tradable services. This requires the promotion of increased value-addition per capita
characterised particularly by movement into non-traditional tradable goods and services that
are competitive in both export markets and the domestic economy.
• The long-term intensification of South Africa’s industrialisation process, and movement
towards a twenty-first century knowledge economy.
• The promotion of a more labour-absorbing industrialisation path with a particular emphasis
on tradable labour-intensive goods and services and economic linkages that catalyse
employment creation.
• The promotion of a broader-based industrialisation path characterised by greater levels of
participation by historically disadvantaged economic citizens and marginalised regions in the
mainstream of the industrial economy.
• Contributing to industrial development in Africa, with a strong emphasis on building regional
productive capabilities.
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CONTEXT ISSUES
Consumption-driven growth path
• SA’s growth path has hitherto been characterised by consumption-driven sectors
growing at twice the rate of its productive sectors.
Financialisation & import intensity
• The economy has experienced extensive financialisation, but the financial sector has
not supported productive sector investment; growth has been import-intensive rather
than based on growth in the domestic manufacturing sector.
Structural unemployment
• High structural unemployment has remained a constant, oscillating between 22,5%
and 25% on the narrow definition.
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UNDERLYING PRINCIPLES OF IPAP
Driving structural change in the economy
• IPAP’s goal is to bring about significant structural change in the economy, reverse the threat
of deindustrialisation and strengthen and diversify SA’s manufacturing base, especially in
value-adding, labour-intensive strategic sectors.
Defending & promoting industrial development
• IPAP is predicated on the state supporting, nurturing & defending industrial development; it
seeks to assert state leadership in a context where the state largely ‘steers but does not row’.
Refining conditionalities & obligations
• IPAP seeks to implement stronger developmental conditionalities and extract stronger
reciprocal obligations from beneficiaries of state support in areas such as competitiveness
upgrading, employment retention and creation, investment etc.
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UNDERLYING PRINCIPLES OF IPAP
• Successive iterations of IPAP have consistently sought to articulate a deeper,
more comprehensive and integrated set of solutions to the major fault-lines of
South Africa’s economic structure; an orientation that necessarily implies a
fundamental shift of policy emphasis in favour of the productive sectors of the
economy.
• In order to deliver on these objectives, the following key areas of intervention
will continue to be energetically pursued throughout the 2014-2016 period
contemplated in IPAP - and further into the medium and longer term future:
1.
Economy-wide:
• Pursuit of a stronger articulation of macro- and micro-economic policies, greater policy
coherence and better implementation.
• Stronger alignment of industrial policies and programmes with investment and export-promotion
programmes such as the National Exporter Development Programme (NEDP) focussed on
widening and balancing SA’s exporter base.
• Better policy alignment, both in general and in relation to specific sector strategies, focussed
particularly (but not exclusively) on those sectors where the domestic economy enjoys global
competitive advantages.
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UNDERLYING PRINCIPLES OF IPAP
2.
Procurement:
• A sustained effort to secure compliance with existing public procurement policies and strategic
supplier development/sourcing measures, with the overall aim of supporting the manufacturing
sector to raise domestic production and grow employment.
• This effort will be combined with:
o further policy framework and institutional improvement measures flowing from the Public
Procurement Review: and
o strong persuasive initiatives to secure greater private sector support for local manufacturing - a
contribution that large companies in particular are well placed to make, given their significant
procurement spend.
o It also includes providing further support for broad based black economic empowerment (BBB-EE)
and better alignment between BBB-EE and industrial development objectives.
3.
Industrial finance:
• Stronger alignment and progressive strengthening of industrial financing across all DFIs - and
within the Industrial Development Corporation (IDC) in particular in order to secure an optimal
mix of public and private sector funding that can progressively strengthen investment in the
productive, especially manufacturing, sectors of the economy.
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UNDERLYING PRINCIPLES OF IPAP
4.
Developmental trade policy:
• Ongoing strengthening of developmental trade policies; with the following
key components:
o deployment of trade measures such as selective and strategic tariffs
and their improved alignment with industrial policy objectives; working
closely with the International Trade Administration Commission (ITAC)
while recognising their independent role;
o closer and more detailed cooperation with the Customs Division of the
South African Revenue Services (SARS) to combat the ever-present
(and steadily growing) problem of illegal and fraudulent imports – one of
the key pillars of the illicit economy;
o steady and incremental strengthening of the capacity and capabilities of
the Standards, Quality Assurance, Accreditation and Metrology (SQAM)
institutions, which provide an indispensable support framework for a
modern and competitive economy.
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UNDERLYING PRINCIPLES OF IPAP
5.
Competition policy:
• Strengthened interventions to combat anti-competitive and collusive behaviour in
both the private sector and State Owned Companies - and in so doing, lower the
cost of procurement to the national fiscus and of wage goods to working families.
6.
Regulation and intellectual property:
• An Intellectual Property Rights (IPRs) regime that seeks to create a supportive
environment for South Africa’s industrialisation objectives.
• The regime should provide broad terms of scope for protection and less stringent
criteria for novelty.
• The recently signed Intellectual Property Amendment Bill enables the regime to
strike a balance between encouraging incremental innovations, providing protection
for indigenous knowledge and providing enough incentives for innovators to make
the necessary research and development investments.
7.
Innovation and technology:
• New policies and programmes to ramp up competitive capabilities in the production
and services sectors of the economy, taking advantage of every opportunity to
leverage the quantum advances on offer in the sphere of digital and other globally
emergent advanced technologies.
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IPAP TRANSVERSAL INTERVENTIONS
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IPAP SECTORAL INTERVENTIONS 1
Sectors supported since 2007: scale up and broaden interventions
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IPAP SECTORAL INTERVENTIONS 2 & 3
2: Qualitatively new areas of intervention
3: Development of long term advanced capabilities
Cultural and Creative Industries
• South Africa has long identified the potential of the Creative Industries to
contribute to both economic and social development as evidenced in CIGS,
ASGISSA, NIPF, NDP and in recent years IPAP
• The Economic Contribution of Copyright Based Industries to the South African
Economy the creative industries (copyright-based industries) were responsible
for almost 4.11% of the total economy in terms of value added, while 4.08% of
the work-force was employed in the creative industries in 2008.
• World exports of creative goods have continued to grow, reaching $454 billion
in 2011 — more than double their 2002 level
• The creative industries hold great potential for developing countries that seek
to diversify their economies and leapfrog into one of the most dynamic sectors
of the world economy.
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Value of the Film & Television Sector
• In 2011, filmed entertainment grew
Millions
at a rate of 3.4% with a value of
US$ 85,433 million and television at
the rate of 8.1%, at a value of US$
400,541 million (PWC Outlook, 2012).
Value of Global Film and TV
Industries
600,000
485,433
500,000
• The total combined value of global
film and television was at US$
485,433 million
• From
2002 to 2008 exports of
audio-visual goods and services
increased from $14.1 billion to
$27.2 billion, from
growing on
average by 9 per cent annually.
• Most of this trade was for audio-
visual services, which accounted for
$26.4 billion, while audio-visual
goods
totalled
only
$811
million.(UNCTAD,2010 )
400,541
400,000
300,000
200,000
85,433
100,000
0
Filmed Entertainment
Television
Film and Television
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Value of the SA Film & Television Sector
• The Film industry grew by 3.1% between 2008 and 2009, while there
was only 1% growth from 2010 to 2011 valued at R2, 889 billion ;
while the Television industry from 2010 to 2011, grew by 13.4% from
R20, 326 to R23, 051 billion.
• The total value of the South African Film and Television industry for
2011 amounted to R 25,940 billion.
• South Africa’s share of the global television and film market growth in
2011 is minimal, pegged at a mere 0.67% market share.
• (Statistics: Price Waterhouse Coopers 2012).
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Share of the Film Market
• The share of the local film market by South African
produced content continues to be minimal.
• South African films were not as successful in 2011 as in
2010, accounting for about 5% of 2011 box-office
spending compared with 11% in 2010.
• Although that are a few South African films breaking into
the international film market, the presence is still very
limited.
• While foreign films continue to dominate the local market,
SA content has struggled to break into international
markets
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Share of the Film Market
100
90
80
70
60
SA Content
US Content
UK Content
50
German Content
French Content
40
Italian Content
30
20
10
0
SA Box Office
US Box Office
UK Box Office
Ger Box Office
Fr Box Office
Ita Box Office
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Share of the Television market
120
• The television market
continues to grow at a
phenomenal rate of more than
10% year on year.
100
80
60
• But the share of this growth
does not benefit local content
• When comparing the share of
local audio-visual content on
local television screen over a
week’s period chosen at
random,, it is apparent that the
majority of local screen time
on television is dominated by
foreign content with the
exception of soapies.
40
20
0
LOCAL
FOREIGN
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Share of the Television market
1 week snapshot of TV programming
across broadcasters - Oct 2013
120
100
80
60
LOCAL
FOREIGN
40
20
0
SOAPIES TV SERIES FEATURE ANIMATED ANIMATED
FILM
TV SERIES FEATURE
FILM
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The potential impact of DTT
• The DTT roll out will result in high demand for audio-visual
content
• Given current local content share of the broadcasting
market, it is likely that foreign content would continue or
even exponentially increase and dominate the content
market across the existing and new channels
• The potential for job creation would thus be limited to the
broadcasting with minimal benefits and opportunities for
content creators and producers
Strategic Thrust
• A range of IPAP instruments ranging from government procurement, incentives, tariffs
as well as local content quotas across all creative industries would need to be
instituted to stimulate accelerated domestic growth.
• The stimulation of domestic demand and consumption is central for the development
of the Creative Industries and their contribution to economic growth and job creation.
• The focus on domestic demand, local production and consumption is not at the
exclusion of export development and growth, but emphasises a strong local market as
a springboard for export
• The Copyright Review Commission recommendations which were adopted by Cabinet
in October 2012 should be vigorously implemented not only just for music but for film.
• The CRC amongst others recommends local content quotas as follows:
• 80 % for the Public Broadcasters and Community Broadcasters
• 50% for private broadcasters
THANK YOU