South Africa announced a 5.75 billion rand ($700 million), three-year program to boost investment in manufacturing and raise economic growth in Africa’s biggest economy.
Eligible companies can apply for capital-investment grants and funding to improve their competitiveness and energy efficiency, Trade and Industry Minister Rob Davies said in a speech in Cape Town today. The Industrial Development Corp., a state lender, will also set up a loan facility for manufacturers seeking to modernize and expand, he said.
“The manufacturing sector has experienced a number of challenges” such as rising electricity prices and a volatile currency, Davies said. “Many manufacturers are wary about considering investments. We want to work with manufacturers, to support manufacturers, to make the kinds of investments that are going to raise competitiveness.”
Manufacturing accounts for about 15 percent of South Africa’s gross domestic product, down from 21 percent in 1977. The government sees the industry’s revival as key to its plans to create 5 million jobs by 2020 and reduce the 25.2 percent unemployment rate. Funding for the manufacturing support program for the three fiscal years through March 2015 was allocated in the February budget.
Manufacturing production shrank 2.7 percent in March from a year earlier as an economic slowdown in Europe damped demand for exports, the government statistics agency said on May 10.
Companies will have to agree not to fire workers while receiving support under the program and to meet government targets that seek to draw more of the country’s black majority into the mainstream economy, Davies said.
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