Trade and Industry

Monday, 13 February 2023

Services and inclusive industrialisation

  • Year: 2022
  • Organisation: TIPS
  • Author(s): Neva Makgetla with Nokwanda Maseko and Itumeleng Mokoena (TIPS)

Industrialisation cannot take off without adequate services such as logistics, engineering, finance and security, as well as human and social capital development. Moreover, the service sector generates around two thirds of the GDP and employment, and six out of seven jobs for women. An effective industrial policy, then, should incorporate measures to maximise the contribution of the service industries to inclusive industrialisation. To assist in understanding the role of the service industries in inclusive industrialisation in South Africa, this paper undertakes the following:

  • It outlines the factors behind the changing role of services in the economy.
  • It maps out the main services industries in South Africa. The analysis points to five broad groups from the standpoint of industrial policy: the professional business services including finance; the services needed for human capital development (mostly education and health); cultural and personal services and hospitality; logistics and retail; and cleaning and security.
  • The paper then summarises the main debates around the role of services in industrial policy.
  • The concluding section briefly outlines the potential contribution to inclusive industrialisation of the five services subsectors and where they now fall short, as the basis for further research.

The annexure provides case studies of engineering and logistics.