The trade and industry department says in its draft regional industrial development strategy that it plans to give low-interest loans to municipalities, initially in 15 areas.

Municipalities, many of which are already struggling to deliver basic services, will be able use the loans to develop or provide infrastructure such as buildings or roads.

The department says that 65% of new employment growth is a result of the expansion of existing firms and not from new investment.

“As a result, encouraging the expansion of the pre-existing economic base and addressing local challenges is a logical development path to pursue,” it says.

The strategy, based on the European Union’s structural fund, aims to overcome regional disparities, which have widened in some cases.

The new regional strategy follows previous unsuccessful interventions, the department says.

Ray Ngcobo, a chief director in the department, said an earlier programme launched in 1995 had failed because there was no national policy and no legislative support.

Government has also ploughed billions of rand into the development of industrial development zones such as Coega, which have attracted little investment to date.

Ngcobo said regional development programmes had not had an overall framework before, but the new strategy would provide one