Johannesburg - The state's industrial offset programme has pumped almost R9 billion into the economy and created 50 000 jobs, according to the department of trade and industry.

Investments related to defence contracts totalled R8 billion and non-defence deals brought in just over R1 billion. There were 15 689 direct jobs created, with a third of these going to unskilled workers.

These figures emerged from the 2007 annual report by the national industrial participation programme (NIPP) at a briefing to the portfolio committee on trade and industry by Sipho Zikode, the chief director of industry, this week.

The NIPP uses government procurement to leverage investment, export opportunities and technology development. Since September 1996 all purchases or leases by departments and state-owned enterprises have been subject to offset obligations if they have an imported content of $10 million (R65.4 million) or more.

Initially the biggest state-funded imports were defence related, which prompted criticism that the NIPP was an invitation to corruption and a sweetener to win support for the arms deal.

There have also been concerns that suppliers do not live up to their promises. The latest NIPP annual report disclosed that more than R6 billion was still outstanding in obligations related to defence contracts and more than R1 billion on civilian programmes.

A macroeconomic impact assessment was undertaken to measure the impact of the programme in greater detail. According to the NIPP, the findings can be stated as follows:

Each year, NIPP projects add R8.6 billion to the gross domestic product (GDP) in the form of employee remuneration, profit generation and other inputs;

The impact on capital utilisation shows that an average of R16 billion of capital is required annually to sustain all NIPP projects in terms of initial investment and capital costs; and

On an annual basis, the NIPP sustains 50 308 jobs.

The study found that the NIPP, measured in terms of GDP formation and job creation, was working as anticipated, although the milestones set for contractors were "probably over-optimistic".

In future, the study said, more attention would be paid to improving the labour intensivity of projects, particularly for unskilled workers.

With acknowledgements to Business Report.