On March 26, at the BRICS (Brazil, Russia, India, China, and South Africa) Business Council, the Minister of Trade, Industry and Competition said that South Africa must rebuild its manufacturing strength to be able to fully benefit from the opportunities in the BRICS markets. This needs to be done through deeper partnerships and careful use of both demand and supply-side measures.
The Conference attracted small and large industrialists and was a hybrid event, with attendance in Sandton and through virtual platforms.
The Minister highlighted the crucial role of manufacturing in strong and dynamic economies, and offered the following comments:
· Over a number of years, manufacturing was seen as a sunset industry, a relic of an age that was passing, and policymakers were urged to abandon efforts to support the industry and seek opportunity in other sectors of the economy. In the case of South Africa, the country rapidly opened its trade-exposed sectors to what was described as the bracing effects of global competition, but without supporting local firms to become stronger and more dynamic. The results were painful to see – we lost critical manufacturing capacity.
· It led to a wave of de-industrialisation pressures, and as core feeder-factories were closed down, they impacted on other parts of supply chains. Our localisation project is about working with the business community to rebuild the foundations of manufacturing, to strengthen industrial capacity that can supply both the domestic and export markets.
· Manufacturing is a big driver of employment, with the strongest employment multiplier. Industrial Development Corporation (IDC) research shows that for every one manufacturing job, another three jobs are created across the economy, in both supplier industries and services sectors. It is an earner of foreign exchange and a driver of innovation, of research and development; and in times like the Covid-19 crisis, countries with capacity relied on their industries to produce food, personal protective equipment and medical supplies.
The Minister noted that the country’s reimagined industrialisation agenda was based on building dynamic firms and economic inclusion:
· To retain and modernise traditional sectors, like steel, textiles and clothing
· To expand advanced-manufacturing sectors such as autos and chemicals
· To develop national resilience through expanding sectors in food and healthcare; and
· To nurture new industries such as the green economy and the digital economy.
Sector partnership agreements, known as Master Plans, have now been put in place in five sectors, with a further one, in the furniture industry, being close to conclusion.
These initiatives have positively impacted on sentiment and investment; and the Minister pointed to the recent R16-billion investment announcement by the Ford Motor Company and the R1-billion investment in the poultry industry.
The Minister pointed to progress made during Covid-19 to repurpose South African manufacturing capacity:
· Local production of hand sanitiser products expanded greatly, supplying the domestic market and also exporting R1.7bn worth of product to other African countries.
· Manufacturing of medical-grade face masks was ramped up from a capacity of 6m to 16m masks per month.
· Local innovation and manufacturing capabilities were combined to produce 20 000 CPAP ventilators, used particularly during the second surge.
New technologies provide significant opportunities, not only for new industries, but to retrofit established sectors to be more flexible and greener. Additive manufacturing, the convergence of the physical and digital worlds, offer enormous opportunities for a location like South Africa.
Climate-change is another significant vulnerability for people and economies. To ensure that we contribute to a more climate-resilient industrialisation, Government will focus its efforts on identifying green economic opportunities: in new products and sectors as well as in greening traditional smoke-stack industries.
The Minister called on the manufacturing sector to work on opening export opportunities in BRICS countries, through three measures:
· First, to produce detailed export-opportunity studies for each BRICS country, identifying the products that can be exported and the support infrastructure needed.
· Second, to build greater cohesion within South African manufacturing, with sharing of ideas between industrialists on how to penetrate export markets; and greater use of manufacturing networking to address issues of technology innovation and marketing, among others.
· Third, to develop an innovation project to bring together product development and manufacturing people to identify new opportunities where South Africa may not yet have capacity, but for which there are significant markets in BRICS and indeed beyond it.
He called on the manufacturing sector to work on attracting bright young people, who can bring energy and new ideas to the making of products.
Story by: Riaan de Lange