Local manufacturing: A blueprint of value - ABSA Economist

Absa economist, Naledi Madala shared that Manufacturing Value Add hovered around six percent in the last five years, although manufacturing value add is relatively low, the sector’s contribution to the economy is more important through job creation and exports diversification. The latest statistics show that the sector employs 6.5 percent of formally employed. There is a correlation between high manufacturing value add and low inequalities and vice versa.

Madala further highlighted the importance of supporting and growing local industries like cement manufacturing for sustainable job creation. In closing she highlighted the opportunities and challenges faced by manufactures in Botswana.

The Absa economist was speaking during a PPC Botswana Kgotla, which comprised different economic and business experts such as PPC South Africa managing director, Njombo Lekula and PPC Botswana Head of Business Unit, Tuelo Botlhole.

When responding to a question on dumping, Madala shared that dumping can be very harmful to local industries. He added that WTO agreement allows governments to act against dumping where there is genuine injury to the competing domestic industry.

BCMA chairperson, Nkosi Mwaba shared the same sentiments giving examples of how the local cement manufacturing industry is limping due to the unfair competition that local cement manufacturers are facing.

“Over the past years, we have had two major cement manufacturers who had employed Batswana shutting down because they were not making a profit due to cement product dumping that has been taking place in the country. A lot of people lost their jobs and operations stopped. This was a huge blow to the local economy,” added Mwaba.

The argument has always been that local cement manufacturers play a vital role in the local economy by creating employment and the usage of local raw materials. Whereas on the other hand, regional and international cement manufactures such as Ohorongo and Cheetah dump their cement products in local retail outlets and sell them at a very low price. Which is unfair competition, as they do not even create value in the local economy.

“It is critical to ensure local players, local manufactures are prioritised for national projects to project a strong economic boom. The value chains that support this are huge for the continent and individual nation-states. With our vast resources, minerals, raw materials, fertile soils, many have argued and demonstrated that Africa’s robust manufacturing sector could be the next global value frontier.

In partnership with the government, we can guarantee industry growth, social entrepreneurship, skills development and a robust value chain as local manufacturers. All these efforts can ensure a viable economic impetus from the construction industry. Where we fall short on national projects import cement can be used, but with local manufactures as a priority. Predatory pricing can be managed through tariffs so the ground is level,” added Lekula.