10 reasons to industrialise

It results in a multiplier effect across economies.

Many people ask why the focus of public investment in small and medium enterprises (SMEs) and business is so heavily placed on the manufacturing sector? Industrialisation results in a multiplier effect in jobs, foreign earnings through exports and increased tax revenues.

Countries which focus on industrialisation have proven it adds to economic growth and contribute to addressing social challenges.

1. Urbanisation: 70% of the world’s expected 9.2 billion people will live in urban environments by 2050, leading to massively dense environments and other challenges including transport, feeding the population and construction.

2. Technology in agroprocessing: rural farms will be further from their markets in an urbanised world while the first world will have limited arable land and will import food.

Storage and shelf-life technology will be increasingly relevant and those agroprocessors who adopt these technologies will expand their markets globally and fetch a premium for their solutions.

Greater investment into processing can yield massive returns.

3. Mining sector inputs: the SA mining sector imports $2 billion (R27.7 billion) of inputs per annum, with the Southern African Development Community importing a further $2 billion.

The Mining Phakisa and Mining Equipment Manufacturers of SA have identified a list of commodities for which localisation would be feasible, with industrywide buying power coming to the table.

4. Mineral beneficiation: SA has 80% of the world’s platinum reserves and must beneficiate and add value to this mineral. One example is fuel cell vehicles.

5. Energy sector: This includes hydro, solar, nuclear and other energy sources – all requiring inputs and components to be produced.

Furthermore, as a net importer of oil, South Africa is struggling with insufficient storage. 6. The continental-market approach: With Africa’s lack of infrastructure, a continental-market approach is necessary.

7. Automotive sector: the sector in SA aims to more than double its production to 1.2 million vehicles by 2020. 8. The fourth industrial revolution: means connectivity is increasingly necessary, both for domestic and industrial consumption.

Data towers, fibre laying and inputs to ensure higher connectivity coverage is extremely important.

9. Mozambican gas finds: with $1.4 billion budgeted for just the first phase of industrialising the Mozambican gas reserves, and an expected $55 billion to be deployed in the medium term, a significant market for local produce is on our doorstep.

10. Technology in how we play: internationally, betting on virtual dog or horseracing is now more popular than betting on real life racing. These technologies, consoles and games need to be manufactured, around which an entire industry is born.

Nadia Rawjee is a director at Uzenzele