Covid could reignite SA’S industries
The manufacturing sector across Africa needs to reinvent itself
Business leaders in the manufacturing industry believe that the Covid-19 crisis could be a catalyst for Africa’s next industrial revolution.
Vinny Perumal, CEO of KAS Africa, the continent’s leading contract manufacturer of personal, home, baby and oral care FMCG products, said the upheaval of global supply chains caused by the pandemic has helped to highlight how important local production capacity is to ensure the resilience of local economies and continuous supply of essential products.
“The virus outbreak has put South Africa’s manufacturing sector under enormous pressure,” she said. “It has caused demand and production in many sectors to slump, disrupted supplies of raw materials and led to financial liquidity concerns for some companies. In other instances, manufacturers needed to reinvent themselves for surge production to meet unexpected demand for some consumer goods.”
According to a study by Deloitte, manufacturing is one of the top three multiplier sectors in terms of value addition, job creation, export earnings and revenue generation for every R1 invested.
“Even before Covid-19, we were seeing a significant reconfiguration of global value chains. The African Continental Free Trade Area (AFCFTA) and South Africa’s close ties with the BRICS bloc mean that there are exciting opportunities to grow exports,” Perumal said.
The recent signing of AFCFTA agreement, which came into effect on January 1, has largely been seen as a step in the right direction as it will encourage inter-africa trading and support business owners in achieving their business goals. The agreement aims to bring together 1.3-billion people in a $3.4-trillion (R49.28-trillion) economic bloc that will be the largest free trade area since the establishment of the World Trade Organization.
South Africa’s manufacturing sector has been in decline over the past three decades. The sector declined from 26% of South Africa’s gross domestic product in 1994 to less than 14% currently.
The Department of Trade, Industry and Competition has pursued several policies to “localise” more manufacturing in the country in an effort to re-industrialise Africa’s most advanced economy.
The Steel and Engineering Industries Federation of Southern Africa (Seifsa) in partnership with the Independent Development Corporation, will later this month host the Southern African Metals and Engineering Indaba in Joburg.
Seifsa CEO Kaizer Nyatsumba said among the topics that will be canvased at the indaba are government’s masterplans, which seek to develop industries by building partnerships with the private sector. “Their significant role means that we need to continuously interrogate whether they are likely to achieve their stated aims,” said Nyatsumba.
“As the metal and engineering sector, we need to be vocal about whether the steel master plan will work – and where we think it can be further refined.
“South African manufacturers deserve support not just because they’re creating local jobs and building prosperity, but also because they’re delivering products to our market that are globally competitive in terms of cost and quality. The pandemic could be an inflection point that sees the rebirth of our manufacturing sector,” Perumal said.