Patel calls for boost in manufacturing, and better use of country’s BRICS ties
It needs to be done through deeper partnerships and careful use of both demand and supply-side measures
TRADE and Industry Minister Ibrahim Patel has called for South Africa to rebuild its manufacturing strength to be able to fully benefit from the opportunities in the BRICS markets.
Speaking at the BRICS Business Council meeting on Friday, Patel said this needed to be done through deeper partnerships and careful use of both demand and supply-side measures.
Patel lamented how South Africa had rapidly opened its trade-exposed sectors to the effects of global competition, but lost manufacturing capacity due to lack of support to local firms.
He said the results were painful to see.
“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,” Patel said.
“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.
Research by the Industrial Development Corporation shows that for every one manufacturing job, another three jobs are created across the economy, in both supplier industries and services sectors.
The industry is also an earner of foreign exchange and a driver of innovation, of research and development.
But manufacturing production in South Africa has declined on the effects Covid-19, declining by 3.4 percent in January due to slowing food and beverages production. Patel said that the country’s re-imagined industrialisation agenda was based on building dynamic firms and economic inclusion to retain and modernise traditional sectors, like steel, textiles and clothing.
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.
Patel said these initiatives have positively impacted on sentiment and investment; and Patel pointed to the recent R16 billion investment announcement by the Ford Motor Company and the R1bn investment in the poultry industry.
He pointed to progress made during Covid-19 to repurpose South African manufacturing capacity, such as local production of hand sanitiser products expanded greatly, supplying the domestic market and also exporting R1.7bn worth of product to other medical-grade products. “New technologies provide significant opportunities, not only for new industries, but to retrofit established sectors to be more flexible and green. Additive manufacturing, the convergence of the physical and digital worlds, offer enormous opportunities for a location like South Africa,” he said.
“Climate-change is another significant vulnerability for people and economies. To ensure that we contribute to a more climate-resilient industrialisation, the government will focus its efforts on identifying green economic opportunities in new products and sectors as well as in greening traditional smoke-stack industries.”
Patel 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 might not yet have capacity, but for which there are significant markets in BRICS and indeed beyond it.
He also alled on the manufacturing sector to work on attracting bright young people, who could bring energy and new ideas to the making of products.