Value-added products a solution – Davies

TRADE and Industry Minister Rob Davies has warned that the economy is facing a crisis and has called for a shift to valueadded products to reignite the economy.

Davies told journalists in Parliament yesterday, during a briefing after he had tabled his annual report to the portfolio committee on trade and industry, that value-added goods would lift up the economy.

He said the contraction of the economy in the second quarter had provided some valuable lessons to the government to move up the value chain.

Things could no longer continue as business as usual, he said. He said focusing on valueadded products in manufacturing, clothing and textile and business processing would bring life into the economy.

Davies was the latest senior member of the cabinet to warn of the serious challenges facing the economy, and the impact this would have on growth.

Davies said the latest crisis had been precipitated by problems in China. When the global economic crisis of 2008 struck it was like an earthquake that shook the entire world.

He said the latest epicentre of the crisis was China. Davies warned that South Africa was not the only country facing this challenge, noting that Brazil and Canada were currently in recession.

However, the minister would not say if South Africa could enter into recession.

He said the contraction of the economy in the second quarter signalled problems ahead, but this did not suggest that the country could be in recession.

He said the falling of the commodity prices in the mining industry had called for the government to look at other areas to grow the economy.

“Our message was that we had to respond to that; we had to mitigate that,” said Davies.

“What this episode is reinforcing in our mind is to move up the value chain, to be the producers and exporters of value-added products.”

The minister also said that the government had to stick to the nine-point plan, tabled by President Jacob Zuma in his State of the Nation address, to reignite the economy.

This would require the country to move faster to implement this plan. Davies said they had seen an improvement in value-added products.

What was needed was for the government to act decisively and where the government had done so there had been positive results. There was also a need to reindustrialise the country on infrastructure programmes, said Davies.

“We think that what we are facing is a challenge. We need to increase the impact of our interventions. There is no magic bullet available, we think we have laid the basis on the industrial policy,” he said.

He said the country needed to hold on to what it had.