2021 Manufacturing Indaba: Minister Patel calls on local business to seize the moment and industrialise

2021 Manufacturing Indaba

The 2021 Manufacturing Indaba convened around the theme ‘Rethink. Manufacturing – Charting a post COVID 19 pandemic recovery course for the manufacturing sector’, began on Monday with a keynote address from the Minister of Trade, Industry and Competition, Minister Ebrahim Patel.

The Indaba will focus on a wide range of areas with relevance to the fortunes of the South African manufacturing sector.

These include, but are not limited to the role of renewable energy, electric vehicles, the Africa Continental Free Trade Agreement and the role of financial support in enabling manufacturing advances on the continent.

Furthermore, the onset of COVID 19 and the contemporary global supply chain challenges, have a presented an opportunity of policy convergence with regard to the role of local production in building resilient value chains.

Minister Patel, in his keynote address to the Indaba highlighted the enormous opportunities and challenges for manufacturing on the continent, and the specific interventions that can be pursued to unlock these opportunities in South Africa and the continent of Africa.

“We are on the cusp of a potentially great renewal in local manufacturing that can drive increased output and competitiveness – what we call re-industrialisation,” said Minister Patel.

“The African market represents a R7 trillion market opportunity for goods that can be manufactured on the continent,” said Minister Patel, “to replace some products currently being imported from outside of the continent”.

In this regard, the Minister suggested that the development of regional value chains across the continent, presents an opportunity to create market linkages between regions and to integrate critical supply chains.

These opportunities have presented themselves in the pharmaceuticals sector in the production of medical grade facemasks, ventilators and hand sanitisers among many other product lines.

Local and regional market opportunities have seen fuel-cell production at the Dube Trade Port in eThekwini and commitments by global auto manufacturers such as Ford Motor Company and Mercedes Benz, who have continued to expand the production of flagship models in South Africa.

These advances, contribute to the commitment with social partners to reduce non-oil imports. Seven MasterPlans, covering 800 000 workers continue to form a critical element of our reimagined industrial strategy, based on industry-level commitments by different actors to rebuild our industrial base.

However, for these opportunities to materialise, there is a need to resolve the structural constraints that may mean Africa and South Africa miss the opportunities presented.

“The most critical of these constraints,” Minister Patel suggested, “is energy supply, energy prices and the efficiency of our logistics system, ranging from rail, to road to port.”

Alongside these, Minister Patel also highlighted the challenges related to red tape and bureaucracy, the challenges in the provision by local authorities of basic infrastructure and services, and the challenges of shop-floor conflict as well as the kind social instability observed in July of this year in parts of KwaZulu Natal and Gauteng.

With regard to shop-floor conflict, this can be moderated through worker ownership via ‘employee share ownership programmes’ (ESOPs) and better transparency on firm level pay practices, which are a critical feature of company regulatory amendments being proposed by the dtic.

Further, he drew attention to the danger that individual firms may raise prices as they gear up for localisation opportunities through policies being pursued by the dtic under the auspices of the Economic Reconstruction and Recovery Plan (ERRP).

Minister Patel in his keynote address at the Indaba said that “a rise in prices will sap public support for localisation”.

He called on businesses to invest in measures to improve competitiveness and dynamism of local firms.

“The government has now introduced reciprocal commitments attached to tariff increases or rebates of duties, which include commitments by affected firms not to raise prices,” said Minister Patel.

He called on the Manufacturing Circle to play a strong advocacy role among local industrialists to focus on the long-term view, namely to capture market share through competitive prices and quality.

“Localisation is not a replacement of the need for greater competitiveness among and within South African firms, but an avenue to lift the rate of growth and stimulate specific economic activities through promoting technology, innovation and competitiveness,” he said.

This is in recognition that prices of final and intermediate goods, influence firms and households’ economic decisions and by extension, the pace and scale of our economic recovery.

Lastly, our efforts to deepen industrial performance and competitiveness, can be assisted by Development Finance Institutions (DFI’s) such as the Industrial Development Corporation and the National Empowerment Fund, and the support schemes offered by the dtic.

These include measures that promote local production, investments and exports and through competition policy and a reform of business regulation, and measures aimed at making South Africa a vibrant place to undertake trade and investment.

As manufactuers and the government, through collaborative partnerships, we can influence outcomes in the marketplace, of variables that are not fully within our control, if we work together.

“We can grasp the opportunity and begin the journey to being a dynamic industrial nation but we can easily squander the opportunity with manufacturing output declines measured as a percentage of our GDP output – in other words, de-industrialisation,” said Minister Patel.

The dtic stands ready to ensure that these measures and partnerships support and reinforce one another in our efforts to bring dignity to millions of South Africans through the creation of value and job opportunities.

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