http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.34Change: -0.13
R/$ = 11.16Change: -0.09
Au 1218.13 $/ozChange: 0.87
Pt 1331.00 $/ozChange: -1.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
Article   Comments   Other News   Research   Magazine  
 
 
Aug 03, 2012

Reindustrialisation Recipe?

Back
Thirdly|Africa|Education|Industrial|Africa|Europe|China|South Africa|Manufacturing|Products|Rob Davies
|Africa|Education|Industrial|Africa|||Manufacturing|Products|
thirdly|africa-company|education-company|industrial|africa|europe|china|south-africa|manufacturing|products|rob-davies
© Reuse this



Few would disagree with Trade and Industry Minister Dr Rob Davies when he expresses the view that no developed economy has achieved its status without first going through a process of industrialisation. “We have taken a view that manufacturing is fundamental and integral to our economic growth. We have no doubt that we need to industrialise our country and immediately address the potential threat of deindus-trialisation,” he reminded an audience of businesspeople last week.

Even fewer would disagree, including Davies, that words and good intentions alone are entirely insufficient to kick-start South Africa’s much-needed reindustrialisation process.

Sadly, though, the country appears to be in a position currently whereby the more it speaks about building manufacturing, the less it achieves in terms of actual visible progress.

Without question, many of the problems relate to external factors outside South Africa’s direct control – not least the current crisis in the eurozone.

A graphic published in the World Bank’s recently released ‘South Africa Economic Update’ indicates just how toxic the crisis is likely to be for South African manufacturers. The graph shows a remarkably close correlation between growth in the eurozone and industrial production in South Africa. Besides a few short periods of decoupling, the lines on the graph track each other much as a heat-seeking missile would its target.

Despite its woes and the rise of China, Europe remains the largest importer of South Africa’s manufactured products and the brunt of the prevailing crisis is, thus, likely to be borne disproportionately by our factories. It should not be forgotten that, during the earlier stages of the crisis, a disproportionate number of the one-million jobs lost during the 2009 recession arose from within the manufacturing sector.

The correlation is equally worrying for the economy as a whole: for every one percentage point change in the eurozone’s gross domestic product (GDP), South Africa’s GDP adjusts by 0.8 of a percentage point.

But there are also internal factors holding back the process of rebuilding industry. The first is the protracted nature of the deindustrialisation process, which is arguably still under way. This long period of decline makes the current reindustrialisaiton aspiration much like turning the proverbial oil tanker on a tickey.

Ironically, the sensible macroeconomic choices made by South Africa over the past decade-and-a-half will also make for a difficult transition. Reindustrialisation cries out for a weaker exchange rate. But to effect such without damaging the country’s economic balances (which rely currently on portfolio flows to close the savings gap) is easier said than done. Indeed, the transition to a weaker rand would probably be very disorientating and disruptive.

Thirdly, South Africa’s poor basic education performance is not equipping the next generation of entrepreneurs with the skills needed to become the next generation of industrialists. Without a massive push to turn the tide on the country’s dismal maths and science outcomes, the raw material needed for industrialisation will simply be absent.

Lastly, the country’s current macro- and microeconomic policies are somewhat half-hearted. Either we have to make the sacrifices needed to facilitate the reindustrialisation dream, through a competitive currency and large-scale incentives for industry, or we will continue to limp down a path that is sure to result in even more deindustrialisation.

The problem is that to make such a dramatic change, we need to be certain the raw material – the entrepreneurs, the skills, policy, incentives and good governance – is truly in place. If it is not, such a policy course could do more harm than good. At present, it appears we are extremely weak in all those critical areas.

Edited by: Terence Creamer
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Editorial Insight News
A new United Nations Conference on Trade and Development (Unctad) report offers a decidedly different approach to how the world and developing countries, in particular, could escape the current low-growth reality. The Trade and Development Report 2014 argues that,...
The shift in the conversation about Africa’s prospects – form utter desperation to breathless exuberance – has been at once dramatic and generally appreciated across the continent. However, unless expectations are properly managed, this exaggerated swing in sentiment...
Could an Airbus-like template revive Africa’s stalled economic integration? Mandela Institute for Development Studies founder and director Dr Nkosana Moyo believes so, and recently urged African governments and the private sector to embrace a different “architecture”...
Article contains comments
More
 
 
Latest News
 South Africa signed a nuclear power cooperation deal with Russia on Monday that paves the way for the building of up to 9.6 GW of nuclear power based on Russian technology by 2030, both sides said. The surprise announcement from the sidelines of a International...
Mozambican, Swazi and South African dignitaries at the official inauguration of the Maputo Corridor JOC
The Mozambican port and rail authorities plan to invest around $3-billion in the coming few years to raise yearly throughput at the Maputo port to between 40-million and 50-million tons by 2020 and to migrate additional cargo from road to rail. Speaking at the...
A series of unfortunate events led to Johannesburg and surrounding areas experiencing significant water shortages over the past week, City of Johannesburg mayoral committee member for development planning and urban management Roslynn Greeff said at a media briefing...
More
 
 
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
 
 
 
 
 
This Week's Magazine
MANUFACTURING CAPABILITY Reliable Transformers designs and manufactures dry-type and oil-filled power and distribution transformers up to 3.5 MVA
While Ekurhuleni-based transformer manufacturer Reliable Transformers currently designs, manufactures and tests its products according to the SANS 780 specifications for distribution transformers and other applicable transformer specifications, it is working towards...
GHAREEB SAAD Kaspersky Lab products contain strong heuristics engines that monitor suspicious file execution to detect attacks
Global endpoint security solutions company Kaspersky Lab has introduced new measures to prevent cyber criminals from accessing sensitive data, alongside its malware-signature and heuristic device analysis detection methods. Threats to mobile devices have increased...
MICHAEL FLETCHER Real-time information available to government when citizens use publicly funded Wi-Fi networks will enable it to communicate with citizens and provide services
To ensure uptake and a positive impact, Wireless Fidelity (Wi-Fi) networks in cities must be provided at schools, community centres and commercial centres to enable citizens and government to access information that will improve access to and delivery of services....
Eco-estate Monaghan Farm, located near Lanseria airport, north-west of Johannesburg, has taken a new approach to modern living and sustainability with its 517 ha development, dedicated to farm living.
Forklift and lift-truck distributor Goscor Lift Hi-Reach launched the Genie SX-180, the tallest self-propelled super boom in Africa, in Johannesburg last month. “As the official distributor of the well-known Genie range of equipment in Southern Africa, we are pleased...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks