Trade and Industry Minister Dr Rob Davies says South Africa needs to “raise its game” in the manufacturing and industrial sector and has outlined various steps in a bid to boost the embattled sector.
“The real challenge is we need to raise our game. We have industrial policy - it works - but the challenge is that we are not on the scale we need to be,” he told delegates at the Manufacturing Indaba Western Cape on Friday.
He told a packed auditorium in Cape Town that manufacturers needed to innovate and said government intended tightening up on using more local manufacturers.
Davies said all organs of State would be instructed through the National Treasury to buy from local manufacturers. A certain percentage of different products needed to be sourced from local manufacturers.
“We’re not alone in the application of this. The US, for example, has the ‘Buy America’ Act. What we are seeing is that where we have these designations, they have been effective and have supported investments in various industries.”
He said that, in addition to rolling these designations out further, the government was going to be stricter about enforcing localisation in the public sector.
While he could not enforce this on the private sector, he said some companies had voluntarily committed targets for localisation, with mining companies, in particular, procuring locally. He encouraged other companies in South Africa to follow their lead.
Davies outlined the government’s Industrial Policy Action Plan, which aims to strengthen industries ranging from agroprocessing, automotives and clothing and textiles, to metals and plastics and the boat-building industry.
He said South Africa couldn’t afford to just look to the regional market to grow exports.
Companies had to face the reality that other countries in Africa were industrialising and may not need products from South Africa. He said now was the chance to innovate and look for opportunities, which the automotive industry in South Africa was doing. It is looking at supplying finished automotive products to Nigeria, which is building its own auto industry.
Davies said he accepted criticism that some of his department’s trade missions abroad were not as effective as they should be.
“We know we need to up our game on this. We have been going back to the export councils, as we want more serious exporters to come on these trade missions, as well as have better events around them.”
The Minister added that his department had had to “wrestle” with what to do with the steel industry. He commented on his decision in August to impose steel tariffs on imported goods to help local companies who have faced pressure following a glut of steel imports, especially from China.
Davies said more tariffs were in the pipeline, but that companies needed to stick to the conditions.
“Tariff increases can be used to insulate local steel companies against price competition, but you cannot use that to raise your price against downstream steel users. We are determined that we come out of this with primary steel manufacturing in place, but you cannot damage downstream steel users.”
Davies said his department was in the process of drawing up more steps to secure a stronger system of industrial financing, incentives and support despite tight fiscal conditions. He also called on manufacturers to follow up on their innovations.
“Someone has a big idea and then we don’t follow it through. It gets picked up somewhere globally and we end up importing it.”