South Africa has the potential to revive, remould and expand its manufacturing sector through partnerships between industry and government, Department of Trade and Industry deputy director-general Lionel October said in an address at the recent Manufacturing Indaba.
He said South Africa had two major success stories in its manufacturing sector, namely the automotive and clothing and textile industries.
The automotive sector contributes 33% to the manufacturing sector and 6% to South Africa’s overall gross domestic product. It also produces over 600 000 vehicles a year and employs 130 000 people, and is a significant employer at city and municipal level.
“We have seen [hundreds of millions of rands] worth of investments by various automotive companies, including Mercedes-Benz, Toyota, Volkswagen and BMW. There has been extensive investment, especially foreign direct investment, by major original-equipment manufacturers into our economy through this sector,” he said.
October added that this was due to a partnership between government and the automotive sector to develop the industry.
“We are now working on our new master plan for 2030, which will hopefully be finalised in the next month or two. We want to get to the point where we produce one-million cars the year,” he said.
The clothing, textile and footwear sector, meanwhile, has faced various challenges, including large-scale imports, making the sector very vulnerable.
“Seven years ago, government made a decision to save this industry and to revitalise it. Since government’s support package, industry agreed to upgrade and be more competitive,” he said.
The industry currently employs 95 000 people. “[Also], 22 new leather factories have opened within seven years, which is a great achievement for a labour-intensive sector”, he said.
He added that there were greater possibilities for positive movement in the economy, owing to new political leadership, and there was improved business and consumer confidence.
However, the challenges the country faces are huge, and there is no “silver bullet” to solve them.
October pointed out that South Africa was the most unequal society in the world, according to the latest World Bank report, which “paints a very grim picture of the country”.
High levels of inequality and low intergenerational mobility act as a brake on poverty reduction and, as a result, poverty is high for an upper-middle-income country.