Measures to stimulate economic growth in South Africa after Covid-19 should include policies and interventions that will result in the reindustrialisation of the manufacturing sector, says industry body Manufacturing Circle executive director Philippa Rodseth.
She tells Engineering News that these policies and provisions should also support increased demand for locally made products and services while helping them to find space on retailers' shelves and with service providers respectively.
“The imperative to arrest the slowdown of the South African economy and the unemployment rate has never been as stark as it is now amid Covid-19 restrictions.”
Last month, Trade, Industry and Competition Minister Ebrahim Patel pointed to opportunities for an increased localisation drive in the manufacturing sector, saying that it could make a meaningful contribution to the South African economy, helping to stimulate economic growth and job creation.
Rodseth notes government’s appreciation of the importance of supporting industrial development, with Patel acknowledging that the Manufacturing Circle’s goals are aligned with government’s strategy of placing a manufacturing-led growth path at the heart of the industrial strategy of President Cyril Ramaphosa’s administration.
“We are committed to partnering with government to increase localisation through import replacement and the use of public procurement, as well as the designation of products,” she says.
The Manufacturing Circle is actively considering ways of driving demand for manufactured products, in addition to assessing demand-side constraints and structural inhibitors.
Demand-side initiatives include a more effective designation process and the identification of catalytic projects such as opportunities for manufacturers connected to Mozambique’s large-scale gas projects.
Moreover, the Manufacturing Circle is emphasising its active involvement in the Business for South Africa (B4SA) Covid-19 initiative to upscale the local manufacturing of medical equipment and personal protective equipment, as well as advising on back-to-work protocols to ensure that the country can restart production as soon as possible.
B4SA is a coalition of volunteer resources across the South African business community, including leading professional services firms, which is supporting government in managing and mitigating the impacts of the Covid-19 crisis.
Although a lack of policy coordination and alignment, as well as low levels of implementation, have been cited by many as stumbling blocks, Rodseth says the Manufacturing Circle’s involvement in the B4SA Covid-19 initiative has been met with numerous positive examples of efficient decision-making and implementation across all constituencies.
“We have participated in a fabric-cloth initiative where industry, labour and government have worked together to facilitate the manufacturing of cloth masks according to recommended guidelines to allow for a back-to-work readiness regime.”
She laments that the sustainability of production and a gainfully employed workforce are becoming increasingly challenging with everyday that the economy is kept under some form of lockdown.
The closure of South African factories and plants has systematically reduced the country’s productive capacity, placing considerable strain on cash flow liquidity, which, in turn, affects the ability to keep workers employed.
“In the short term, we are working to position industry as strategic partner in the health and welfare of the workforce,” adds Rodseth.
She emphasises that the Manufacturing Circle recognises the need for manufacturers to assure government and the workforce that the manufacturing sector is ready to return to work, and that it is fully cognisant that the health and wellbeing of its workers is directly linked to businesses productivity.
“To mitigate the pressure imposed by Covid-19, we encourage all small, medium-sized and microenterprises, as well as large manufacturing firms, to ensure that each has well thought-out compliance plans to implement Covid-19 health, safety and hygiene protocols.”
The sector is witnessing a “shift change”, as all businesses have to adapt to viewing the manner in which global value chains work “through a new lens”, Rodseth explains.
Certain markets will close and demand in certain areas will drop, while opportunities will present themselves in other areas, she says, adding, for example, that import replacement is a possible area of focus.
“Demand for locally manufactured product remains a priority consideration. It was a priority before the Covid-19 crisis, but is even more so during the crisis, and will continue to be a priority afterwards,” adds Rodseth.
Another concern for the manufacturing industry in South Africa is energy security.
Manufacturing is energy-intensive, using about 36% of total final energy consumed in South Africa, according to the 2015 figures provided by Department of Mineral Resources and Energy.
Industrial facilities, such as lighting systems; heat, ventilation and air conditioning; process heating; compressed air; and electric motors use considerable amounts of energy throughout the entire manufacturing value chain.
“Overall, we need to engage our policy makers and partner with them as an industry on the adoption of energy efficiency improvement standards in the manufacturing sector,” Rodseth concludes.