T
he Manufacturing Circle released a
plan in late November outlining how
South Africa could create a million
jobs over a ten-year period by pursuing a series
of reforms designed to stimulate demand for
South African-manufactured products and
improving the investment climate.
The 48-page document, which also recom-
mends the creation of a ‘super-Ministry’,
similar to Japan’s Ministry of International
Trade and Industry (MITI), was handed to
Trade and Industry Minister Dr Rob Davies
at a launch function hosted at the Gordon
Institute of Business Science, in Johannesburg.
Davies said he “warmly welcomed” the
plan, despite disagreeing with some of its
recom mendations.
The Minister also commended the plan’s
general thrust of highlighting the importance
of manufacturing, and its associated services
value chains, as central to future job creation
and inclusive growth, as well as its warnings
that “premature deindustrialisation” would
have serious social and economic consequences.
Manufacturing Circle chairperson André
de Ruyter said the ‘Map to a Million New
Jobs in a Decade’ report was its response to a
“palpable sense of crisis” in the sector, which
had shed more than 500 000 jobs over the past
two decades and whose gross domestic product
(GDP) contribution had slumped from 24% in
the 1980s to only 13% currently.
De Ruyter, who is also Nampak CEO, argued
that there was a need to turn the “vicious
cycle” of weak demand, low capacity utilisa-tion and investment and job shedding into a
“virtuous circle”, underpinned by the stimula-
tion of aggregate demand. Core to stimulating
such demand would be to increase public- and
private-sector purchases of locally produced
products.
Davies, likewise, viewed local procurement
and localisation as the most critical immediate
levers available to stimulate the domestic
manufacturing sec tor, particularly in light of
the country’s cur rent fiscal constraints, which
were limiting govern ment’s ability to increase
financial and tax incentives.
A task team had been established to assess
how to improve local-content enforcement
across government departments and State-
owned companies (SoCs) in line with instruc-
tion notes issued by the National Treasury.
The instruction notes list products that have
been designated by the Department of Trade
and Industry (DTI) for local procurement by
public-sector organisations and cover a range
of items from uniforms and medication to
power pylons, buses and locomotives.
Davies acknowledged that there had been
“leakages” and “slippages”, but promised that
enforcement was a current priority for the DTI.
However, he also appealed to the private
sec tor to support the manufacturing sector
by actively buying more local products, in
line with the Local Procurement Accord
signed between government, business and
labour in 2011. He was less enthusiastic
about the Manufac turing Circle’s proposal
for a MITI-like super-Ministry, hinting thatthe recom mendation did not fully align with
South Africa’s “Constitutional context”,
where the demo cratic oversights insisted
on full transparency when pursuing policy
inter ventions. Nevertheless, he accepted
that there was currently a lack of coherence
within govern ment on the implementation of
industrial policy, which was hindering further
investment in the sector.
Besides the super-Ministry, the plan also
outlined several other “structural fixes” to
help increase investment and job creation,
including:- introducing significant private-sector equity
participation in SoCs; - an education focus that promoted high
standards instead of high pass rates; - rescinding and renegotiating the Mining
Charter, which was described as detrimental
to investor confidence across sectors; - ensuring greater policy certainty and reduced
currency volatility; - supporting municipalities with the capacity
to deliver and maintain infrastructure; - dividing Eskom into independent generation
and transmission entities, while introducing
private-sector equity partners; - the creation of a home-grown renewables
sector instead of unaffordable nuclear energy; - abolishing the costly and ineffective Sector
Education and Training Authority system in
favour of direct tax credits for training; and - rethinking concurrent jurisdiction to give
the Competition Commission more power
where regulators such as the National Energy
Regulator of South Africa were failing to
regulate monopolies appropriately.
The plan also outlined various demand-
and supply-side interventions. These ranged
from support of “catalytic projects”, such as
the construction of a gas pipeline from the
Rovuma basin, in Mozambique, to liquidating
legacy Industrial Development Corporation
investments to free up capital to drive a new
phase of industrial investments.
De Ruyter also called for urgent inter ven-
tions to prevent further deindustrialisation
in “rust belts”, such as the Vaal Triangle, by
imple menting a 15% tax rate for companies
in distressed industrial areas.
“If manufacturing can expand to 30% of
GDP, between 800 000 and 1.1-million direct
jobs can be created, with five to eight times
that number in indirect jobs,” he argued.
The lobby group described its interventions
and recommendations as “realistic, construc-
tive and actionable steps to create an environ-
ment in which manu facturing in South Africa
can thrive and jobs can be created”.
Davies stressed that he and his DTI
officials were more than willing to work with
the Manufacturing Circle, as well as other
business organisations, to take a “deeper dive”
into some of the recommendations and put
manufacturing back onto a growth path.
8 ENGINEERING NEWS | December 8–14, 2017 RA
NEWS&INSIGHT
MANUFACTURINGMap to a Million
Growing domestic demand at heart of plan to create
one-million manufacturing jobsVIRTUOUS PARTNERSHIP
Trade and Industry Minister Rob Davies and Manufacturing Circle chair André de RuyterTERENCE CREAMER | CREAMER MEDIA EDITORPicture by Senior Chief Photographer Duane Daws