Patel calls for partnerships in manufacturing sector

Trade, Industry and Competition Minister Ebrahim Patel says South Africa must rebuild its manufacturing strength to be able to fully benefit from the opportunities in the BRICS markets.

“This needs to be done through deeper partnerships and careful use of both demand and supply-side measures,” Patel said.

Patel was speaking at the BRICS Business Council meeting.

The conference, which attracted small and large industrialists, was a hybrid event, with attendance in Sandton and through virtual platforms.

Minister Patel highlighted the crucial role of manufacturing in strong and dynamic economies.

“Over a number of years, manufacturing was seen as a sunset industry, a relic of an age that was passing, and policy-makers were urged to abandon efforts to support the industry and seek opportunity in other sectors of the economy.

“In the case of South Africa, the country rapidly opened its trade-exposed sectors to what was described as the bracing effects of global competition, but without supporting local firms to become stronger and more dynamic. The results were painful to see – we lost critical manufacturing capacity,” Patel said.

“It led to a wave of de-industrialisation pressures, and as core feeder-factories were closed down, they impacted on other parts of supply-chains.

“Our localisation project is about working with the business community to rebuild the foundations of manufacturing, to strengthen industrial capacity that can supply both the domestic and export markets,” the Minister said.

Patel said manufacturing is a big driver of employment with the strongest employment multiplier.

“IDC research shows that for every one manufacturing job, another three jobs are created across the economy, in both supplier industries and services sectors.

“It is an earner of foreign exchange and a driver of innovation, of research and development and in times like the COVID-19 crisis, countries with capacity relied on their industries to produce food, personal protective equipment and medical supplies,” he said.

SA’s reimagined industrialisation agenda

Patel noted that the country’s reimagined industrialisation agenda is based on building dynamic firms and economic inclusion which includes:

• To retain and modernise traditional sectors, like steel, textiles and clothing;

• To expand advanced-manufacturing sectors such as autos and chemicals;

• To develop national resilience through expanding sectors in food and healthcare; and

• To nurture new industries such as the green economy and the digital economy.

Master Plans

Sector partnership agreements, known as Master Plans, have now been put in place in five sectors, with another one in the furniture industry close to conclusion.

These initiatives have positively impacted on sentiment and investment, and Minister Patel pointed to the recent R16 billion investment announcement by the Ford Motor Company and the R1 billion investment in the poultry industry.