Mapping out how manufacturing can mend SA’s economy
Industries in South Africa need to make bold choices about what must be done to drive industrialisation and create jobs, writes André de Ruyter
SA is at the crossroads. After more than two decades of democracy and the failure of well-intentioned economic policy to lift the majority of the country’s people out of poverty, something radical needs to be done to create jobs and grow the economy.
We need to align the nation towards a common goal of creating jobs, and ensure we don’t expend our limited resources on unnecessary distractions.
We need a focused war on unemployment to give those citizens still excluded from the economy the dignity and security of a decent job.
Manufacturing, with its strong multiplier effects on value addition, job creation, export earnings and revenue generation, is the one sector in the economy that has the potential to create these jobs.
But its positive contribution is under threat and declining. Since the 2008-09 financial crisis, when almost 400,000 South African manufacturing jobs were lost, the industry has not been able to recover to those levels and we now have 300,000 fewer jobs in the sector than in 2008.
Further, manufacturing’s contribution to GDP has declined, from more than 15% in 2008-09 to just under 13% in 2016. In the early 1980s, manufacturing contributed 24% to GDP.
International experience shows that for SA’s stage of economic development, manufacturing should contribute close to 30% of GDP, or more than double the current 13%.
It’s up to us to make it happen, and with the appropriate support framework, we believe our targets are achievable.
There are many factors that have contributed to the de-industrialisation of our country. These include electricity supply constraints, rapid increases in administered prices, labour and political instability and competition from unfairly incentivised imported products. The attack on our democracy by the agents of state capture has also devastated business and consumer confidence.
WE CANNOT STAND BY AND WATCH OUR COUNTRY DE-INDUSTRIALISE, UNEMPLOYMENT GROW AND POVERTY DEEPEN.
While we believe in the resilience of SA’s institutional and legal establishment, we cannot stand by and watch our country de-industrialise, unemployment grow and poverty deepen.
Equally, SA still has a number of strong companies, many committed people and an infrastructure that, if adequately enabled, can drive economic growth, employment and equality.
In May 2017 — working in collaboration with manufacturing sector associations — we launched our Map to a Million new jobs initiative. Through workshops with our members and others, we identified the specific constraints that need to be tackled to incentivise investments in manufacturing and, in so doing, create jobs.
Trade and Industrial Policy Strategies (TIPS), a not-for-profit economic research institute, facilitated these discussions. We then embarked on a public sector engagement process, including discussions with various ministers.
We also engaged with organised labour, which expressed support to create more jobs in manufacturing.
The launch of the Map to a Million document is the next step in our work. With it we aim to inform the government’s Industrial Policy Action Plan and encourage the government, industry, labour and society at large to take the actions we have identified as being necessary to open the gates to job-creating investment.
The proposals we make in Map to a Million are intentionally detailed and specific: for too long have we laboured under the generalities of inspiring but vague statements of noble intent, without actually tackling the detail.
We don’t intend to be unduly critical, nor do we wish to be idealistic. Instead, we want to be realistic and constructive to identify real actionable steps that can create an environment in which manufacturing can thrive. Together we can create at least a million new jobs in manufacturing in the next decade, and facilitate inclusive economic growth to the benefit of all.
This initiative does not intend to be exclusive or pretend to be exhaustive: we acknowledge how complex it is to agree on exactly what needs to be done to make the country work.
We are also conscious that there are a number of other private sector efforts to spur economic growth.
But as industry, we need to make bold choices about what we must do to drive industrialisation and create jobs. Time is of the essence and we need to be decisive: there is no time for prevarication. We welcome much greater collaboration and more conversations between all stakeholders in the months ahead.
Conscious of the responsibility of our generation to the next, we look to the future with confidence and resolve.
• De Ruyter is chairman of the Manufacturing Circle.