Peter Bruce’s most recent column raised fundamental issues concerning industrial output in South Africa, and what analysts call premature deindustrialisation.
However, the problem with his analysis is reductionism; he does so by placing almost all the economic challenges he is referring to on the ANC, and minsters Parks Tau and Gwede Mantashe, which is not entirely true.
Granted, there are binding constraints affecting industrial performance in South Africa, one of which is the cost of electricity supply, which is being attended to by the government. To accelerate industrial performance, South Africa must address electricity security of supply, including access, reliability and affordability, among other priorities.
Economic history is also important in critiquing Bruce’s article. The erstwhile Iscor was privatised because government was considered to be inefficient in running the primary steel mill in South Africa. Years down the line government is being called upon to rescue the company from collapse.
The steel industry is critical in the industrialisation of South Africa and the industry must be protected and supported. The government has been working with business and labour in implementing the steel masterplan, and remains committed to facilitating investments into the industry under difficult global trading conditions.
In the sugar industry, it is well documented that a huge financial fraud case involving senior executives who manipulated land sale agreements to overstate profits, led to the challenges Tongaat Hulett is facing today. Again, it is not important to engage in reductionism by apportioning blame; what is key is to support the sugar industry value chain, so that it can contribute positively to economic growth in South Africa.
Difficult as it is, it is important to be forward looking and provide solutions to help South Africa improve its industrial output under difficult global trading conditions.
The industry was a pioneer of early industrialisation and is critical for food, beverages and other industrial applications. The government is working with the sugar industry, made up of small and large cane growers, millers, refiners and retailers, to implement the masterplan. It is thus in the interest of government to avoid the collapse of Tongaat Hulett.
The global vehicle industry is rapidly changing, from both the supply and demand sides; South Africa has to navigate those changes. The key issue to be addressed in South Africa is sales of imported vehicles, which is having a negative effect on the local production and associated levels of local content, including opportunities given to local vehicle component manufacturers.
It is in the interests of the government, business and labour to address such challenges through the reforms of the vehicle production development programme and incentives given to the industry. Some of the changes will require reforms of the tax instruments and other demand-side interventions, including attracting other original equipment manufacturers to manufacture in South Africa.
On the mining side, the Junior Mining Exploration Fund is important in advancing geological mapping and exploration activity. The fund is also critical in promoting economic inclusion, and to access the minerals that support economic growth in South Africa. The next step is the concerted effort to process and add value to such minerals inside the country.
Difficult as it is, it is important to be forward looking and provide solutions to help South Africa improve its industrial output under difficult global trading conditions. Reductionism and losing hope do not help — South Africa is not about to collapse.
• Dr Makube is acting deputy director-general: sectors branch at the department of trade, industry & competition. He writes in his personal capacity.
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