Friday 6 November 2015 saw many Western Cape Manufacturing people attend the Manufacturing Indaba at the CTICC.
Government was represented by Councillor Gareth Bloor of the Cape Town Mayoral Committee and Minister Dr. Rob Davies as well as many members of the DTI.
Gareth Bloor opened proceedings and presented some of the local plans – Cape Town is clearly doing its best to be business friendly.
Minister Davies gave the Keynote address and he is obviously committed to development – he spoke almost entirely note free for an hour.
He was saying that government (or at least his department) recognizes the crisis in manufacturing and stated that manufacturing has dwindled from over 20% of the economy to only 11%.
He highlighted the Industrial Policy Action Plan – now in its 7th year- as well as some of the incentive programs in place.
There is a focus on rail and the timber industries as well as the steel industry. Special Economic Zones with a flat tax rate of 15% are part of the government plans.
Local procurement is a priority – if this can be controlled well and implemented correctly it could be a great shot in the arm for local industry. We all should be preparing for this!
Stavros Nicolau from Aspen Phamacare followed. He feels that we need a growth rate of at least 5% to make any inroads into our dire unemployment problem. Nicolau believes that industrialization must form the core of government policy – he says “we need to export products – not jobs”. While importing products may save 10c per unit it takes 35c out of the local economy; this will further erode our struggling economy.
Currently some 1.6 million people work in manufacturing, this could easily become over 3 million. Much of the growth could come about through the local beneficiation of raw materials rather than exporting them. He feels that there are many market segments we can leverage – his own company operates in 76 other countries. Aspen has effectively saved over a million lives in SA by locally manufacturing ARV’s.
Hlidegarde Fast of the Western Cape Government then discussed methods of saving energy and taking the load off ESKOM. Local government has a target of 10% saving over the next 2 years, this should prevent any local load shedding. Sustainable energy sources such as wind and solar are being implemented mow. Ms. Fast also listed 5 methods of reducing dependence on ESKOM, including rooftop solar and gas. She also warned about the dangers of illegal connections to the grid.
Fast also spoke about how Cape Town wants to help local business achieve growth. The city has identified “3 goals to manufacturing growth.” Namely:
- The achievement of South African competitiveness
- Get manufacturers to take a supportive global perspective to growth even with competitors
- Advance the reputation of South African manufactured products.
The message was that manufacturing needs to get competitive through enhanced productivity, efficiency, innovation and smart investment. It is also clear that South African products are of high quality but not enough is done to promote local products above those of international competitors. Localization of manufacturing combined with innovation will drive the growth of manufacturing and create jobs in this sector.
Several panel discussions followed, topics ranged from manufacturing opportunities elsewhere in Africa to Localization and advanced manufacturing as well as energy solutions and IDZ’s.
There is an opportunity to grow the chemicals industry. Currently 90% of chemicals are imported.
Other opportunities lie in the local SADC region and East Africa. SA currently exports only 30% to this market with the bulk of exports to China, USA and Europe. Angola only accounts for 5% of our exports. The middle class is growing in all developing countries in Africa and this is a real opportunity for SA manufacturers
One of the highlights was the fact that there is so much funding available but which is not currently being accessed by local business, especially for development, growth and furthering export opportunities. Besides funding there are institutions which can help foster relationships between SA business and other countries through government contacts and also local banks and institutions. The message is that it may be difficult to get things started but there are many ways to get through the process and become successful.
However although opportunities abound a caution was sounded as well. There is a need to understand the different markets, and interested companies must do proper due diligence. There is a need to get on the ground and explore the grassroots of the deals and not just meet in boardrooms. Keep in mind that export alone will not be sustainable in the long term as most local economies will be aiming for localization and industrialization. The most successful companies will be those who establish a long term presence by also developing the local economies of the host countries.
Many points were raised by the panelists but time was too restricted for there to be much interaction with the audience.
Our last speaker was a representative of Jonker sailplanes. He described how a tiny business started by 2 brothers has grown into a major exporter of “the world’s best glider”. It was a truly inspirational and entertaining way to close off a day that all participants we asked felt was of great value. We are looking forward to next year.