“We need a business community that will join hands with government in designing and implementing practical strategies that (will) broaden the scope for socio-economic advancement. We want a new breed of entrepreneurs that are not risk averse but are prepared to boldly test choppy business waters. History tells us that many successful brands have emerged out of brave business people whose determination reaped considerable benefits.”
This call came from KZN’s recently appointed MEC for Economic Development, Tourism and Environmental Affairs, Sihle Zikalala, as he delivered the keynote address at this week’s KwaZulu-Natal Manufacturing Indaba at the Durban International Convention Centre.
Less energized than the previous year, the event nevertheless wrestled with many pertinent topics and, in the words of the MEC, demonstrated a search for solutions and strategies to keep manufacturing at the top of the developmental agenda. Although his request for a cross pollination of ideas that would translate into practical solutions and “earnestly start the process of creating a strong and innovative manufacturing base” was muted during the course of the day, numerous invitations for continued dialogue between government and the private sector raised spirits somewhat.
Zikalala explained that the manufacturing sector was pivotal in government’s effort to shed the negative impact of slow growth caused in the main by global economic down turn.
“This industry continues to occupy a significant share of the South African economy, despite its relative decline from 19 percent in 1993 to about 17 percent in 2012. In real terms, this currently sits at approximately 15%,” he said.
Determined to show all was not doom and gloom, he quoted Statistics South Africa, saying that manufacturing production in South Africa rose by 4% year-on-year, following an upwardly revised 3.1% increase in the preceding month. Petroleum, chemical products, rubber, plastic products, and food and beverages made the largest positive contributions. Eight of the ten manufacturing divisions reported positive growth rates over this period.
On a monthly basis, factory output rose by 1.6% while industrial production in South Africa averaged around 1.24% from 1999 until 2016. Agriculture was affected by the severe drought, seeing an 8.4% contraction in this sector, the biggest drop since 1995.
Zikalala said the “industrial context” had evolved markedly over the past five years in South Africa, and more so in KwaZulu-Natal.
On an optimistic note, he said an economic recovery was expected after protracted declines in Gross Domestic Product (GDP), and massive increases in unemployment.
However, he qualified, saying that in manufacturing, an economic upswing had been slow to emerge and, with it, job growth.
Zikalala admitted that large infrastructure investments initiated in the province prior to the crisis had been expanded as a counter-cyclical strategy to maintain jobs and said he hoped that investments in the province’s ports, in particular, would soon take shape.
He said provincial government wanted to attract more manufacturing businesses – and wanted them to “define their presence in the province” by locating their headquarters in KZN.
“This contributes in the positive marketing of the province as a strategic location for manufacturing in the region.”
He added that the biggest shift that leaders in the manufacturing sector are dealing with was the global move from traditional manufacturing practices which were in the main labour intensive and required low technology support, to models that now embraced the latest technological innovations.
“Here we are talking about digital age manufacturers that are capable of designing products somewhere in the world and still able to effect production in different sites just by pressing a button. These are therefore new models requiring new sets of skills and capabilities. This calls for government and business to pool resources towards industry driven skills development programmes to be able to remain relevant in the ever changing world market, particularly in the highly competitive manufacturing sector,” he said.
He also warned that a lack of appropriate industry skills could scupper ambitious developmental strategies and said all needed to inject resources in this area. “We need to produce more than 30 000 artisans annually to be able to contend with the global market competition as a country.
And Zikalala’s parting salvo? Government and the private sector needed to align their plans. “We are mindful that government is expected to champion processes that would be amenable to business development and prosperity, but it takes two to tango spectacularly: hence we need business to partner with us in our continuous campaign to make KwaZulu-Natal a better place to do business.”