OVERVIEW
Manufacturing Incentives are in place to support new investment.
SECTOR INSIGHT US tariffs on steel imports will affect South Africa. • The leather sector is making a comeback.
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he manufacturing sector employs the third-most people of South Africa’s economic sectors, about 1.7-million, after financial services and retail. The Department of Trade and Industry (dti) is the state’s lead promoter of the sector. The main vehicle for the dti is the Industrial Policy Action Plan (IPAP) which is periodically updated with particular focus areas. In marking the 10th version of IPAP in 2018, the department noted that some “deep-seated structural problems” in the domestic economy are still in place. The Manufacturing and Competitiveness Enhancement Programme (MCEP) of the National Department of Trade and Industry (dti) announced in 2017 that it had disbursed a total of 1 552 grants to the value of R5.8-billion which had resulted in 230 000 jobs being “sustained”. Plastics, pharmaceuticals and chemicals received 31% of the money, metal fabrication, capital and real transport equipment 28% and agri-processing 21%. Because of the dti’s Clothing and Textile Competitiveness Programme, that sector currently employs around 95 000 workers, contributing 8% to manufacturing GDP and 2.9% to overall GDP. In the leather sector 22 new factories have been opened, supporting 2 200 jobs. Manufacturing value addition for companies receiving the incentive has grown by 60.8%, and productivity by 22.3%. The various IPAPs are intended to create policy certainty to stimulate investment. The creation of an investment “one-stop shop” is another measure aimed at the same goal. Investor support is also available in terms of tax incentives, on budget support measures and Special Economic Zones (SEZs). Increasing demand for goods manufactured locally through governSOUTH AFRICAN BUSINESS 2019
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ment procurement programmes is yet another way of stimulating the manufacturing sector. Growth elsewhere in Africa and beyond is something that South Africa’s manufacturers are increasingly turning their attention to. Relationships with other Southern African countries through SADC, and to Brazil, Russia and India through the BRICS grouping hold tremendous potential for makers of goods in South Africa.
Innovation The Support Programme for Industrial Innovation (SPII), run by the Industrial Development Corporation (IDC) on behalf of the dti, promotes technology development. New technology has been embraced by some innovative manufacturers. Desert Wolf’s Skunk Riot Control Chopper is an unmanned light aerial vehicles (UAV) that has proved popular in the world market. Denel makes a drone product that can be adapted for use by conservationists. Another IDC initiative has allocated R23-billion over three years
