Interventions for fostering growth

Suggestions for fostering growth

Enhance export competitiveness

Faster export growth will help propel economic growth, but to achieve this, manufacturing competitiveness must improve. South Africa’s score on the 2020 Competitive Industrial Performance index dropped four positions to 52 out of 152 countries assessed (Unido, 2020). Suggestions to enhance export competitiveness include: • Implement export incentives. • Reduce port tariffs and improve port efficiency. • Consider re-instating rail subsidies for containers destined for export. • Emulate the automotive support programme for key industries. Fix municipalities It is imperative that municipalities function properly. To achieve this, ethical leadership, service orientation and good governance are required. Local governments need to be properly capacitated and free from political interference and constant churn. Strong external controls must be in place to prevent financial loss and wastage. Given the central role that the manufacturing sector plays in creating jobs and national wealth, and the need for a well-functioning manufacturing sector to ensure the economic sustainability to ensure the wellbeing of the nation, the maintenance of municipal infrastructure and services within industrial areas needs to be prioritised by local authorities.

Communities also need to be more involved in municipal matters and hold local government accountable. Flexible labour laws Labour legislation is viewed as onerous and hampers employment. Suggestions to modernise labour laws include: • Revisiting the centralised collective bargaining model. • Making it easier for employers to hire and fire workers. The current standard three-month probation period should be extended to at least one year to properly establish a person’s skills and attitude.

Implement transport subsidies It is expensive for workers, who often live far from their places of employment, to commute to and from work. Implementing transport subsidies will assist manufacturers and help overcome spatial distortions.

Improved access to financing Having access to sufficient financial resources is crucial to enable entrepreneurs and smaller businesses to grow. The current financing rules should be revisited to ensure that they actively promote economic development by mobilising and allocating resources efficiently – making it easier for entrepreneurs to access credit.

Interventions for fostering growth

Increase domestic demand

Creating additional demand for local goods is key to a virtuous cycle that promotes economic growth. Demand for local goods can be stimulated by increasing the procurement of locally manufactured goods, provided their cost and quality are competitive. Local industries could be protected more through assertive trade policies, but this should be pursued based only on competitiveness. Keep costs down Allow business to catch its breath by keeping increases in rates and services below inflation for the next five years. Unions’ wage demands should also not exceed the inflationary rate. South Korea’s experience shows that a competitive agricultural sector with low food costs helped keep labour costs competitive. Reduce red tape Business owners are being inhibited by red tape. Making the business process simple to navigate will foster enthusiasm, investment and support entrepreneurial growth.

Revitalise ‘old’ industrial parks

Scrap raw material protection mechanisms

Speed up technology commercialisation

Stimulate battery industry Revitalising ‘old’ industrial parks located in former Apartheid-era homelands acts as a catalyst for economic and industrial development in lagging rural areas. These parks support job creation in manufacturing and arrest the migration of people to overpopulated urban areas. Government embarked on an initiative in 2016 to revitalise ten Stateowned industrial parks located in underdeveloped former homeland areas. This initiative dovetails with the special economic zones programme, which is a major focus for attracting investment and promoting industrialisation. Steel protection measures have been severely criticised by domestic steel consumers, which argue that without a safeguard duty, fabricators will be able to compete on a level playing field and export steel products. Primary steel producers should not enjoy more protection than what the downstream sector is afforded. If such circumstances persist, then similar protection measures will also be required for downstream participants. Centres must be developed at universities to transition technologies from the research lab to the marketplace faster. Technology commercialisation centres will require collaboration between tertiary institutions, the private sector and entrepreneurs. Batteries are at the core of a modern energy system and play an important role in the shift to electric mobility. South Africa is presented with an opportunity to carve out a niche for itself in what is a fastgrowing and rapidly evolving market. South Africa already has some battery manufacturing capabilities and experience with beneficiating minerals. Besides lithium, the value chain for lithium-ion batteries includes a host of materials produced at scale in South Africa, such as manganese, iron-ore, nickel and titanium.