The South African Minister of Trade, Industry and Competition, Ebrahim Patel, has called for collaboration in the manufacturing sector in order to benefit from opportunities in the BRICS (Brazil, Russia, India, China, South Africa) markets. He believes that deeper partnerships and careful use of demand and supply-side measures will be the key to economic growth in the industry.
Minister Patel recently spoke at the virtual BRICS Business Council meeting in Sandton, Johannesburg. He states that the manufacturing sector has a vital role to play in a solid and dynamic economy. The local manufacturing industry still has much room to grow and there are always opportunities for investment and collaboration.
Formex Industries currently exports automotive components to Brazil, but there is a possibility for future growth into other BRICS markets. The Minister’s statements resonate with the current increase in partnerships that have been established within the local manufacturing sector.
Manufacturing sector is key in the local economy
“Our localisation project is about working with the business community to rebuild the foundations of manufacturing; to strengthen industrial capacity that can supply both the domestic and export markets,” says Minister Patel. This sector is a major contributor to employment, not just in the manufacturing sphere but also in other sectors too.
“IDC [Industrial Development Corporation] research shows that for every one manufacturing job, another three jobs are created across the economy, in both supplier industries and services sectors,” he explains.
“[The manufacturing sector] is an earner of foreign exchange and a driver of innovation, of research and development and, in times like the Covid-19 crisis, countries with capacity relied on their industries to produce food, personal protective equipment and medical supplies,” he continues.
Reimagined manufacturing agenda
South Africa has reimagined its agenda for the manufacturing sector. Minister Patel explains that this is based on building dynamic businesses and economic inclusion. Key points of this agenda include the following:
- To retain and modernise traditional sectors, such as steel, textiles and clothing.
- To expand technology-based manufacturing businesses, such as automotive and chemical companies.
- To develop national resilience by expanding the food and healthcare sectors.
- To nurture new industries, such as the green economy and digital enterprises.
South Africa’s manufacturing partnerships
The local manufacturing sector already has solid partnerships in place, as encouraged by various Master Plans. So far, these documents and plans have had a positive impact on investment, as proven by Ford’s recent $1-billion cash injection in the South African manufacturing industry.
These partnerships can be complemented by opening export avenues to other BRICS countries. This can be done in three ways, according to Minister Patel. Firstly, local businesses need to produce in-depth export opportunity studies for each foreign country and identify the products that are likely to succeed overseas.
Secondly, local businesses need to collaborate with one another by sharing ideas on how to make an impact on export markets. This sort of networking and collaboration will lead to improved use of technology and marketing expertise, among others.
Thirdly, local innovation projects need to be established in order to combine product development with manufacturing in a bid to identify new business opportunities. Sometimes, South Africa may not have the manufacturing capacity, but there are promising opportunities in BRICS markets. This is a key area of development.
Header image: ©World Economic Forum/Photo Eric Miller
Formex Industries is a metal forming and assembly company that supplies a variety of complex products to the local automotive industry and the export market. The company is based in the Nelson Mandela Bay metropole, South Africa’s foremost region for automotive manufacturing and export.
Formex is a supplier with over 80% black ownership, of which more than 40% are black women. The company is owned by Deneb Investments Limited – a subsidiary of Hosken Consolidated Investments Limited (HCI) – one of South Africa’s biggest true B-BBEE companies listed on the Johannesburg Stock Exchange (JSE).
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