From the Chief Executive Officer’s Desk – July 2015

By Kaizer M. Nyatsumba | Chief Executive Officer

By the end of this month, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) will have been registered in Zimbabwe, Namibia, Zambia and, possibly, Mozambique. This is consistent with the Federation’s decision, approved by the Board in February 2014, to extend its reach to the Southern African Development Community (SADC), with the “SA” in SEIFSA’s name now standing for “Southern Africa”.

This was a very important strategic decision. Any company with an ambition to grow must, of necessity, look beyond the borders of South Africa. Indeed, a significant percentage of companies that are members of employer Associations affiliated to SEIFSA and many others outside our membership fold already have a presence in other countries in our region. Increasingly, they are in Mozambique, Namibia, Zambia, Zimbabwe and other markets as far as Kenya and Tanzania in East Africa and Nigeria and Ghana in West Africa. We expect many more to do so in the months and years to come. With countries on the continent having greater opportunities for infrastructure improvement compared to South Africa, which is generally more advanced in this area, they will also have more opportunities for infrastructure development. Necessarily, that will mean that they will present more opportunities for companies in the metals and engineering sector to do business. It is important that South African companies place themselves in a position where they can compete for those opportunities.

While South Africa continues to be a major economy on the continent, despite its dismal performance in recent years, generally most of the sizeable economies on the continent have registered higher levels of growth – admittedly off a lower base – and are in better shape that our beautiful country. While South Africa could manage pedestrian growth of 1,5% last year, the picture elsewhere on the continent was quite different. For instance:

  • Chad grew by 9,6%;
  • Democratic Republic of Congo – 8,6%;
  • Ivory Coast – 8,5%;
  • Mozambique – 8,3%;
  • Ethiopia – 8,2%;
  • Sierra Leone – 8%;
  • The Gambia – 7,4%;
  • Tanzania – 7,2%;
  • Nigeria – 7%;
  • Mauritania – 6,8%;
  • Burkina Faso – 6,7%;
  • Zambia – 6,5%;
  • Uganda – 5,9%;
  • Mali – 5,9%;
  • Togo – 5,6%;
  • Benin – 5,5%;
  • Djibouti – 5,5%;
  • Kenya – 5,3%;
  • Cameroon – 5,1%;
  • Gabon – 5,1%;
  • Sao Tome and Principe – 5%.

Clearly, South Africa has lost its competitiveness as an economy and the country could be much better governed. With the listed African countries all growing above 5%, and many more doing much better than South Africa, the inescapable question is why it is that our economy is under-performing to the extent that it is. Instead of creating jobs, we have been shedding them on a massive scale.

The picture that emerges from the growth rates listed above is that there are considerable opportunities on the continent – including in neighbouring Mozambique and nearby Zambia – for the metals and engineering sector. Companies with ambitions would want to place themselves in a position to compete for opportunities in those countries, instead of continuing to languish in growth-less South Africa.

As these African countries register healthy growth rates and develop, addressing their considerable infrastructure backlogs must certainly be one of their key priorities. In fact, in a matter of a year or two from now some parts of previously war-ravaged Mozambique will be unrecognizable from what they are now or used to be. This much was evident in some of the presentations made at the first-ever Africa Iron and Steel Conference that took place in Maputo, Mozambique in June, where impressive projects were unveiled.

At a time when steel producers in South Africa and around the world are hurting and, as a result, working short time or retrenching workers, in Mozambique British company Baobab Resources Plc is building a brand-new steel production company in the Tete province, in partnership with the International Finance Corporation. Baobab describes the project thus: “The Tete Steel Project has the potential to form the cornerstone of Mozambique’s steel industry for the next 100 years, delivering robust investor returns and unprecedented local and national socio-economic benefits.”

Following the major oil and gas finds there, Mozambique is a country with enormous opportunities for companies in the metals and engineering sector. Although not much has changed yet in terms of its dilapidated infrastructure, nevertheless the capital of Maputo is such a hive of activity, with entrepreneurs and senior business executive from around the world travelling there.

South African companies dare not be left behind. When they enter Mozambique, Zambia and Namibia, among other countries, they will find SEIFSA there, ready to help them by offering its expert services. They will find in SEIFSA a reliable name with which they are familiar, which understands those countries and has entered into vital, strategic relationships on the ground.

Africa presents opportunities for the local metals and engineering sector, whether they be local exporters or investors in those countries. Local companies that have yet to seize the emerging opportunities elsewhere on our continent are encouraged to explore them as a matter of urgency.

Here at home, the eventual implementation of the National Development Plan should also create opportunities for transformed companies in our sector (I say “transformed companies” because those that perform poorly in this area will not be considered for contracts by the Government and State-owned companies).

Although most of us have so far seen no developments on the NDP front, in his address at the Vision 2030 Conference at Emperors Palace in June, Minister in the Presidency Jeff Radebe catalogued a long and impressive list of projects currently being implemented.

If, indeed, there are so many NDP projects currently being implemented, then, perhaps, the Government needs to communicate much better on this front.

As I indicated in this space last month, our inaugural Southern African Metals and Engineering Indaba and the SEIFSA Awards for Excellence were a run-away success. Reports on both innovative events accompanied by pictures are carried in this issue of SEIFSA News. More information on these events is also available on their respective websites, and Go through this newsletter and visit these websites to take a peek at those who were there – and to see what you missed out on!

Once again, my thanks go to all the pioneers who attended the Indaba as speakers and delegates and the companies that entered for the inaugural SEIFSA Awards for Excellence. Next year’s Southern African Metals and Engineering Indaba, taking place on 26-27 May, and the SEIFSA Awards for Excellence, taking place on 26 May, will be much bigger and more prestigious. You don’t want to miss them.