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JOHANNESBURG, 9 OCTOBER 2020 – Weaknesses in government leadership is holding South Africa back, to the detriment of current and future generations, academic Khaya Sithole said at a Steel and Engineering Industries Federation of Southern Africa (SEIFSA) function today.

Addressing the annual SEIFSA Presidential Breakfast this morning, Mr Sithole said the COVID-19 pandemic had brought into sharp focus the leadership problems facing South Africa, which would affect South Africans politically, economically and socially for generations to come. He bemoaned the facts that South African politicians did not appreciate the fact that they were the servants of the people, and that members of the general public did not punish the current Government by exercising their rights to vote for other parties which offered different visions for the country.

Mr Sithole said voters needed to shoulder the responsibility for the lack of leadership and the decay in which the country finds itself. “You get the government you deserve,” he said.

He said the only way to get the Government to deliver on its mandate these days was to litigate, as had been previously done by organisations such as Equal Education, which had taken the Department of Basic Education to court to force it to eradicate pit latrines.

Also highlighting  weaknesses in Government leadership, outgoing SEIFSA President Elias Monage pointed to Government entities’ inability to support Metals and Engineering (M&E) businesses as a contributing factor to the sector’s troubles, saying State-owned companies (SOCs) had become liabilities on the fiscus, instead of being drivers of economic growth.

Mr Monage said it was worrying that where SOCs and different spheres of government have had infrastructure projects with the potential to stimulate the economy, they have tended to conveniently forget about designation and imported goods which local manufacturers have the capacity to manufacture.

“It is not surprising, therefore, that in the past year metal sector average output declined by 3%, net operating surplus dropped by 1.3%, formal employment declined by roughly 21,000 and the sector’s fixed investment cumulatively contracted by 19%, contributing to a sector trade deficit of R23-billion,” Mr Monage said.

He emphasised that the M&E sector remained strategic to the local economy and was crucial in creating both labour-intensive and capital-intensive jobs. It had important direct linkages with the primary sector, other key industries and the tertiary sector of the economy.

Mr Monage said the M&E sector was facing unfair competition from highly-subsidised Asian economies, which had resulted in accelerated import penetration of their products into the South African market over the last year.

“The protective measures already in place and those still in the pipeline for basic steel producers are likely to help, but they will not be enough. Primary steel producers are in such distress that short-term downscaling is unavoidable.

“For various reasons, South African production costs are higher than the lowest-cost quantile of producers in the world, who are simply overrunning our market. Protection seems to be a choice between losing the entire sector or trying to ride the short-term storm and adjust for the future,” he said.

Mr Monage said long-term recovery would not be easy. He said the sector was intimately linked to the fortunes of the mining, construction and auto sectors which, as a group, directly contributed 15% (R466-billion) to GDP in 2019 and, depending on the indirect and induced multipliers, up to twice this number. On its own, the M&E sector contributed R110-billion to GDP. These four sectors exported and earned a huge proportion of the country’s foreign exchange, and employ directly about 1,5 million people, he said.

“Recovery in each of these three sectors and of export demand would be crucial for the M&E sector over the longer term,” he said.

Meanwhile, Parc RGM Chief Financial Officer Alpheus Ngapo was elected SEIFSA President yesterday. The Federation’s Vice-Presidents are Monage, MphoNo Energies Managing Director and KSB Pumbs Director Nonhlanhla Ngwenya and Auto Industrial CEO Andrea Moz.

Other Board members are Zimco Group Human Resources Manager Ellen Veldhoven,  Dynamic Fluid Control CEO Tumi Tsehlo, Reinforcing Steel Contractors Operations Director Ernst Volschenk, Rheinmetal Denel Munition Senior Human Resources Practitioners Ntobeko Panya,  South African Mint Company Managing Director Honey Mamabolo and Frigoglass South Africa Human Resources Practitioner Ryan Haynes.

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