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Mining, Construction And Automotive Sectors Critical For M&E Sector’s Survival Thumbnail

Import Penetration Remains a Great Concern for the Metals and Engineering Sector

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Johannesburg, 11 October 2019The continuous influx of imported steel into the domestic economy remains a great concern for companies operating in the metals and engineering sector, so said Steel and Engineering Industries Federation of Southern Africa (SEIFSA) President Elias Monage.

 

Speaking at the SEIFSA Presidential Breakfast held in Johannesburg this morning, Mr Monage said inspite of a relative reduction in import volumes, owing to the protection measures for the upstream steel industry announced by the Government, import penetration – notwithstanding designated products – remains a cause for concern.

 

He said there are also legitimate concerns from the mid-and downstream steel sectors that the safeguard duty mainly favours the upstream still sector.

“This calls for a need to revisit quid pro quo commitments made by the principal beneficiaries of the safeguard, including the contentious downstream developmental pricing, which is obsolete in a world of volatile steel prices, exchange rate and trade war,” Mr Monage said.

 

Although the establishment, through interest rate subsidy, of a R1.5 billion downstream steel industry competitiveness fund over three years has relieved some pressure from a number of structural factors, Mr Monage said there is still a need to ensure that the fund is accessible to more companies.

 

“Longer-term survival and recovery, however, needs honest and sincere discussions around policy measures and company behaviour. The need to contain input costs and further lessen the impact of both the 2007/8 financial and economic crises and the 2014 productions crisis still exists. Also, the negative effects of the Chinese economy, which is simultaneously slowing down and overwhelming world markets with cheap exports, need to be contained.”

 

He said there are, however, prospects for increased trade and interdependence with the rest of Africa, since local companies can still make use of the R13,4 billion export trade facility launched by the Export Credit Insurance Corporation of South Africa (ECIC) and the African Export Import Bank (Afreximbank).

 

“This amount, plus additional support to the tune of $1 billion from Afreximbank to help alleviate the transactional and adaptation costs of countries which are signatories to the African Continental Free Trade Agreement, should boost SA’s intra-African exports to the rest of Africa.”

 

Remarking on transformation, Mr Monage said the slow pace of transformation in the metals and engineering sector continues to be of great concern.  According to the Employment Equity Report 2018 released by Former Labour Minister Mildred Oliphant, white people occupy 67.7% of top management jobs in South Africa, while Black people occupy 83.5% of positions at unskilled level.

 

“The manufacturing industry in general and the metals and engineering sector in particular are very much in need of transformation. As a sector, we need to stand up and embrace change and advocate transformation. It is of critical importance that a concerted effort is made by the sector to create meaningful opportunities for all South Africans to play a crucial role in taking our industry to new heights.”

 

Delivering the keynote address, Deloitte Emerging Markets & Africa Managing Director Dr Martyn Davies said South Africa needs to implement structural reforms in order to address the challenges of low economic growth and inequality.

 

“Political rhetoric will not change South Africa’s economics and time is not on our side. We need to take drastic action now.”

 

He said the manufacturing sector remains vital in lowering the country’s inequality rate.

“Countries with high manufacturing value add has low levels of inequality because

manufacturing creates structural employment and create a need for services sector, which in turn also contribute towards economic growth.”

 

He said more capital should be invested in productive sectors of the economy.

“A lot of capital investment is being plugged into non-productive sectors such as the financial and real estate. More investment needs to be spent in productive sectors to create employment and lower inequality,” Dr Davies concluded.

SEIFSA is a National Federation representing 21 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 people. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.
Continental Free Trade Agreement

Dip In Manufacturing Production Concerning, Says SEIFSA

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Johannesburg, 10 0ctober 2019 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is concerned by the preliminary data released by Statistics South Africa (Stats SA) today, capturing a decrease in manufacturing production for the month of August.

The Federation’s Economist, Marique Kruger, said the decrease in output is disappointing, given the need for companies in the Metals and Engineering (M&E) cluster and the broader manufacturing sector to remain resilient against the backdrop of a stagnant economy.

The latest preliminary seasonally-adjusted production data captures a year-on-year decrease in production in the broader manufacturing sector in August 2019 when compared with July 2019. Manufacturing output decreased from -0.7 percent in July 2019 to -1.8 percent in August 2019. On a month-on-month basis, output in the broader manufacturing sector was 1.3 percent in August 2019, highlighting the volatility which is still evident.

“The performance is worrisome and compounds the multiplicity of the challenges faced by businesses in the manufacturing sector in general, and the M&E sub-sector in particular,” Ms Kruger said.

She said that the headwinds faced by businesses are underpinned by low domestic demand, volatile input costs and high petrol prices, in addition  to logistics costs.

“It is also disconcerting to note that manufacturing companies were unable to increase capacity towards higher production in August 2019, given the existence of supply constraints and poor inventory turnover.

“Hopefully, companies will be able to rebound from their poor performance towards enhanced growth and contribution to the Gross Domestic Product in the short to medium term,” she concluded.

SEIFSA is a National Federation representing 21 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 people. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.

Deterioration In Broader Manufacturing Purchasing Managers’ Index Is Disappointing

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Johannesburg, 1 October 2019 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) finds the deterioration in overall business activity in the broader manufacturing sector –  as reflected in the ABSA Purchasing Managers’ Index (PMI) released today – disappointing.

The headline PMI dipped from 45.7 points in August 2019 to 41.6 points in September 2019, moving further from the benchmark level of 50, which separates expansion from contraction.

SEIFSA Economist Marique Kruger said the deterioration in the data is disappointing, and reveals that manufacturers are still struggling, amid low business and consumer confidence.

“Worryingly, the trend in the majority of the sub-indices deteriorated in September 2019 when compared to August 2019, with the business activity sub-index (39.3 points) and the inventories sub-indices (39.6 points) performing the worst. However, the best performing sub-index was the supplier performance sub-index, rising from 48.7 points in August 2019 to 51.4 points in September 2019,” Ms Kruger said.

She said notwithstanding the decline, SEIFSA remains hopeful that the performance of the sub-indices would recover and eventually improve the composite seasonally-adjusted PMI for October 2019.

Johannesburg, 1 October 2019 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) finds the deterioration in overall business activity in the broader manufacturing sector –  as reflected in the ABSA Purchasing Managers’ Index (PMI) released today – disappointing.

SEIFSA is a National Federation representing 21 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.

 

CEA (TESD) Accredited Companies

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Using a Temporary Employment Services Provider

As long as an employer is a member of a SEIFSA affiliated Employer Association which signed the MEIBC Main Agreement and is utilizing the services of a Temporary Employment Services Provider which is a member of the TESD – temporary employment services providers are at liberty to continue to provide employees in any category of work for any period of time which is determined to be a temporary service by a collective agreement concluded in a bargaining council. For them, it is business as usual.

Download the Temporary Employment Services Division of the CEA (SA) brochure to find out more.

As of 9 September 2019

Adcorp BLU a div of Adcorp Workforce Solutions (Pty) Ltd
Adcorp Blu a division of Adcorp Staffing Solutions (Pty) Ltd
ALOS Holdings (Pty) Ltd
AMT Placement Services
AMT Africa Recruitment
Babanango Recruitment Services cc
Bathusi Staffing Services (Pty) Ltd
BDM Management (Pty) Ltd
Boardroom Appointments
CAP Personnel Placements (Pty) Ltd
CDR Contracts (Pty) Ltd
Consortium Personnel Consultants cc
Eduardo Construction (Pty) Ltd
EFS Labour Consultants cc
ESG Recruitment cc
Fempower Personnel (Pty) Ltd
Gee 2 Kay (Pty) Ltd
Global Industrial Consultants 2 cc
Global Isizwe Placements cc
Inqaba Services (Pty) Ltd
Intelli Staff (Pty) Ltd
Ithemba Langemphela
ITL International Task Labour cc
Khuboni Placements TES (Pty) Ltd T/A Express Employment Professionals Parktown
Lady of the Waters 46 cc t/a Spartan Technical Services
Lavoro Matkri (Pty) Ltd
Lekang Projects & Security Services cc
M & S Projects (Pty) Ltd
Mabhele and Associates cc
Madobra (Pty) Ltd
MECS Growth (Pty) Ltd
Phakisa Technical Services (Pty) Ltd
Primeserv ABC Recruitment (Pty) Ltd
Primeserv Staff Dynamix (Pty) Ltd
Quyn International Outsourcing (Pty) Ltd
Scribante Labour Consultants (Pty) Ltd
Sebcon Contracting Services
Seven Stars Investments (Pty) Ltd
SFG Engineering
Sindawonye Services
Sizuluntu Staffing Solutions (Pty)Ltd
STAFFATACLICK (PTY) LTD
 The Workforce Group (Pty) Ltd
Themba Njalo Camden
Transman (Pty) Ltd
Tributum Emawi (Pty) Ltd
Vusithemba Mpumalanga
Employment Equity

Second-Quarter Drop In Formally Employed People Disappointing, Says SEIFSA

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Johannesburg, 26 September 2019 – The latest data for the Quarterly Employment Statistics (QES) released by Statistics South Africa (Stats SA), which reflects a dip in the number of formally employed people in the country, is disappointing, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said today.

The Stats SA data showed that employment in the domestic economy decreased by 2 000 quarter on quarter, from 10 174 000 in March 2019 to 10 172 000 in June 2019. The largest contributor to the quarterly decrease was the manufacturing sector, losing 15 000 jobs in June 2019. There were also decreases in job numbers in the business services (14 000 jobs), trade 10 000 jobs), construction (9 000 jobs) and electricity (1 000 jobs) sectors.

Speaking after the release of the numbers, SEIFSA Economist Marique Kruger said an analysis of the preliminary estimates shows that the broader manufacturing sector, including its heterogenous metals and engineering (M&E) cluster of industries, lost 1.2 percent of total employment (15 000 jobs) in the second quarter of 2019, with employment decreasing from 1 224 000 in March 2019 to 1 209 000 in June 2019. Over a longer time-frame, between the second quarter of 2018 and the second quarter of 2019, a total of 1 000 jobs were lost in the manufacturing sector, a decrease of 0.1 percent.

“The decrease in formal employment numbers in the South African economy is discouraging, especially given the decreasing contributions of labour-intensive sectors such as manufacturing, construction and agriculture to Gross Domestic Product (GDP),” Ms Kruger said.

She said businesses in the manufacturing sector are struggling and continue to face headwinds amid increasing input costs, underpinned by a volatile exchange rate, increasing energy and fuel prices and rising operational costs. She said businesses were left with very little lee-way but to pass cost increases on to the market, and are consequently forced to take drastic measures to survive, thereby compounding existing socio-economic problems.

“The current challenging operating environment, therefore, highlights the importance of stakeholders continuing to engage to seek sustainable solutions to the persistent and difficult business conditions,” she concluded.

SEIFSA is a National Federation representing 21 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people
The Benefits of a Contract Price Adjustment

SEIFSA Welcomes August Rebound In Selling Price Inflation For The Metals And Engineering Sector

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Johannesburg, 26 September 2019 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes the rebound in the Producer Price Index (PPI) for intermediate manufactured goods in August, as indicated in data released by Statistics South Africa (Stats SA) today.

The data indicate that the annual percentage change in the PPI for intermediate manufactured goods, a measure of factory gate prices, rebounded to 1.9 percent in August 2019 from 1.7 percent in July 2019. Alternatively, the PPI for final manufactured goods for the broader manufacturing sector registered an annual slowdown, dipping from 4.9 percent in July 2019 to 4.5 percent in August 2019.

SEIFSA Economist Marique Kruger said domestic producers still operate under difficult business conditions, as evidenced by the weak exchange rate and increasing energy and fuel prices. These factors invariably contributed to the rebound in selling price inflation in the M&E cluster as producers pass on cost increases, and are expected to continue to influence the trend in the short to medium term.

“Hopefully, the rebound in the PPI for intermediate manufactured goods will provide a buffer for businesses, as it is imperative to maintain a positive differential between selling price and input cost inflation in order to ensure that businesses maintain healthy margins,” Ms Kruger said.

SEIFSA is a National Federation representing 21 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people
Closing Address: Metals and Engineering Indaba Thumbnail

Closing Address: Metals and Engineering Indaba

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13 SEPTEMBER 2010: 16:45 – 17:00
DELIVERED BY: MARTIN L KINGSTON
VICE PRESIDENT – BUSA

1. Introduction

As we mark the 25th anniversary of South Africa’s democracy and within the first few months of the 6th democratic Government in our country, we have the opportunity to reflect on the advances that South Africa has made over the past two and a half decades:

  • We have the most advanced economy on the continent with a thriving democracy;
  • Real GDP per capita has almost doubled from c.$3,500 p.a. in 1994 to c.$6,300 p.a. today;
  • [Our banking sector, with assets that have grown more than 15 fold since 1994 to R5.8tn today, is one of the leading in the world; and
  • Foreign direct investment, although coming off a low base and currently under pressure, has grown almost 15 times to R71bn in 2018].

However, and as discussed earlier, South Africa is facing significant headwinds, coupled with a growing sense of negativity as illustrated by Wednesday’s announcement of the business confidence index having reached a 20 year low. The environment facing the country is one that is hallmarked by 6 key issues:

  1. A constrained global macro environment, aided and abetted by unprecedented geopolitical tensions;
    Current growth levels continue to significantly lag global GDP growth of 3.3% (Q1 2019). South Africa’s growth now lagging both developed economies (2.2%) and emerging economies (4.2%). The constant downward revenue of our growth statistics undermines both our credibility and confidence levels in the environment. Importantly, in recent years GDP growth has lagged population growth, implying that average incomes are falling;
  2. Stubbornly high unemployment, with South Africa’s expanded definition of unemployment at almost 40%, whilst youth unemployment is 55%;
  3. Infrastructure challenges, SOE governance and fiscal constraints;
  4. A hostile labour market. Accordingly to the most recent WEF Global Competitiveness Report, South Africa is ranked 136th out of 140 countries in terms of cooperation in labour employer relations;
  5. The need to address the skills shortage. The most recent OECD Survey ranked South Africa 75 out of 76 countries based on maths and science; and
  6. The country’s credit rating at risk of being downgraded to subinvestment grade. Moody’s, the last remaining investment-grade rating, is set to reassess South Africa’s credit rating in November 2019, although recent indications may offer us a brief respite.
  • We are in the eye of the storm where we need to take responsibility for the circumstances confronting us.
    • All stakeholders need to urgently accelerate efforts to create an environment conducive to stability and investment given the significant headwinds we need to navigate.
    • We need to accept the link between investment, growth and jobs. In so doing, we must honestly assess the constraints and address them decisively and collaboratively, involving all social partners (government, business, labour and community).
  • As outlined by the National Development Plan (“NDP”) and National Treasury’s recent Economic Strategy for South Africa, the most effective weapon in the campaign against the triple challenges of poverty, unemployment and inequality is faster economic growth, underpinned by education and skills development.
  • The private sector, including the metals and manufacturing sectors, has a critical role to play in assisting the State to achieve inclusive economic growth and reach its developmental goals, primarily through investment but also through collaboration with government and its social partners. It is increasingly acknowledged by government including the Minister this morning that it is the private sector that is the key contributor to economic activity: GDP, taxes, employment, fixed direct investment. However, that does not translate adequately into clear and aligned patterns of co-operation and partnership.
  • Structures such as Business Unity South Africa, and its members including SEIFSA, SACCI, Business Leadership South Africa, and other sectoral and country chambers play an essential role in ensuring a coordinated effort across all stakeholders to optimise the investment environment.

2. Role of the metals and engineering related sectors

  • The mining, metals, engineering and manufacturing sectors have long been viewed as labour-absorbing industries that could provide a significant solution to South Africa’s structural unemployment and assist in driving GDP growth.
  • Key Government policy documents, including the NDP, outline the basis upon which these sectors can assist in driving inclusive growth.
  • However, both the manufacturing and mining industries have seen a decline in their contribution to the overall South African economy:
    • Manufacturing’s contribution to GDP has decreased from almost 16% in 1994 to 13% in June 2019.
    • Over this same period, the manufacturing sector’s overall contribution to South Africa’s employment has steadily decreased from 15% in 1994 to just above 10% in 2019.
    • The mining sector’s contribution to GDP has halved over the last 25 years, with the current contribution to GDP being less than 8%.
    • Employment by the sector has followed a similar trend, with the sector’s contribution to employment falling from 11% to below 5%, shedding 220,000 jobs in the process.

3. Key sector challenges

  • The downturn in South Africa’s manufacturing sector has been driven largely by unreliable and uncompetitive electricity supply, high administrative costs, inadequate skills, outdated technologies, cheaper global competition and weak demand.
  • The latest statistics show that South African manufacturing production is running at 81% utilisation – almost 20% below available manufacturing capacity.
  • Rectifying this is critical as manufacturing is a key enabler of development given its role in promoting productivity growth, skills development and relatively high-income elasticity of demand in world markets. The metals sector has a significant role to play in South Africa’s economic trajectory.
  • In mining, a number of leading South African mining companies have restructured their operations. By way of example:
    • Anglo American completed the sale of its domestic coal assets to Seriti;
    • South32 has announced the sale of its SA coal assets; and
    • Impala Platinum recently announced the closure of some of its less profitable shafts.
  • Further challenges facing the sector include:
    • Soft commodity prices, combined with high input cost inflation,
    • Infrastructure constraints including electricity, transportation and water availability and competitiveness; and
    • Labour relations – managing wage inflation, whilst productivity remains under pressure
  • The new Mining Charter was finalised in 2018 and has been a positive development relative to the uncertainty that existed for an extended period of time prior to its finalisation.
  • Although we are making some progress, much more needs to be done if we are to ensure the growth of the mining, metals, engineering and manufacturing sectors.

4. Infrastructure constraints impact growth

  • Eskom:
    • The manufacturing, metals and mining sectors account for just under two-thirds of
      South Africa’s electricity consumption.
    • Eskom’s current financial crisis (in excess of R440bn in debt), represents a material threat to these industries (as it does for the rest of the South African economy), with the key issues relating to the reliability, predictability and competiveness of electricity.
    • In March 2019, the National Energy Regulator of South Africa approved electricity increases of 9.4%, 8.1% and 5.2% for the next three financial years. These increases were significantly below Eskom’s application for double-digit tariff increases – which were opposed by business and labour.
    • However, current and future tariff increases, which are above inflation, will continue to put the mining, metals and manufacturing sectors under pressure.
    • Failing to deal comprehensively with Eskom is no longer an option. It must be restructured, a significant proportion of its debt must be assumed by the state directly, its workforce must be right-sized, its cost base and clients addressed and competition introduced.
  • Other:
    • Rail and port capacity remain a concern.
    • We need to investigate solutions to fund the development of increased capacity to assist in driving new investment and the expansion of manufacturing and mining output.
    • Given the funding constraints of Government and SOEs more broadly, public-private partnerships need to be seriously considered for future infrastructure rollout. There is no doubt that public private partnerships represents not only an opportunity but a fundamental solution to dealing with the deficit of capital and skills in key areas of the economy. I am glad that government is now acknowledging this.

5. Investment

  • Inbound FDI was at its lowest level in a decade in 2017 – at R27bn. In 2018, the FDI recovered to R71bn assisted, in part, by President Ramaphosa’s drive to attract investment of $100bn over a five year period. The Investment Conference held
    November 2018 and scheduled to occur again in November 2019 are designed to provide a platform to maximise investor interest.
  • South Africa is in desperate need of increased investment, this starts with the government actively taking steps to increase investor confidence, which will drive increased investment leading to improved economic growth, creating sustainable jobs
    and employment. We cannot create jobs without investment and growth. Increased tax revenue, enabling the government to tackle poverty and inequality as well as to address the challenges facing the public sector, will predominantly come from the private sector.
  • As BUSA, we recognise that if we are to maximise investment and deal with constraints underpinning viable and sustainable commercial operations at an individual, sectoral and national level, a number of key issues need to be addressed. We have accordingly raised them directly with the President and the political leadership of the country. These include:
    • Lack of policy alignment and implementation;
    • Corruption, maladministration and malfeasance (both in the public and private sector);
    • Failure to address political and populist rhetoric, which alienates investors and the citizenry more broadly, including the vexed issues of the status of the SARB, land expropriation, attitude towards immigrants;
    • An inflexible attitude often displayed by labour suggesting that there is an inadequate acceptance of the parlous state of the economy;
    • Dysfunctional, poorly managed and governed SOEs, which are inadequately capitalised and generally not fit for purpose. We need to take difficult decisions as to how we address these challenges, recognising that failure to do so will simply exacerbate problems in the future;
    • The recent examples of gender-based violence, civil unrest and xenophobia, the high levels of criminality and a culture of impunity matched by a limited accountability; and – Debt levels that are unacceptably high, threatening the viability of individual businesses and the economy at large.

6. Other actions that could be taken by the Government to assist

  • National Treasury, in its recent Economic Strategy for South Africa Paper, estimated that manufacturing could grow by as high as 3.9% over the short term and 4% over the long term with the right policy approach. I would encourage SEIFSA to review and comment on this paper.
  • In this context, potential areas of Government support include:
    • The Sectoral Master Plan for the Steel & Metals Sector is in the process of being concluded between the Department of Trade, Industry and Competition and industry. This should be encouraged, considering the success of interventions
      such as the Automotive Production and Development Programme – generally seen as a successful example of state support and intervention.
    • Steel products and components for construction are designated by government, meaning that designated sectors’ goods must be manufactured locally. [However, designation is not always implemented by municipalities and SOEs. Consequently, the success story on the Competitive Supplier Development Programme by Eskom and Transnet, for example, is limited. This needs to be addressed and Business has tabled this for consideration by the Minister of Trade, Industry and Competition.]
    • The decline in the Infrastructure Spend Programme arising from the fiscal crunch has resulted in a significant reduction in construction activity, including the demise of a number of large South African construction companies. Government action to invest effectively in infrastructure is critical.
    • To improve the potential of Special Economic Zones (“SEZs”) to incentivise investment.
    • The Chinese interest in and commitment to Africa presents both an opportunity and a threat. To ensure that local businesses and skills development are not prejudiced, Government needs to explicitly prioritise the use of local skills, contractors and engineers and complies with designation of inputs in local projects.
    • The African Continental Free Trade Agreement (“AfCFTA”) has been signed and will enter into force in July 2020. The AfCFTA represents a significant opportunity for South African business. Regional growth opportunities should be harnessed to promote export growth, and , as Minister stressed, the AfCFTA may provide a much-needed boost to South Africa’s manufacturing sector.
  • [To support and encourage the aforementioned areas, BUSA have agreed to participate in various structures recently established by Minister Patel, including:
    • The SEZ Reference Group;
    • A Ministerial Export Promotion Panel;
    • The National Committee on the African Continental Free Trade Agreement; and
    • A Committee on Digital Trade.]
  • Non-tariff barriers in the form of transport and logistics bottlenecks, customs barriers and high port charges, etc. also need to be addressed across the region to fully exploit the potential benefits of regional integration. On this, BUSA has established a BUSA /Transnet working group and has commenced engagements with Government in the context of the Ports Charges Joint Committee (led by BUSA and the DTIC) to explore ways of reducing ports charges to render exports more competitive.

7. Conclusion

  • It is critical that all stakeholders recognise that economic growth is the most effective instrument to address South Africa’s challenges.
  • As I have said, whilst the private and public sectors are collectively looking to drive growth and attract investment, it is in fact private sector investment that is the key lever to delivers sustainable and inclusive growth given public sector constraints.
  • As the apex body for organised business in South Africa, BUSA believes that it is our responsibility to take the lead on behalf of and alongside our members, such as SEIFSA, in defining how business can maximise its contribution and, together with our partners in labour and government, ensure we deliver on South Africa’s undoubted potential, despite the current challenges.
  • As Kaizer said at the opening yesterday, South Africa can be saved if we work together as a team. I fully agree that neither government not business can achieve this independently of one another. We need to harness the energy that I have seen here, speak openly and directly and commit to implementable actions where we take individual and collective responsibility for navigating our problems thus ensuring that South Africa properly positions itself for success.
Continental Free Trade Agreement

Promise of a New Dawn Still Holds But the Private Sector also Has a Role to Play

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Johannesburg, 13 September 2019 –  The ushering in of President Cyril Ramaphosa as the new Head of State in February 2018 brought with it the promise of “A New Dawn” underpinned by four pillars namely: clean governance; anti-corruption; the re-building of a broken economy and improvement of education and training but 18 months later, South Africa still finds itself confronted by pedestrian economic growth, high unemployment rate as well as poverty and inequality.

“We were also, in 2018, promised by then Minister of Finance Malusi Gigaba that ‘drastic measures would be put in place to implement meaningful and far-reaching reforms in State-

Owned Entities (SOEs), it is now  2019, South African Airways still doesn’t have a new board and Eskom does not have a CEO,” Accountant and Commentator Khaya Sithole said at the Southern African Metals and Engineering Indaba taking place at the IDC this afternoon.

Mr Sithole attributes the lack of implementation of the New Dawn to indecision, leadership vacuum and Luthuli House civil wars, among other factors. This, he said has, in turn negatively impacted business confidence.

Speaking on the same panel, Massmart and Aspen Holdings Chairman Kuseni Dlamini said we have to accept the fact that there are elements of the New Dawn that are good and there are elements that are not.

“There are elements of success in the New Dawn including the fact that there is a new style of engagement between Government and business that is honest and transparent, the New Dawn has also brought with it hope amongst the business community.”

He said while the New Dawn appears to be waning amongst South Africans, the international community remains positive about South Africa as one of the emerging markets.

“The reform of SOEs hasn’t worked and yes there are other challenges but this challenges all of us to work together to deliver on the promise of the New Dawn, Government will not do it alone,” said Mr Dlamini.

Meanwhile, South African Chamber of Commerce and Industry CEO Allan Mukoki said for South

Africa’s economy to grow and its credit ratings to improve, we need to restructure, change and renew the public service by bringing to the public sector highly-skilled and competent individuals to lead the sector.

“We also need to solve the problems with our SOEs. It is incorrect to expect a Minister who has never worked outside the public sector to be able to choose SOE board members. We need to reconsider how Board members are elected. If we don’t get these fundamental things right. We will not be able to deal with the bigger challenges confronting the country.

 

Issued by:
Ollie Madlala
Communications Manager
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za

Metals and Engineering Sector Crucial in Turning South Africa’s Economy Around

Metals and Engineering Sector Crucial in Turning South Africa’s Economy Around

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Johannesburg, 13 September 2019 – South Africa is facing significant headwinds, coupled with a growing sense of negativity as illustrated by Wednesday’s announcement of the business confidence index having reached a 20-year low, so said BUSA Vice President Martin Kingston.

Delivering a closing address at the Southern African Metals and Engineering Indaba at the IDC Conference Centre in Sandton this evening, Mr Kingston said the environment facing the country is one that is hallmarked by a constrained global macro environment, aided and abetted by unprecedented geopolitical tensions; stubbornly-high unemployment, with South

Africa’s expanded definition of unemployment at almost 40%, whilst youth unemployment is 55%; infrastructure challenges; a hostile labour market and the need to address the skills shortage as well as the country’s credit rating at risk of being downgraded to sub investment grade.

“We are in the eye of the storm where we need to take responsibility for the circumstances confronting us. All stakeholders need to urgently accelerate efforts to create an environment conducive to stability and investment given the significant headwinds we need to navigate. The private sector, including the metals and manufacturing sectors, has a critical role to play in assisting the State to achieve inclusive economic growth and reach its developmental goals, primarily through investment but also through collaboration with government and its social partners.”

Remarking on the role of the metals and engineering sector in turning South Africa’s economy around , Mr Kingston said the mining, metals, engineering and manufacturing sectors have long been viewed as labour-absorbing industries that could provide a significant solution to

South Africa’s structural unemployment and assist in driving GDP growth. However, both manufacturing and mining industries have seen a decline in their contribution to the overall South African economy.

He said the downturn in South Africa’s manufacturing sector has been driven largely by unreliable and uncompetitive electricity supply, high administrative costs, inadequate skills, outdated technologies, cheaper global competition and weak demand.

“Rectifying this is critical as manufacturing is a key enabler of development given its role in promoting productivity growth, skills development and relatively high income elasticity of demand in world markets. The metals sector has a significant role to play in South Africa’s economic trajectory.”

Commenting on Eskom, Mr Kingston said the manufacturing, metals and mining sectors account for just under two thirds of South Africa’s electricity consumption.  Eskom’s current financial crisis (in excess of R440bn in debt), represents a material threat to these industries (as it does for the rest of the South African economy), with the key issues relating to the reliability, predictability and competiveness of electricity.

He said failing to deal comprehensively with Eskom is no longer an option.  It must be restructured, a significant proportion of its debt must be assumed by the state directly, its workforce must be right sized, its cost base and clients addressed and competition introduced.

“It is critical that all stakeholders recognise that economic growth is the most effective instrument to address South Africa’s challenges. Whilst the private and public sectors are collectively looking to drive growth and attract investment, it is in fact private sector investment that is the key lever to delivers sustainable and inclusive growth given public sector constraints.”

In conclusion, Mr Kingston said South Africa can be saved if we work together as a team.

“I fully agree that neither government not business can achieve this independently of one another.  We need to harness the energy that I have seen here, speak openly and directly and commit to implementable actions where we take individual and collective responsibility for navigating our problems thus ensuring that South Africa properly positions itself for success.”

 

Issued by:
Ollie Madlala
Communications Manager
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za