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SA Reserve Bank

SEIFSA Welcomes Reserve Bank’s Repo Rate Cut

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Johannesburg – 18 July 2019, The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes the South African Reserve Bank’s decision to reduce both the repo and prime lending rates by 25 basis points, and said the decision has the potential of stimulating local consumer demand and boosting production towards reviving the stuttering economy.

Speaking after the Governor’s announcement, SEIFSA Chief Economist Michael  Ade said the decision provides some relief for businesses, which continue to operate in a tough economic environment characterized by low domestic growth, subdued demand, high unemployment, volatile output, high unit labour costs and poor business activity levels.

Moreover, Gross Domestic Product (GDP) growth has consistently deteriorated since quarter three of last year, despite the rebound from a technical recession, reflecting a continuing period of strain for businesses in 2019, with first-quarter growth results having shown a 3.2% annualised contraction.

“The performance of high-frequency data since the beginning of the year is also worrisome. The manufacturing Purchasing Managers’ Index, a proxy for business activity, has been trending in the contractionary zone from January 2019, reflecting generally poor inventory levels amid challenging supply chain management,” Dr Ade said.

He added that manufacturing firms, including those in the diverse metals and engineering (M&E) cluster of industries, are wary, as indices of business confidence and business expectations are gradually constricting, with the undesired potential of negatively impacting on competitiveness, investment, production and employment.

Dr Ade said the Reserve Bank’s decision to ease monetary policy is welcome, given the need to stimulate consumer demand further and improve on an ever-gloomy domestic outlook in the medium term.

“The timing, against the backdrop of moderate official inflation numbers, is apt, given the need also to stimulate spending by over-indebted consumers with restrained purchasing power. Correspondingly, the dovish stance of the US Federal Reserve ank, which has signalled possible rate cuts of as much as half a percentage point later this year, must have partly influenced the outcome by the Monetary Policy Committee members,” he said.

In conclusion, Dr Ade said the lowered interest rates will reduce borrowing costs of direct investors and domestic companies within the M&E cluster, thus benefitting key industries which are drivers of its domestic demand and supply patterns, and boosting overall demand for its intermediate products, towards better production levels. Moreover, it will help struggling companies to mitigate production costs, offset rising petrol prices and losses arising from pricey intermediate imports, and provide a basis for an improved differential for businesses faced with ever-fluctuating selling price inflation.

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

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.

Purchasing Managers’ Index Still Volatile Despite Rebound In June 2019, Says SEIFSA

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Johannesburg, 1 July 2019 – While the increase in overall business activity in the broader manufacturing sector – as reflected in the latest ABSA Purchasing Managers’ Index (PMI) data – is encouraging, nevertheless the trend remains volatile, highlighting the underlying constraints faced by business, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist Marique Kruger said this morning.

Based on a survey of purchasing executives, the composite PMI data for June 2019 shows that industrial activity improved to 46.2 points, up from the 45.4 points recorded in May 2019. A reading above the benchmark level of 50 indicates an expansion when compared with the previous months, while the reverse is true for a reading below 50.

Speaking after the release of the data today, Ms Kruger said it is encouraging to note that the majority of the five seasonally-adjusted sub-components correspondingly registered increases in June 2019 when compared to May 2019. Of the five sub-components, the new sales orders and the inventories sub-indices increased the most, surging from 44.4 points in May 2019 to 46.2 points and from 41.6 points to 43.4 points respectively in June 2019, while the worst-performing sub-index was the employment sub-index (41.9 points).

Despite the improvement, Ms Kruger said the PMI trend is still very volatile, highlighting the underlying constraints faced by business.

“Against the backdrop of low domestic demand, companies still have to deal with fluctuating input costs, increasing fuel and energy costs, carbon tax and volatility in the exchange rate. These are very challenging,” concluded Ms Kruger.

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.
SEIFSA Employment equity

Increase In The Number Of People Formally Employed Is Encouraging, Says SEIFSA

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Johannesburg, 25 June 2019 – The Steel and Engineering Industries Federation of Southern African (SEIFSA) is encouraged by the Quarterly Employment Statistics (QES) data, reflecting an increase in the number of people formally employed in South Africa, Economist Marique Kruger said today.

According to the data released by Statistics South Africa this morning, formal employment in the local economy increased from 10 152 000 in December 2018 to 10 174 000 in March 2019, an increase of 22 000 jobs
quarter on quarter. The largest contributor to the quarterly increase in job numbers was the community services sector, gaining 19 000 jobs in March 2019. Furthermore, there were increases in job numbers in the mining and quarrying sector (6 000 jobs), the manufacturing sector (5 000) and the business services sector (5 000 jobs).

An analysis of the preliminary estimates indicates that the broader manufacturing sector, of which the metals and engineering (M&E) cluster of industries forms an integral part, gained 0.4 percent of total employment (5 000 jobs) in the first quarter of 2019, with employment increasing from 1 222 000 in December 2018 to 1 227 000 in March 2019. Over a longer time frame, between the first quarter of 2018 and the first quarter of 2019, an encouraging total of 9 000 jobs were gained in the manufacturing sector, an increase of 0.7 percent.

“However, the concern is that the increase in formal employment numbers is unsustainable, as underlying industry dynamics and contribution to GDP are deteriorating,” Ms Kruger cautioned.

She said that businesses are under duress, mainly rowing against high tides and headwinds comprising a plethora of challenges, including increasing intermediate input costs, a volatile exchange rate, comparatively high fuel prices, operational costs and the new carbon tax. These constraints leave companies with little room to pass cost increases on to the market, compelling them to lay off workers in order to cut operational costs in the medium to long term.

“Given the prevailing difficulties, it is, therefore, important for captains of industry and policy makers to engage continuously and seek sustainable solutions aimed at addressing the existing challenges which, if ignored, may reverse the gains made and compound the scourge of unemployment,” Ms Kruger 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.
Metal Sparks

Although Q1 Metals And Engineering Sector Performance Was Disappointing, Recovery Is Imminent – SEIFSA

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Johannesburg, 25 June 2019 – Although the performance of the metals and engineering (M&E) sector during the first quarter of 2019 was disappointing, recovery underpinned by stronger regional and international demand appears to be on the horizon, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said this morning.

SEIFSA Chief Economist Michael Ade said although the optimism SEIFSA had anticipated at the beginning of 2019 had waned against the backdrop of the constriction of the sector, which saw its output dropping during the first quarter of 2019 when compared to the first quarter of 2018, the Federation nevertheless remains optimistic that the external environment holds a great deal of potential for the sector’s exports and ultimate recovery.

“The sector’s recovery will be driven by stronger regional demand from the SADC region and the rest of Africa, underpinned by the newly-launched African Continental Free Trade Area, and globally from Europe, Asia and the Americas. In addition, the slowly-improving international commodity prices will also provide a strong basis for the M&E cluster to improve on output,” Dr Ade said.

Dr Ade attributed the sector’s contraction during the first quarter to continued softening of global economic activity, with trade and manufacturing showing signs of marked weakness against the backdrop of heightened trade battles driven by geopolitical dynamics.

Locally, the sector’s growth was choked by a weak domestic environment and load shedding, which also negatively impacted on the growth rate of the mining, transport, electricity, trade and construction sectors.

Despite of the challenging start to 2019, Dr Ade said there is hope that the sector will ultimately recover, albeit at a slower pace and a lower rate than usually forecast.

“Internationally there has been heightened policy uncertainty, including a recent re-escalation of trade tensions between major economies, accompanied by a deceleration in global investments and a decline in confidence, which in turn weighed on the local currency, dragging down emerging markets as capital flows from investors move to the safety of the US dollar in expectation of better returns. Undoubtedly, the downside to the production growth in the M&E sector will be tempered by a generally difficult operating environment, but the expectation is for the comparatively weaker exchange rate to provide leverage over time and perk up export volumes through relatively lower prices, also impacting on production,” he said.

Commenting on the domestic operating environment, Dr Ade said despite the prognosis being less robust, primarily as a result of slowly-improving but volatile supply-side dynamics underpinned by regressing business and consumer confidence, SEIFSA remains positive about the sector’s long-term outlook against the backdrop of the decision by Moody’s to keep South Africa’s investment rating above sub-investment grade.

Although the decision by Moody’s augers well for existing and new investments, Dr Ade cautions that the positive outlook depends on continuous policy reforms and initiatives aimed at promoting real gross fixed capital formation (GFCF) from the general government, public corporations and private business enterprises.

Dr Ade said this was important, given the dismal performance of GFCF in Q1 2019, decreasing by 4.5 percent, its fifth consecutive decline from Q1 2018.

Dr Ade said notwithstanding the decline in real GDP in quarter 1 of 2019, there was a corresponding net growth in production in the broader manufacturing sector, with preliminary data showing the sector cumulatively growing by 2.5 percent, despite the dismal performance of its M&E sub-sectors comprising roughly 45 percent.

“Although the expectation is for the M&E sector to rebound and improve during the course of the year, we are cognisant of the difficult operating environment, hence the moderate forecast of 1.6 percent growth for 2019,” Dr Ade said.

SEIFSA is a National Federation representing 23 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
Easing Consumer Inflation

Uptick In CPI Amid Low Growth Is Discouraging For Consumers And Businesses

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Johannesburg, 19 June 2019 – The uptick in consumer price index figures for May 2019 amid low growth is discouraging for consumers and businesses and may negatively affect  consumer sentiments and spending, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Chief Economist Michael Ade said this morning.

According to the latest data released by Statistics South Africa today, the annual headline consumer price inflation increased from 4.4 percent in April 2019 to 4.5 percent in May 2019, while the core CPI remained unchanged at 4.1 percent in May 2019. On a month-on-month basis, the headline CPI was 0.3 percent in May 2019.

“This is discouraging for over-indebted consumers who are clearly struggling to cope, as reflected by the dip in final consumption expenditure in Q1 2019, decreasing by 0.8%,” Dr Ade said.

He added that given the low-growth context, the general increase in the prices of goods and services does not augur well for embattled domestic consumers and the South African households in general as higher CPI numbers increase the nominal prices of goods and services, also impacting negatively on over-indebted consumers’ household budgets and reducing the ability to service existing debts or to make extra payments.

Dr Ade said companies in the broader manufacturing sector, including its heterogenous metals and engineering sector, will also not benefit from higher inflation due to a possible decrease in the demand for intermediate and final manufactured goods.

“However, we sound a caveat against reading too much into the current data, which does not constitute a trend, given its high level of volatility. This is because changes in factors affecting supply, including high-frequency data, may also negatively impact on the CPI numbers as businesses pass on cost increases into the market,” Dr Ade 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
Continuous Positive Growth

Continuous Positive Growth in Manufacturing Output despite a Spluttering Domestic Economy Is Encouraging, Says SEIFSA

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Johannesburg, 11 June 2019 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is encouraged by the continuous positive growth in broader manufacturing sector production, as indicated in manufacturing production figures released by Statistics South Africa (Stats SA) this afternoon.

Speaking after the release of the data, SEIFSA Economist Marique Kruger said despite the struggling economy and continuous headwinds faced by companies in the broader manufacturing sector, in which includes the Metals and Engineering (M&E) cluster of industries, businesses were able to stay resilient.

The latest preliminary seasonally-adjusted production data for the broader manufacturing sector released by Stats SA indicated that output improved to 4.6 percent year-on-year in April 2019, when compared to April 2018. On a continuous three-monthly basis, output in the broader manufacturing sector consecutively trended positively from 0.7 percent in February 2019, to 1.3 percent in March 2019 and to 4.6 percent in April 2019. On a month-on-month basis, the manufacturing sector’s performance was also inspiring – registering 2.8 percent in April 2019 when compared to 0.9 percent March 2019.

Ms Kruger said despite the encouraging production data, there are still concerns regarding various constraints, including volatility in exchange rate, increasing intermediate input costs, operational costs and high fuel and energy costs.

“These variables, no doubt, dropped the value add by manufacturing to the Gross Domestic Product (GDP) in quarter one of 2019, and have the ability to further hinder manufacturing contribution in the second quarter of 2019,” she said.

However, Ms Kruger said, the expectation is for the generally weak exchange rate to boost manufacturing export competitiveness in the mid-term, to the benefit of businesses, in order to stay resilient and build on the positive performance of the last three months, as we collectively seek ways of re-igniting long-term growth and the sector’s value add.

 

Issued by:

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

SEIFSA is a National Federation representing 23 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.
South Africa’s New Labour Laws

SEIFSA Brings Its Significant Experience to Bear on South Africa’s New Labour Laws

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31 July 2019

SEIFSA is proud to present it significant expertise in Industrial Relations and Legal Services (IR&LS) on the 24 July 2019. The occasion is SEIFSA’s Industrial Relations and Legal Services Division’s exploration of South Africa’s Labour Laws.

At this event, you can expect the best in thought leadership and guidance designed to help any Human Resources Practitioners, Industrial Relations Managers and people in any organisation wishing to understand in a practical way  how to implement and prepare their organisations for changes, happening as we speak and running concurrently in a negotiations year.

The event will showcase the following SEIFSA Thought Leaders:

  • Lucio Trentini (Operations Director)
  • Sibusiso Mthenjane (Industrial Relations & Legal Services Executive)
  • Michael Lavender (Industrial Relations Manager)
  • Zolile Moyikwa (Legal Services Manager)
Lucio Trentini

The face of the metals and engineering Main Agreement Negotiating Team and an unrivalled expert on Industrial Relations since 1990, Trentini has made it his mission to guide companies through a complicated labour law landscape in South Africa.

Trentini holds a BA in Economics and Industrial Psychology and a Post-Graduate Diploma in Management from the University of the Witwatersrand and the Graduate School of Business Administration respectively. He also holds an Expert Negotiator Certificate issued by the Gordon Institute of Business Science (GIBS).

Sibusiso Mthenjana

An admitted attorney, Sibusiso Mthenjana joined SEIFSA as Industrial Relations and Legal Services Executive on 1 May 2019. He holds an LLB degree from the University of Zululand and is currently working on an LLM at the University of South Africa.

Mthenjana has previously worked as Legal Manager at the National Health Laboratory Service, as Company Secretary at Thembalethu Development NPC, as Group Company Secretary at TEBA, as Company Secretary/Head of Legal at Mpumalanga Regional Training Trust,
as Legal Manager at South African Music Rights Organisation and as Legal Services and Administration Manager at Chief Albert Luthuli Municipality. He has also practised as an attorney while working for STRB Attorneys, Mavimbela Mthenjana Attorneys and his own law firm, Mthenjana Attorneys.

Michael Lavender

Serving SEIFSA and its members since 1991, Michael Lavender has held various positions within the Industrial Relations Division, including as Senior Industrial Relations Advisor and Industrial Relations Services Training Manager, and was appointed to the position of Industrial Relations Manager in 2013.

Michael has gained extensive knowledge and experience and his daily duties include, but are not limited to:

  • advising and training companies on the Main Agreement and labour law;
  • chairing hearings in the areas of disciplinary, incapacity, grievance; and

Representing various companies in retrenchment consultations and other industrial relations matters, such as disputes and industrial action, as well as at the CCMA and the MEIBC Bargaining Council at conciliation and arbitration.

Lavender holds a Bachelor of Social Sciences degree, majoring in Industrial Psychology and Economics, from the University of KwaZulu-Natal (formerly the University of Natal), a Personnel Management Trainee Programme from Rand Mines, a Certificate Programme in Industrial Relations (CPIR) from the University of the Witwatersrand’s Graduate School of Public and Development Management (Wits Business School), and An Expert Negotiator Certificate issued by the Gordon Institute of Business Science (GIBS).

Zolile Moyikwa

Zolile Moyikwa joined SEIFSA in August 2018 as an Industrial Relations and Legal Services Manager.

He is an Admitted Attorney registered with the Law Society of Northern Provinces and the Law Society of Cape of Good Hope. He has a wide range of experience gained through partnering and working for various institutions, among them in Private Practice and the Department of Justice.

His excellent organizational and client relationship management capabilities mean that he is able to work with people across a broad spectrum. As an attorney, Moyikwa  was trained andgained experience in litigation, drafting policy formulation, interpretation of statutes, drafting of contracts and vetting thereof.

At SEIFSA his daily duties include Labour Court Litigation, advising and training companies, chairing hearings in the areas of disciplinary, incapacity, grievance, retrenchment consultations and industrial relations matters, as well as attending to CCMA,  the MEIBC Bargaining Council for conciliation and arbitration and the Labour Court for litigation.

Johnathan Goldberg

Johnathan Goldberg is the CEO of Global Business Solutions and holds several qualifications, including a BComm, LLB and an MBA (cum laude). Over the past 20 years, he has been at the forefront of the changing labour law landscape, leading negotiations at plant, industry and NEDLAC levels. He assists clients to navigate the dynamic regulatory environment.

Goldberg holds several key roles, including being nominated as a business representative, as employment conditions commissioner, chief operating officer of the Confederation of Associations in the Private Employment Sector (CAPES), member of the Employment Services Board, and as a BUSA representative at NEDLAC focusing on labour law amendments, including a-typical employment. He continues to be actively involved in various industries, leading and advising on negotiations in numerous sectors of the economy.

SEIFSA RESPONDS TO GOVERNMENT’S CALL TO COMPLY WITH LABOUR LAWS

SEIFSA has noted the Government’s insistence for companies to comply with new labour laws as quickly and as seamlessly as possible. The Government made the call as South Africa joined the world in commemorating Workers’ Day last month.

“For South Africa, this day holds particular importance as it emanated from the protracted struggle for workers’ rights and social justice of the late 1800s. Government expresses its appreciation to all workers for their contribution to the economy and the role of labour unions,” the Government Communication and Information System (GCIS) said. President Cyril Ramaphosa, encouraged companies and institutions which are resisting transformation to be part of the solutions that will lead to the development of South Africa.

“Our Seminar on 24 July is part our ongoing support to the metals and engineering industry to ensure that companies are strategically positioned for innovation, growth and development of their human capital to realise their full potential”, says Operations Director Lucio Trentini.

Tough leadership is required to improve South Africa’s economic fortunes, says SEIFSA

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Johannesburg, 4 June 2019 – The 3,2% drop in South Africa’s Gross Domestic Product (GDP) in the first quarter of 2019 demonstrates, much more than anything else, that the country needs more than the now-routine lip service paid by the country’s political leadership to economic growth and the euphoria which greeted Cyril Ramaphosa’s ascendancy to the presidency last year, SEIFSA Chief Executive Officer Kaizer Nyatsumba said today.

Mr Nyatsumba said this major drop – the largest in a decade – is concrete evidence, if any were needed, that merely talking about a new dawn without having the courage to tackle the country’s myriad challenges would not suffice.

“This terrible news shows that the tremendous amount of goodwill that greeted President Ramaphosa when he assumed the country’s interim presidency last year – and came to be known as ‘ramaphoria’ – may have been misplaced. It is clear that we were so punch-drunk from the terrible leadership offered by President Jacob Zuma that we got carried away as a country and assumed that that ugly past was behind us.

“Regrettably, however, it has been during the Ramaphosa presidency that South Africa experienced a recession last year, and now comes the depressing news that our economy has shrunk by its biggest margin since 2009. We have previously been told about an economic stimulus to reinvigorate the economy, but no evidence of that has been seen so far,” Mr Nyatsumba said.

He said that the situation called for bold leadership from President Ramaphosa and his Government, and not just mere soothing words, and required that tough decisions were taken speedily to reverse the malaise confronting the country.

“President Ramaphosa has now obtained a mandate from the electorate; he and his team can no longer continue to fiddle while the country burns. We are currently confronting a growing economic crisis, which has the potential to get completely out of control. Tough leadership, as opposed to tepid leadership and mere rhetoric, is called for,” he said.

Mr Nyatsumba said it was deeply regrettable that, instead of being engines for growth, South Africa’s State-owned companies like Eskom and South African Airways – whose CEOs were forced by circumstances beyond their control to step down within days of each other – were allowed to teeter dangerously on the brink of collapse simply because “our political leadership does not have the courage to do what needs to be done”.

Mr Nyatsumba said SEIFSA would be seeking an urgent meeting with Trade and Economic Development Minister Ebrahim Patel and his colleagues within the economic cluster of Ministers to discuss the concerns of the metals and engineering sector, which is a vital part of manufacturing.

Meanwhile, SEIFSA Economist Marique Kruger said the decline in the GDP is disconcerting to businesses that continue to face headwinds amid spiraling operational expenses and rising intermediate input costs underpinned by high petrol prices and electricity costs.

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.

Decrease in PMI disappointing, says SEIFSA

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Johannesburg, 3 June 2019 – A dip in overall business activity in the broader manufacturing sector is disappointing and the result of the lead indicator for May 2019 does not bode well for future activity of companies in the broader manufacturing sector, so said Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist Marique Kruger.

The ABSA Purchasing Managers’ Index (PMI) decreased from 47.2 points in April 2019 to 45.4 points in May 2019, providing discouraging forward-looking insight into the manufacturing sector’s health, while still trending below the benchmark level of 50, which separates expansion from contraction.

Speaking after the release of the data this morning, Ms Kruger said the headline PMI and its five main sub-indices play an important role in businesses’ decision-making processes.

“The deterioration in the headline PMI is underpinned by decreases in the business activity and new sales orders sub-indices, with the business activity, new sales orders, inventory and employment sub-indices trending below the neutral 50-point mark in May 2019. However, the supplier performance sub-index was the best performer, increasing to 55.7 points in May 2019,” Ms Kruger said.

She said generally the information on all sub-indices highlights volatility in the trend, which is worrying to the broader manufacturing sector. She said SEIFSA, which is disappointed with the decrease in the data, hopes for an improvement in business activity in the short term.

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.
Free Trade Area

SEIFSA Welcomes Launch of Africa Continental Free Trade Area, Which Provides a Wider Market with Huge Value for Local Businesses

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Johannesburg, 2 June 2019 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes the official beginning of the African Continental Free Trade Area (AfCFTA) on 30 May 2019, which provides access to a continent-wide market of 1.2 billion people worth $2.5 trillion.

SEIFSA Chief Economist Michael Ade said the deal, which effectively places Africa as the world’s largest free trade zone by population since the 1995 creation of the World Trade Organisation (WTO), has remarkable potential for intra-continental trade.

“This is a huge milestone in achieving African economic integration. SEIFSA commends the 24 countries that had ratified the Agreement by 30 May, thus bringing it into force,” said Dr Ade.

The Agreement’s operational phase will be launched on July 7 at an African Union summit in Niger, with some minor issues – including rules of origin – still to be resolved. The Agreement which will effectively breathe life to the largest trading bloc in the world,  enables the creation of a single continental market for goods and services, with free and unfettered movement of business people and investments. It cuts duties on 90% of goods and is expected to boost regional and international trade and to improve on the proportion of trade by African nations with continental neighbours.

Dr Ade said the AfCFTA presents a unique opportunity for South African-based companies to trade with those of other regions, such as in West and Central Africa where there is a dearth of trade agreements. He encouraged companies in the metals and engineering sector to take advantage of the Agreement to boost trade further North and East of the continent.

“Due to challenges principally caused by poor logistics and infrastructure, most businesses had limited their trading opportunities to the southern part of the continent. The Agreement provides a scope for more improved trade in line with the African Union’s Agenda 2063 – and this is good news,” he said.

Dr Ade cautioned that rather than limiting themselves to producing a particular set of goods, local companies should conduct market research, move with the times and produce goods currently needed by other African countries. He said it was very important for trade among Africans to be expanded, since uncertainties in international trade increase the premium on regional intra-African trade.

“The AfCFTA proves that Africa has learnt from the experience of East Asia and Latin America to build productive trading capacities through regional value chains. This will help build collectively the competitiveness of African products – including raw materials – internally and internationally. By trading with other African member states, South Africa will strengthen its position and improve gains from international trade,” Dr Ade said.

However, Dr Ade also urged African leaders to do away with remaining challenges that pose a threat to intra-African trade. He said non-tariff barriers such as the plethora of documentation needed for cross-border trade transactions were even bigger impediments to intra-African trade.

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

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.