SA deindustrializes and this needs to change fast – Godongwana
The SA economy has been on a path of deindustrialisation – which speaks to significant job losses, widening income inequality and poverty, according to Finance Minister Enoch Godongwana. South Africa urgently needs to develop a passion for, and commitment to, manufacturing – to support the fundamental transformation of society and enable substantially higher standards of living.
The South African manufacturing sector has experienced limited development over the last two decades. Several indicators show worrying signs of premature deindustrialization. To turn this around, Barnes (2019) argues that the country must urgently develop monozukuri – a passion for manufacturing – so that it can better contribute to employment creation, skills upgrading, and other benefits associated with manufacturing-led industrialization.
Manufacturing accounted for 22% of GDP in the late 1980s and early 1990s, but now contributes 12% of GDP. The per-capita base of the sector has shrunk from R677. 7 billion in 2008 to R545.2 billion.
The national government’s Department of Trade, Industry and Competition has also summarized a number of factors that have led to South Africa’s relatively poor manufacturing performance in its various Industrial Policy Action Plans, namely: sub-optimal performance of state owned companies; logistical bottlenecks; infrastructure constraints; volatility of South African exchange rate; monopoly pricing of key economic inputs, such as steel; skills deficiencies across the national economy; aging capital equipment; and the rapid liberalization of the domestic economy to global trade in the late 1990’s and early 2000’s.
South Africa’s manufacturing future is therefore precarious. And yet the country desperately needs to re-energise its processes of manufacturing-led industrialization with their capacity to create employment, enhance labour productivity, upgrade skills, increase wages, grow the economy, and generate innovation. Informed by this, Barnes (2019) argues that South Africa urgently needs to develop “a passion for, and commitment to, manufacturing – to support the fundamental transformation of society and enable substantially higher standards of living”. In Japan they call this monozukuri – a spiritual and philosophical underpinning that materializes in a pride for the making of things (Roser, 2021).