Silver lining for SA economy
Mail & Guardian | News & Media 2015 | Thulani Gqirana
The DTI minister has told Parliament that while the economy is not in great shape, certain industries such as automotive and clothing are promising.
Davies said interest in the automotive and locomotive sectors showed that ‘we can manufacture in this country’. (David Harrison, M&G)
While South Africa’s economy continues to face serious challenges, things are looking up for the automotive, film, textile, clothing and footwear manufacturing industries and business process outsourcing.
At a press conference to present the annual report of the trade and industry department in Parliament on Tuesday, Minister Rob Davies said the country was facing choppy waters. But he shied away from predicting a recession.
South Africa’s economy shrank by 1.3% in the second quarter of 2015 compared with the first, leading to concerns about a possible recession in the next quarter, which is a serious challenge, according to Davies.
He said he was not in a position to say whether this quarter would be similar to the last.
“But I think that the one quarter’s figures do tell us that we have a challenge. Things are becoming much more difficult than they were before.”
He said the country was making progress with interventions to stabilise the economy.
“The energy situation, though we are not completely out of the woods yet, is more stable than it was at the beginning of the year. We are facing a challenge and we do have to increase the impact of our interventions. We need to make better, faster and more effective progress.”
The department of trade and industry presented its annual report, which included a clean audit, in Parliament on Tuesday to a parliamentary committee, where it highlighted some of its achievements.
While it is not all moonlight and roses in the economy right now, things are looking up, according to the department.
Director general Lionel October said the department was seeing real and significant investments and exports in the four sectors in which it had targeted incentive programmes.
“In the auto industry, for example, we are now exporting over R100-billion worth of automotive vehicles. The employment is 100 000, 30 000 in assembly and 70 000 in components. We are seeing big investments, but we are also seeing expansions of people moving into new areas, like Toyota, which no longer just produces vehicles but has gone into truck manufacturing and taxis.”
October highlighted the achievements in the revival of the clothing and textile manufacturing industry, as well as the growth of the footwear industry.
The department said it was making progress in ensuring its suppliers were paid within 30 days and said most were being paid in half that time.
A slight dip in foreign direct investment (FDI) was an area of concern.
October said that while FDI had fallen globally, FDI in sub-Saharan Africa was still growing faster than in the rest of the world.
“And within sub-Saharan Africa, South Africa still gets the lion share by far. So the trends are definitely upwards. FDI is driven by demand, we are upscaling our locomotive programme and that is why we are seeing big investments in locomotive manufacturing. FDI will reflect the central demand patterns.”
He made an example of Shell putting shale gas exploration on hold because of the drop in oil prices.
Davies said interest in the automotive and locomotive sectors showed that “we can manufacture in this country”.
Democratic Alliance shadow minister of trade and industry Geordin Hill-Lewis said the DTI’s annual report was an endless stream of over-regulation.
“Under Minister Davies, the DTI has directed our economy into a helpless situation through over-regulation and underspending on key job-creating programmes. A fundamental policy shift is needed in order to revive the South African economy,” Hill-Lewis said.
“The DTI has placed less and less emphasis on fostering innovation and enterprise in order to create jobs. Wholesale change is required as a matter of urgency and necessity.”
Thulani Gqirana is the Mail & Guardian’s parliamentary correspondent.