Business leaders say SA needs to address the exporting of raw materials that are then imported as finished products.
Leaders of different entities in South Africa met under one roof to discuss the possibility of expanding the country’s manufacturing sector.
A discussion during the Nedbank Commercial Banking Manufacturing Roundtable this week focused on how some raw materials are exported from South Africa and then later imported finished goods.
Exported raw material returns packaged
Ajay Bachulal, manufacturing director at Tiger Brands Culinary, highlighted the import-export challenge facing South Africa. He said over the years South Africa has seen an increase in raw materials getting exported to different countries around the world. The issue arises when a final product, made from the raw material is later imported back to the country.
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Bachulal is concerned that this challenge is still present in today’s world, and it needs to be looked at urgently.
“The government or the private sector must look at investing in businesses, to ensure that South Africa can make use of its raw materials. Instead of the final products being imported, they can be made in the country,” said Bachulal.
A need to produce local products
Bachulal said manufacturers need to look at which raw materials are important, which items are made from those raw materials and how can they produce the items locally. Producing the item locally will also boost the country’s economy because instead of exporting the raw material, the final product will be exported.
Eustace Mashimbye, CEO at Proudly SA said this is a challenge the private sector can look into. He agreed with Bachulal that it can start by looking at what is being imported the most and what can be done to produce that product locally.
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Mashimbye said it will be a beneficial conversation to be had as this has been a challenge for years. “It is time to look at what we can do with our own raw materials,” he said.
Amith Singh, National Manager for Manufacturing at Nedbank Corporate and Investment Banking said there is a mindset that certain products carry certain quality because they come from a certain country. “People believe the best suits and shoes are bought in Italy; the best watches are bought from Switzerland.”
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Policy and regulatory will unlock potential
Singh believes the successful implementation of the country’s industrial policy will unlock the sector’s potential to increase production, beneficiation, and localisation. An improved investment climate and structural reforms in infrastructure, including energy, ports, rail, and roads, will provide the incentives manufacturers need to grow their businesses.
Other challenges that the sector has faced over the past two decades include inadequate infrastructure, inefficient transport networks, and persistent energy supply issues. “Recent improvements, such as uninterrupted power supply for the past three months and positive changes at Transnet, also indicate the potential for a resurgence in manufacturing,” Singh said.
