Johannesburg - Trade and Industry Minister Rob Davies yesterday urged South African manufacturers to prioritise exports and take advantage of the weaker rand.
Speaking at a manufacturing conference, Davies said: “There needs to be a stronger focus on exports. We need to take advantage of the devalued currency.”
Davies said exports enhanced competitiveness. “Vehicle exports are an example of what can be done,” he said.
He said South Africa had recently seen a number of companies in the fast-moving consumer goods sector set up operations in the country in order to export to other African countries.
Export destinations
He said South Africa’s export destinations were diverse and cited the growing importance of the Middle East and Russia as important export destinations. India was the fastest-growing developing country and South Africa’s sixth-biggest trading partner with R95 billion worth of trade, ahead of the UK, which is the country’s eighth-largest trading partner, Davies said.
He said South Africa needed to diversify its activities as the country could no longer rely on being a producer of minerals. “That is not a good plan. Value is in the processing of the raw materials. It is in the diversified activities that are somewhere in the value chain.”
Davies said, given the unfavourable economic conditions that had led to what he said was the manufacturing sector’s erratic performance, “it is urgent that we diversify. We need to develop new production bases.”
Against the backdrop of high unemployment levels, Davies said job creation should remain the main target. He said focus should be on labour-absorbing sectors such as agro-processing. This was despite the drought which had hit the agriculture sector.
Speaking at the same conference, Thomas Konditi, the chief executive of GE South Africa, said the National Development Plan envisaged increased exports in order to achieve economic growth.
Meanwhile, Davies said last week’s decision by the UK to leave the EU was unlikely to affect South Africa’s trade relations with the UK.
“I do not think we will be denied access to the UK. I do not think we are going to have a trade problem.”
Automotive plan
Speaking during a panel discussion at the conference, BMW government and external affairs manager Bongani Mshibe said the automotive development plan in South Africa was one of the the best plans in the world.
“We are competitive because of the duty rebates we have received,” Mshibe said.
Bruce Strong, the chief executive of paper and plastic packaging company Mpact, said the automotive industry was currently benefiting from “a good” automotive policy because of the sector’s interactions with the government.
“We acknowledge that there is a need to learn from them. We need to learn from what the automotive industry has done,” Strong said.
He said the private sector had to work closely with the government. “We will learn more by listening to what government’s priorities are. We need to engage, not just in times of crisis.”
Davies said the government had created policy certainty for the automotive sector, which he said accounted for 14 percent of the country’s exports.
BUSINESS REPORT