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SA can hold its own in global production

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Generously endowed with a variety of minerals and varied climatic conditions in its different geographic areas, the SA economy is, understandably, anchored by natural resources and agriculture. And we are proficient in mining, animal husbandry and the cultivation of crops.

However, we have recognised that we must be much better than just digging holes in the ground, taking out minerals and looking after plants and animals. Particularly as the price we pay for buying technologically advanced goods from other nations is high indeed.

Just think of all the ubiquitous computers, iPods, televisions, music systems, microwaves, cars, watches, cameras, cellphones and washing machines which we import or are manufactured here under licence. Can’t we have SA brands of these things? Besides, what will happen in the future when our mineral wealth depletes and we are no longer able to exchange them for these modern products we need so much?

Correctly, we decided gradually to migrate towards a knowledge economy. That decision means we will support our scientists, researchers and engineers, protecting the intellectual property they generate, and then exploit the said intellectual property to produce new goods and services, building new industries, enhancing our industrial capacity and trading with other nations.

We did all the right things, including elaborating policies related to this future vision of our country, passing legislation to protect our intellectual property and creating vehicles such as the Technology Innovation Agency to help in the commercialisation of our innovations.

But alas, we failed spectacularly at the first test of our resolve to move towards the knowledge economy. The decision to abandon the commercialisation of the SA-developed electric car, the Joule, is a blow that our move towards the knowledge economy might take a long time to recover from, if ever.

Consider this: SA has been assembling vehicles for decades, but we do not have an SA vehicle. We are paying billions of rand a year to subsidise foreign-owned automobile manufacturers to stay in the country. We do this by giving them input and import duty credits for local content and fixed investments in local production facilities through the Motor Industry Development Programme (MIDP).

Next year, the MIDP will be replaced by the Automotive Production Development Programme, which will run until 2020, and that will probably be extended. They threaten to leave if we do not subsidise them.

Of course, we can’t let an industry that is worth 7.5 percent of our GDP and employs more than 35 000 people leave our shores. But why are we happy to subsidise foreign companies to assemble vehicles here but not to invest in the development of our own brand?

It would be difficult for SA to enter the big motor manufacturing industry through the internal combustion engine. But with the introduction of new technologies, such as electric cars and those using fuel cell technologies, we have a perfect opportunity.

Obviously driven by concerns around diminishing reserves of oil, its escalating cost and climate change issues, the EU gave billions of euro to the European motor companies to do research aimed at the production of electric cars. A few years down the line, we would be subsidising their companies to produce electric cars here.

The decision to move towards a knowledge economy presupposes that the state is prepared to play in economic spaces where there is market failure. It is thus inexplicable and incomprehensible why the state, after investing more than R300 million to develop the Joule and launch it at the Paris motor show suddenly cites market concerns as a reason for not commercialising the product.

Are we a nation that does not believe it can develop its own advanced products?

The vehicles on our roads are a result of painstaking development by their countries of origin. We may also remember that many decades ago the state built Sasol, which is today a respected private multinational company.

We can build many more, if we have the will.


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