Africa/WorldEnergySouth Africa

Capital and Electricity Supply identified as constraints to Manufacturing Sector

Availability of capital and the electricity supply are a major problem for the manufacturing sector in the country, the Select Committees on Trade and International Relations and Economic Development heard.

The Department of Trade and Industry (DTI) Chief Director for policy implementation, Ms. Zukiswa Ncaphayi, told Members of the Committee that manufacturing and industrial development is one of the key pillars in government.

“Manufacturing in South Africa is still using old technology and that needs to change. It should keep up with international competition and trends. We are looking to grow labour absorptive industries, and build on industries that will be able to soak on the high unemployment in the country,” Ms. Ncaphayi said.

She said constraints that hamper the industry include the supply of electricity and pricing at municipal level.

“A number of factories have had to close down as a result of this, but we also need to overcome inefficiencies at ports and rail networks,” she said.

The Committees began their week-long oversight visit in Pretoria where they are expected to visit a rail manufacturing plant in Pretoria and the BMW plant in Rosslyn.

The Chairperson of the Select Committee on Trade and International Relations, Mr. Eddie Makue, said the oversight visit was critical to test the authenticity of information given to Parliament by government officials. “It is important that Members understand how the sector contributes to the National Development Plan (NDP). The automotive sector and rail are particularly important, as they contribute immensely to gross domestic product,” Mr Makue said.

The Committees heard that DTI made available approximately R1.86 billion to about 259 manufacturing companies last year.

Committee Member Mr. Boingotlo Nthebe said the country needs to improve its export base while growing labour intensiveness of industries. “For too long we have relied on the mining industry and it is beginning to shed jobs now. Investment on infrastructure is lacking and not where it is supposed to be,” he said.

Members sought clarity on such issues as empowerment of formerly disadvantaged groups, beneficiation, procurement of set-top boxes, and the import/export ratio.

Ms. Ncaphayi said that DTI was looking to move towards a sector-specific incentives programme rather than a generic one, and that progress has been achieved in some sectors. She said agro-processing and rail components manufacturing are the sectors that the department is looking to enhance in order to deal with unemployment.

She further said there was a need to change trade patterns, as regional intra-trade was happening at a very small scale. She also said that procurement of set-top boxes was skewed towards overseas companies as there was limited local capacity.

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