Manufacturing and industrialisation remain key to stimulating South Africa’s battered economy as the country makes efforts to recover from the Covid-19 pandemic, Finance Minister Enoch Godongwana said on Wednesday.Speaking during the launch of a book on the “Transformation of the Economy’s Structure and Industrial Development,” the minister said the government’s Economic Reconstruction and Recovery Plan identified manufacturing and industrialisation as key pillars in the recovery of the economy.
“Through these pillars, we are intervening decisively to drive strategic localisation, re-purpose South Africa’s manufacturing base as well as strengthen regional and global trade,” Godongwana said.
He added: “Ultimately, our goal is to significantly increase South Africa’s manufacturing output, reduce the proportion of imported intermediary and finished goods, and expand the capacity of local suppliers.”
For instance, the manufacturing industry has shrunk from at least 22% of the country’s gross domestic product (GDP) to about 12% of GDP, he said, adding that this meant that the country was now importing more manufactured goods to the “decimation” of the country’s own manufacturing industry.
“The manufacturing sector’s capital base has shrunk – from US$48.4 billion in 2008 to the current US$39 billion in real terms. These numbers speak of the decimation of our industrial base. They also speak to significant job losses, widening income inequality, and poverty,” the minister said.
He added: “Our economy continues to suck-in imports. This is, in part, because of a weak industrial base. This is also a reflection of an imbalanced growth model, which is unsustainable, and keeps our economy vulnerable.”
To mitigate this, government has embarked on the restructuring of the economy back to industrial development — with emphasis placed back on the “high growth, high productivity and greater labour” absorbing manufacturing industry, the minister said.