South Africa must find niche in ‘tectonic’ shift towards greener industries
24TH JULY 2020
BY: TERENCE CREAMER
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Trade, Industry and Competition Minister *Ebrahim Patel* reports that the department is canvassing the ideas of talented people inside and outside his department on a just transition to a greener economy, arguing that the “tectonic shifts” towards greener industries will provide new opportunities for enterprise development and job creation.
Delivering the Department of Trade, Industry and Competition’s (DTIC’s) revised budget vote during a virtual meeting of lawmakers, Patel said repairing the economic damage of the Covid-19 pandemic required better coordination and a different way of working. ADVERTISEMENT
“There can be no return to the ‘old normal’. And nor should there be. It was not fit for future purpose. Established industries, though critical in our economy, will not be able to create the millions of jobs required,” Patel said in a meeting during which he faced personal criticism from opposition lawmakers for some of the decisions he had taken during South Africa’s Covid-19 lockdown.
Together with digital technologies and industrial agility, greener industries would “profoundly reshape” the industrial age. South Africa, he argued, must find its niche in this new environment. ADVERTISEMENT
“At the same time, the tectonic shifts in economies towards greener industries provide opportunities. For example, Toyota’s announcement that they will build Africa’s first hybrid vehicle in South Africa within 18 months is a step towards that; as can be investing more on battery-storage technologies and components used in renewable energy. This provides an opportunity for the beneficiation of key mineral resources like vanadium.”
The DTIC is central to the drafting of a South African Renewable Energy Masterplan, which is being developed in collaboration with other government departments, organised labour and the Public Private Growth Initiative.
The masterplan process, which is currently in the research phase, is expected to culminate in a social compact in the coming months through which the social partners will commit to a vision and programme of action that will include industrialisation and black-empowerment targets.
The masterplan will initially focus on the period to 2030, but is likely to include a broader vision to 2050.
Renewable energy was also expected to feature in government’s broader economic recovery and reconstruction plan, which was currently being developed.
“This wider plan includes investment in infrastructure-driven growth, through building of bridges and roads and clinics and renewable-energy plants will bring more young people into jobs; and greater use of locally-made inputs of steel, cement and machinery can enable that infrastructure investment stimulates the growth of manufacturing.”
Masterplans are also being developed for various other more established industries, from furniture and steel, to poultry, sugar, automotive and clothing and textiles.
Patel argued that South Africa needed to “pivot” the economy from its current reliance on imports, to greater levels of local manufacture and lauded the progress local stakeholders had made during the Covid-19 crisis in re-establishing domestic ventilator manufacturing.
The first units of a locally-made ventilator machine, a continuous positive airway pressure, or
CPAP, were being assembled at local factories, with 20 000 units to be produced by “teams drawing in some of South Africa’s best science capabilities”.
“When confronted with a challenge, we found the will, the innovation and the industrial capacity to do the job. We proved as South Africans that we can be resilient. Now we must recognised the historical moment and the opportunity it provides. We must build even greater resilience, by making strategic localisation a major policy goal.”
As an immediate response to the pandemic, however, every directorate of the DTIC and every agency falling under its authority, including the Industrial Development Corporation, had been told to prioritise saving jobs and firms.
“Wherever possible, the DTIC institutions will be asked to reallocate resources to this goal,” he said.
They would need to do so despite that DTIC’s 2020/21 budget having been cut by R1.8-billion, the bulk of which would arise from the suspension of allocations for incentives.
South Africa’s Foreign Economic Representatives stationed at embassies, meanwhile, would focus on investment enhancement and export promotion, particularly into the rest of Africa, where trading under the African Continental Free Trade Agreement would begin in 2021.
“South Africa is well-positioned to become a major supplier of industrial goods and value-added services to the continent.”
Patel also argued that, post-Covid-19, Africa had an opportunity to redefine its role in the world and to break from its post-colonial history as a supplier of raw materials.
“A profound re-boot is now possible, as well as necessary. History suggests that from the greatest human crises, the greatest human advances can be made. So, in the darkest hour, we must prepare for a brighter future – at the heart of which must lie a new economy – fit for future purpose, fair and just, sustainable and resilient so that future shocks can be absorbed.”