Industry is the production of material goods, excluding agriculture. This industry can also be defined as being made up of the mining, energy and manufacturing sectors.

 

The legacy caused by apartheid policies on industrialisation has been devastating, as these policies were designed  to benefit only 25% or less of the population. 

 

Following this, for years the textile industry battled and struggled after South Africa was reintegrated into the global economy. Although this sector only contributes 0.06% to South Africa’s GDP, it directly employs approximately 127 000 people, mostly working in the Western Cape. Since then this industry has suffered severely with the emergence of Chinese producers. Cheap imports from the latter have had the result that several firms have had to shut down in South Africa. In order to compete well internationally, the PA will draw up a list of industries in which South Africa performs poorly by international standards because of high labour costs. Such industries would then qualify for the relaxation of labour laws in order to encourage job creation and to increase the numbers of competitive exports from South Africa, which would improve the country’s balance of trade. 

 

South Africa needs to move from having trade deficits to having trade surpluses. The reason why mining and its outputs accounts for almost two-thirds of South Africa’s exports is because South Africa is stuck in the typical profile of post-colonial African societies that export raw materials only to buy back finished products that have used those raw materials and transformed them into consumer goods. South Africa (and certainly the rest of Africa) possesses all the requisite raw materials for almost all the finished trade products that the world’s population consumes.

 

One of the reasons why South Africa struggles to industrialise and manufacture all the products that it imports is because labour and other business costs are far lower in competitor emerging economies and markets. Labour costs are not, however, the biggest deterrent as labour costs continue to remain relatively low in South Africa. The cost of transport, communications and general living in South Africa is much higher and the PA would undertake to find ways to lower these in relation to competitor nations in order to make South Africa far more competitive.

 

Another reason is that there is a lack of skill and expertise to follow through on industrialisation and manufacturing targets.

 

Under the PA, once labour restrictions have either been relaxed generally for certain industries (many of which do not exist or barely exist as a result of such restrictions in any event) it is expected that industries will begin to form as a natural consequence.

 

The PA accepts that infrastructure development must remain a top priority for South Africa, with the transportation (particularly rail, road and ports) and energy networks to be expanded, maintained and modernised at ever greater levels in order to cater for the increasing demands that will be placed on all infrastructure to keep up with the rapid growth in development.

 

The PA would also promote different regions of South Africa as hot spots for different kinds of industrialisation in order to spread the South African population more widely than is currently occurring and to ensure that South Africa’s towns are supported and allowed to grow, and for some of them to even become cities to rival established urban areas like those in Gauteng, the Western Cape and elsewhere.

 

A more targeted and balanced approach in education in order to promote skills development and expertise growth will also address this shortfall. The PA will pay to send South African students to education centres worldwide in order to bring back valuable knowledge and expertise on every industry in which South Africa could grow to become a major competitor.

 

There has been a large degree of human capital flight from South Africa in recent years. But according to several surveys there has been a reverse in brain drain following the global financial crisis of 2008-2009 and expiration of foreign work contracts. In the first quarter of 2011, confidence levels for graduate professionals were recorded at a level of 84% in a PPS survey. This is something the country can use as a strong foundation to build upon.

 

However, South Africa’s Bureau of Statistics estimates that between 1 million and 1.6 million people in skilled, professional, and managerial occupations have emigrated since 1994 and that, for every emigrant, 10 unskilled people lose their jobs. The PA undertakes to reverse this trend and would act to ensure the retention of skilled South Africans, regardless of their race. This can be done in ways that do not hamper the growth of black South Africans in the workforce. Instead, it would grow the framework in which to grow employment across all areas of the workforce.

 

The PA would want South Africa to retain skills and grow the workforce so that the pool of professionals and people with specialised talents becomes as large as possible. Countries are increasingly relying on intellectual capital for success and the retention and spread of skills and knowledge are crucial.

 

This is particularly valid in light of the evidence that the primary cause of brain drain is not affirmative action, employment equity policies, BEE or terrifying headlines about crime and violence but rather that countries such as the UK, US, Canada, New Zealand, and Australia have led active recruitment programmes in South Africa. Other countries go out of their way to poach our most skilled individuals. 

 

These countries alone have accounted for 75% (by volume) of recent skilled emigration, with the UK receiving approximately half of annual skilled South African emigration from 1990 to 1996. The South African healthcare sector has been hit particularly hard. A widespread skills drain in South Africa and in the developing world in general is generally considered to be a cause for concern. For the medical sector, the loss of returns from investment for all doctors emigrating is $1.41bn for South Africa. The benefit to destination countries is huge: $2.7bn for the United Kingdom alone.

 

The PA undertakes to reverse this trend and even attract international talent to these shores. South Africa is a country with much to offer and it must lead active recruitment programmes of its own to grow its professional skills base through targeted immigration — along with the well-planned educational foundation for its citizens.

 

However, it remains counterproductive to keep training and educating people only for them to leave and share their skills with an adoptive country.

 

At the moment, the manufacturing industry's contribution to the economy is relatively small, providing just 13.3% of jobs and 15% of GDP. The cost of labour in South Africa is not the most prohibitive factor 

 

Companies producing in South Africa can take advantage of the access to new markets as a result of trade agreements with the European Union and the Southern African Development Community. The AGOA agreement with the US has also made South African made products very attractive in the USA as these products can be exported to America tariff free. The PA would work to build on and improve this preferential situation.

 

More primary manufacturing within South Africa’s borders would lifting the strain on SA’s ports infrastructure, which is currently not able to cope with the high levels of exports currently in demand.

 

Eskom has been widely criticised for failing to adequately plan for and construct sufficient electrical generating capacity, although ultimately the government has admitted that it was at fault for refusing to approve funding for investment in infrastructure. The margin between national demand and available capacity is still low (particularly in peak hours), and power stations are under strain, such that another phase of rolling blackouts is probable if parts of the supply are halted for whatever reason. The PA believes more can be done to bring on board private partners in the electricity industry.