Latest news with #Reindustrialisation
Mail & Guardian
6 days ago
- Business
- Mail & Guardian
Here's how South Africa can avoid the economic dependency path
Reindustrialisation, as well as diversified trade partners and dismantled apartheid spatial patterns, will get South Africa out of its socioeconomic mess. Photo: File South Africa's racialised capitalist system has been anchored on the minerals-energy-complex (MEC) since the 19th century. This economic structure is organised around fossil-fuel energy, segregated spatial development, market sector concentration and cheap black African migrant labour. The mining, energy, agricultural and upstream sectors linked with mining constituted the core sector drivers of the MEC. The structural composition of the MEC has been altered slightly since the country's democratic transition in the early 1990s because of macro-economic policy shifts and full reintegration in the global political economy. The most significant change is financialisation and the central role played by financial markets in South Africa's economy. Several literature sources analysing the post-1994 economy draw attention to positive and negative policy outcomes associated with this trend. Additionally, the growing introduction of digital and low-carbon technologies in all sectors aims to disrupt the traditional MEC economic logic. Our country is classified as a middle-income nation in various global indexes. But it still exhibits the structural socio-economic fault lines associated with economic path dependencies of lower income countries — deindustrialisation, low productivity, systemic inequality and uneven spatial development. South Africa should speedily implement strategic policy steps to avoid the negative socio-economic consequences produced by the path of dependency. First, place rebuilding the industrial base of the country at the centre of macro-economic policy planning and implementation. Fiscal, monetary and trade policy strategies should complement this objective in several ways. This requires improved policy coordination and political will to place reindustrialisation socio-economic indicators such as manufacturing growth and domestic value chain linkages at the apex of development outcome assessments. A narrow focus on GDP growth without disaggregating overall sector drivers underpinning economic growth should be avoided. Second, South Africa requires a growth path that emphasises creating demand in the economy. This is essential for two reasons: a demand-led economic development trajectory reduces inequality and addresses free market failures. A good starting point is connecting our social wage expenditure on housing, education, health and public infrastructure with clearly defined industrial policy targets. These linkages will create employment, support localisation, enhance skills development and drive aggregate economic demand. An additional lever for raising demand is addressing South Africa's astronomical wage disparities. Several labour market analyses point to race and gendered pay income gaps that impede economic growth and development. Interventions such as the minimum wage, sectoral determinisations, Companies Act and Employment Equity Act amendments are useful policy options for addressing wage inequalities. Third, our country needs to diversify trade partnerships and deepen its connection with African regional trade networks. The shift towards economic nationalism globally puts countries that are overly dependent on one or two export markers at greater risk. Thus, it is imperative to adapt to changing international political economy trends so that South Africa's national development goals can be achieved. There are several opportunities for trade diversification that should be explored by policymakers. These include the African Continental Free Trade Area and Brics trade strategies, which present opportunities for technology transfer, integration into global value chains, investment attraction and employment creation. But South African trade policy negotiators must avoid the narrow East versus West trade partner categorisation that misses the political economy nuances in trade treaties or agreements. For example, several actors assume that trading with partners in the Global South will automatically produce positive socio-economic returns. The empirical evidence on these trade relationships counters this assertion. Last, it is important to dismantle colonial and apartheid spatial development patterns. The transition to democracy has not addressed this matter adequately and it needs urgent attention. Recent debates on redesigning rural and township economies are useful because they shift the dominant paradigm, which reduces governance in these areas to service delivery and maintaining the law. We need to rethink and broaden conceptions of development in municipalities so that they are based on industrial diversification, local value chain creation, increasing access to public goods and protecting global commons. This requires local economic development planning that is not solely dependent on household rates and taxes. Municipalities should diversify revenue sources and create economic development planning around sectors that produce the following socio-economic outcomes: enhanced job creation, skill development opportunities, technological upgrading and increased local manufacturing. Dr Khwezi Mabasa is a lecturer at the REAL centre: University of Witwatersrand.
The Independent
12-06-2025
- Business
- The Independent
Jonathan Reynolds mocks Nigel Farage's coal mines plan as an ‘absolute parody'
Jonathan Reynolds has mocked Nigel Farage for wanting to reopen the coal mines in Wales, dubbing him an 'absolute parody'. The business secretary, whose grandfather was a coal miner, admitted that Reform UK are Labour's biggest opponents – but said Mr Farage fails to understand 'the pride in where we're from and what we represent, but also the aspiration for the future'. Speaking at a media lunch in Parliament, Mr Reynolds also defended the UK's plan for closer trade ties with the US, saying: 'We might have different views but we have to engage with them'. His comments come after Mr Farage announced his party wants to restart Port Talbot's blast furnaces and 're-industrialise Wales'. On a visit to South Wales, the leader of Reform UK said the resumption of traditional steelmaking and coal production is the party's long-term ambition if it comes to power. The speech came one year ahead of the Senedd elections in May next year, where the party is looking to end Labour's 26 years of domination. But Mr Reynolds shot down the plan, telling reporters: 'When I see someone like Nigel Farage go to Wales and say to those people, 'I'm going to reopen the coal mines' and he thinks that's what working class people want - that is an absolute parody of what someone like Nigel Farage thinks that people like I grew up actually want.' He added: 'My grandfather was a coal miner, kind of much like everyone where I grew up… It was a position of real responsibility and family pride. 'He went down the mine fourteen years ago. He had one message for my dad, and that was 'don't go down the mine'. And he became a fireman. 'That's the bit that our opponents don't understand: the pride in where we're from and what we represent, but also the aspiration for the future.' Acknowledging that Reform is currently Labour's biggest opponent, he said the challenge facing the government is to persuade voters that 'mainstream politics can deliver for them'. Turning to the US trade deal, Mr Reynolds said the UK was able to negotiate one before other countries because Britain has made an effort to understand America's mindset. 'This is not US politics disrupting global trade. This is how global trade has disrupted US politics', he said. 'We might have different views but we have to engage with them.' The business secretary also recounted one phone call with his US counterpart Howard Lutnick, where he said he was worried he was 'going to sell the NHS' because of poor phone signal. 'The Woodhead Pass between South Yorkshire and Manchester is probably the only place in Britain with worse mobile phone reception than working in Parliament…. 'Howard starts talking, but because of the reception, every fifth or sixth word is genuinely cutting out of signal. 'I'm literally slightly worried I'm going to sell the f***ing NHS because of Britain's telecommunications infrastructure. I didn't. And I'm pleased to say we were the first country to get a deal.' The deal, announced last month by Sir Keir Starmer and Donald Trump, will see British tariffs on steel and automotive exports to the US slashed in exchange for greater access to the UK for some American goods. But the deal has still not been implemented, with both Washington and London yet to take the necessary steps to reduce tariffs. Mr Reynolds said the UK is 'ready to go' on implementing it's the deal, but is waiting for the White House to finalise it on their side. The business secretary added he was 'very hopeful' that the agreement would come into effect 'very soon', but acknowledged negotiations had not 'always been easy'. A Reform UK spokesman said: 'Labour are continuing to deindustrialise our towns and communities across the country. They don't blink when we lose thousands of well paid jobs in these crucial industries. 'Labour simply don't understand working people. Reform will continue to call for the re-industrialisation of Britain and with it, bring back thousands of well paid jobs.'
Zawya
09-06-2025
- Business
- Zawya
South Africa: Has the Steel and Metal Fabrication Master Plan delivered or collapsed?
Launched in 2021, the Steel and Metal Fabrication Master Plan (SMP) looked to reposition the steel industry at the heart of South Africa's reindustrialisation agenda. Nearly four years later, we are confronted with an uncomfortable question: has the Master Plan delivered, or has it collapsed under the weight of unfulfilled promises? The Steel and Engineering Industries Federation of South Africa (SEIFSA) president and chairman of the Board Elias Monage asks, if four years after its launch, has the Steel and Metal Fabrication Master Plan delivered? South Africa's steel and engineering sector stands at a perilous crossroads. Once the bedrock of our industrial economy, the sector today faces a stark reality: years of deindustrialisation, declining production, job losses and a steady erosion of competitiveness. This decline is not the result of chance, but a culmination of systemic policy failures, a lack of coordinated action and inadequate implementation of recovery frameworks. SMP concept sound, execution problem The concept of the SMP remains sound. An inclusive, coordinated and well-resourced industrial policy is critical to saving strategic sectors. The problem lies in its execution. Instead of clarity and action, we have seen diffusion and inaction. With over 20 workstreams and 73 deliverables, the SMP lacked focus. As progress stalled, industry leadership began to withdraw, disillusioned by government's inability to deliver on commitments. Unmistakable signs of collapse Today, the signs of collapse are unmistakable. Steel production remains 18% below its 2007/8 peak and capacity utilisation across all sub-sectors has slipped below the 85% benchmark for efficiency. Per capita steel consumption has dropped by 37% since 2013, a sharp contrast to global trends where steel intensity continues to rise. These trends are not just statistics — they translate into factory closures, job losses and the loss of critical productive capacity. Business-as-usual will not suffice If we are to reverse this trajectory, we have no choice but to fundamentally rethink South Africa's industrial policy. Business-as-usual will not suffice. Government must acknowledge that past interventions, however well-intentioned, have not delivered the intended impact. This moment demands a bold shift — from fragmented policies and siloed departments to a unified national compact anchored in public-private collaboration. A new approach What should this new approach look like? - Craft a Strategic Agreement for Impact between government and the steel and engineering sector This agreement should bind both parties to a shared vision with clear accountability. Crucially, it must define a singular, measurable objective — for example, achieving 4 - 5% annual growth in metals and engineering output — against which all policy instruments and initiatives can be aligned. Without a clear north star, no policy can succeed. - Streamline efforts into three focused workstreams: Industrial Policy, Demand Creation and Financing The Industrial Policy Workstream must aim to establish a coherent framework that balances competing interests across the value chain, from upstream primary producers to downstream manufacturers. Too often, policy has favoured one at the expense of the other. The vision must be unified and inclusive. The Demand Creation Workstream must be tasked with unlocking catalytic projects that stimulate the consumption of domestically produced steel and fabricated products. This includes leveraging state-led infrastructure initiatives, strategic procurement and facilitating partnerships that can turn project pipelines into real economic activity. The Financing Workstream must address the chronic undercapitalisation of the sector. A reindustrialising economy cannot be built on weak balance sheets and ad-hoc funding. What is required is a structured financial framework — including public-private funding vehicles and targeted incentives — to finance industrial and infrastructure projects that have multiplier effects across the economy. - Reorient our approach to policy from punitive to incentive-based mechanisms Businesses need predictability and support to invest and grow. Every policy instrument must undergo rigorous cost-benefit analysis. Those that don't work must be scrapped. Those that do must be scaled up. Industrial policy must become an iterative, evidence-based practice, not a once-off, static document. - Government to lead a national policy alignment drive Energy security, rail logistics, port capacity and trade policy are all levers of industrial competitiveness. Right now, these levers pull in different directions. Coordination and coherence across departments and spheres of government are essential. The private sector cannot be expected to invest in an economy where the left hand of government does not know what the right hand is doing. - Reaffirm the strategic importance of the steel and engineering sector to South Africa's long-term economic prospects No country can industrialise — or reindustrialise — without a resilient metals sector. Steel is the foundational input into mining, construction, transport, manufacturing, energy and agriculture. The erosion of this sector undermines every other sector's growth potential. Rescue its original intent The SMP, in its current form, has not lived up to its potential. But that does not mean we abandon it. Instead, we must rescue its original intent — to galvanise industry and government behind a shared industrial vision — and breathe new life into its structure and implementation. A new compact for industrial growth SEIFSA and its members remain ready to co-create a new compact for industrial growth. But we cannot do this alone. We call on government, particularly the departments of Trade, Industry and Competition, Finance, Public Enterprises, Infrastructure, and Transport, to urgently come together with industry leaders to forge a new path forward. Time is running out With every passing year of stagnation, the socio-economic consequences deepen — more job losses, more factory closures and a deeper erosion of South Africa's productive capacity. Let us focus on a Strategic Agreement for Impact between government and the steel and engineering sector with a singular commitment: to reignite South Africa's industrial engine and build a future of inclusive, job-rich growth. The steel sector — and South Africa — depends on it.
