The number of South Africans who are employed has plunged by 2.1 million since Covid-19 first hit local shores, translating to an alarming average of over 3,800 fewer breadwinners each day. As anticipation builds for the upcoming State of the Nation Address (SONA), job creation must therefore feature prominently in President Ramaphosa’s speech – beginning with rallying the country behind local businesses, especially SMEs and industrialists, says Proudly South African Chief Executive Officer, Eustace Mashimbye.

According to Statistics South Africa, the number of people with jobs before the country’s first hard lockdown in March 2020 totalled 16.4 million. However, this number fell to 14.3 million by the end of September 2021 – a more than 12% decrease within the space of only 18 months.

“These figures translate into a loss of income and significant financial hardship for a growing number of families, aggravating social ills such as poverty, food insecurity and homelessness – a situation which is untenable and can lead to scenes such as we saw in July last year,” states Mashimbye.

“It is only through job creation that we can finally turn the tide on these issues. This starts with stimulating business development and encouraging companies to gradually increase their capacity by consciously directing spending towards locally made and manufactured goods.”

Notably, insufficient demand remains the primary reason for under-utilisation of production capacity in manufacturing.

“This is where government needs to play a larger role in leading by example. While local procurement guidelines stipulate that the public sector should procure some 27 broad items from local manufacturers, our internal monitoring system shows that compliance remains extremely low at below 50%,” he notes.

“As Proudly South African we are therefore calling on all spheres of government to show support for local manufacturers as per the Preferential Procurement Policy Framework Act (PPPFA), as well as extending local procurement practices to as many other items as possible. Additionally, while the tragic fire in the Parliament precinct has forced government to move this year’s SONA to the Cape Town City Hall, we hope that government draws on local materials and equipment throughout as it rebuilds the National Assembly building.

“Private citizens and more important, private businesses also have a critical role to play and need to use their power as purchasing decision makers to place South Africa and South African jobs first in order to co-author a better future for all. We would therefore urge President Ramaphosa to use this year’s SONA as a rallying call for all to urgently mobilise in support of buying local.”

Localisation a national economic imperative

In consultation with labour, business and civil society partners at The National Economic Development and Labour Council (Nedlac), government has already set a relatively modest import substitution target of 20% of non-petroleum products within five years – a move which is expected to inject up to R200 billion back into the local economy.

Critics of the localisation policy have argued, however, that it risks stymieing competition and innovation, or will lead to inevitable trade-offs in terms of price and quality.


“In our view, however, the opposite is true. With increased levels of local demand leading tonew market opportunities, we expect to see new market entrants disrupt the status quo, boosting competitiveness and innovation in industries traditionally dominated by a few large players,” argues Mashimbye.


“Likewise, through supporting businesses as they gradually invest in building capacity, consumers will be able to benefit from price efficiencies achieved through economies of scale. Companies will also benefit from investments in building independent, robust supply chains that are able to withstand overseas shocks such as the recent disruptions in China.

As an example, he points to the meteoric rise of smartphone manufacturer Mara Phones. Since opening its high-tech device manufacturing plant at the Dube Trade Port Special Economic Zone in KwaZulu-Natal in 2019, Mara Phones have quickly found favour with local and international markets which, together with devices produced at a second factory in Rwanda, are now exported to over 70 countries globally. Given its success with South African consumers, the company has now set itself the ambitious aim of opening 50 Mara Experience stores within the next two years.

“The example of Mara Phones demonstrates that there is a convincing argument to be made for locally manufactured goods, and that new industry players are able to produce quality, affordable and innovative products. Additionally, its success in developing new markets overseas for exports demonstrates just how compelling its product offering really is.

“The example of Mara Phones demonstrates that there is a convincing argument to be made for locally manufactured goods, and that new industry players are able to produce quality, affordable and innovative products. Additionally, its success in developing new markets overseas for exports demonstrates just how compelling its product offering really is.

“As President Ramaphosa prepares his upcoming speech, we would therefore like to encourage him to advocate again for localisation as a national economic imperative for reigniting economic growth and job creation.”

ENDS

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