What Can We Make?

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South Africa is well known for the resilience of its small economy. The country’s unique and leading position on the continent and its economy being diversified in multiple sectors means that it is not as vulnerable as some might think.

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Pockets of excellence exist, including in mining machinery, aerospace, automobiles and agri-processing. In recent weeks, mining, especially gold, has experienced strong tailwinds, with gold at its highest ever price.

In December, retail performed better than expected, defying market expectations by growing by 2.7% year on year. Even South Africa’s unemployment rate and youth unemployment rate have decreased consistently over the last two years, with wages rising too.

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In terms of trade, South Africa imports and exports with a diverse array of countries around the world, without an over-reliance on a single economic partner. Furthermore, tourist flows into South Africa announced a recovery into South Africa, albeit not yet at pre-pandemic levels.  

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These are positive facts that nevertheless are only true when taken within a context of major difficulty. First and foremost, electricity production is shockingly at a lower point than in 2007. Any gains are invariably only incremental; however improvement is to be celebrated and guarded with the right actions repeated.

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At a recent trade show attended by ItalCham in the renewables sector, the power of China as the workshop of the world was fully on display. The future of solar power generation, electrical inverters and battery storage is being driven by the rising superpower of the east. China’s bad reputation as a cheap imitator of technology is rapidly disappearing as they lead the way in terms of production, research and development in this sector.

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In the same way, South Africa needs to develop on its reputation for excellence and capitalise on its existing niches of excellence. A key sector in South Africa, in terms of its outstanding effects on GDP (12%) and employment is that of manufacturing. Manufacturing is known for its unique role of creating upstream and downstream economies, as well as for its privileged position over primary sectors like agriculture and mining. However, over the last 16 years, this sector has shed more than 400-thousand jobs in South Africa.

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On a positive note for manufacturing, Absa’s Purchasing Managers’ Index increased to 51.7 in February 2024. This signalled a renewed expansion in South Africa's factory activity in February, the strongest since early 2023, after a steep contraction in the prior months. The uptick is another positive yet merely incremental change. Absa reported that respondents were more upbeat about exports, possibly signalling some alleviation of the congestion and disruptions at local harbours.

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Manufacturing is a boring word for the miraculous process of making something out of nothing. The cities and things around us are all the products of ingenious human creativity. In other moments humans have shown themselves to be extremely destructive.

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The result of South Africa’s elections will likely prove critical in terms of whether recent incremental improvements will be scrapped or capitalised on. Participants in the economy and the society at large must reflect on what they can do so that we may finally realise our creative potential and finally give a good go at seeing what we can make of all this.

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