By Lehlohonolo Lehana.
President Cyril Ramaphosa says South Africa is entering one of the most important periods of infrastructure investment and economic reform since the advent of democracy.
Ramaphosa was addressing the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Presidential Business Breakfast at the Radisson Hotel OR Tambo on Thursday.
“Our task is to ensure that this investment does more than build infrastructure. It must rebuild South African industry,” Ramaphosa said.
He said every transmission line, railway, port and water system constructed should contribute to expanding the productive capacity of the economy.
“We must use this infrastructure programme to create factories, develop skills, strengthen supply chains, support new industrialists and create jobs,” he said.
The President highlighted the strategic importance of the metals, engineering and capital equipment industries, noting that SEIFSA’s more than 1 300 member companies manufacture equipment and components essential to mining, electricity, transport, manufacturing and other productive sectors.
He acknowledged, however, manufacturers continue to operate under difficult conditions, including weak domestic demand, logistics constraints, high electricity costs, infrastructure bottlenecks and growing import competition.
Globally, fragile steel demand, excess steelmaking capacity, geopolitical tensions, supply chain disruptions and energy price volatility are adding to the pressures facing South African companies.
“Investment decisions are delayed. Margins are squeezed. Factories operate below capacity. And ultimately, jobs are placed at risk, “he said.
He warned that South Africa could not accept the continued erosion of its industrial base, describing manufacturing as fundamental to the country’s economic sovereignty.
“It generates skills. It drives innovation. It supports exports. It creates productive employment. And it sustains thousands of businesses throughout the economy,” he said.
Ramaphosa also argued that energy transition should become an industrial transition, highlighting in particular the potential manufacturing spin-offs from the build-out of 14 500-km of new transmission infrastructure.
“Nowhere is the industrial opportunity more immediate than in the expansion of our electricity transmission network,” he said, indicating that the roll-out would require everything from fabricated steel and cables to transformers, insulators and switchgear.
“And behind every one of these products are factories, workers, engineers, artisans and suppliers. This should become one of the great industrial projects of our generation.”
Likewise, Ramaphosa argued that the larger R1-trillion infrastructure drive should be viewed as both a construction and industrialisation opportunity.
However, he also said that localisation should not become a licence for inefficiency or excessive prices.
Seifsa president Mervin Naidoo also highlighted the industrialisation potential of the infrastructure programme, but said that deliberate policy interventions would be required if the programme was to stimulate manufacturing and job creation.
“We accept the fact that as an industry, we’ve got to be competitive … and that we can’t rely on protectionism. But equally so, I think we need policies that support general investment and strategic investment based on long-term commitments and demand,” Naidoo said.
Ramaphosa acknowledged need to improve the coordination and publication of the infrastructure pipeline so that companies could see what government, State-owned enterprises and other public institutions intended to procure over an extended time horizon.