Research on the Performance of the Manufacturing Sector

Policies at a Provincial and Local Level

Provincial and local governments have developed and implemented growth and development strategies based on national strategies at a local level.

Most policies are industry specific but lend heavily from current national frameworks and strategies, such as

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  National Spatial Development Perspective (NSDP)
  
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  Accelerated Shared Growth Initiative South Africa
  
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    The core objective of this initiative is to halve poverty and unemployment by 2014.
    
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    The ASGISA is an initiative that includes all stakeholders in the economy including government to provide input in developing strategies that will speed up the process of growth and development in South Africa by addressing the constraints that hinder growth on a provincial and local level ultimately impacting at a national level.
    

Provincial and Local Economic Development Strategies

Gauteng

Gauteng Provincial Growth & Development Strategy

Overview of Strategy

The Gauteng Provincial Government has identified a number of key mechanisms that would drive the objectives of the growth and development strategy the main objective of these mechanisms is to increase and drive investment and growth in the provinces economy.

These mechanisms identified are not an exhaustive list, and can be applied and implemented across all industry sectors; however the following three objectives are specific to the manufacturing sector.

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  Investment, Support and Economic Growth
  
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  SMME Support
  
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  Skills Development
  

Investment, Support and Economic Growth

The manufacturing sector was targeted as one of six potential growth sectors by the new growth path based on the potential and opportunities that these sectors offer in investment growth, Value add growth, employment growth and productivity.

SMME Support

Small, Medium and Micro enterprises (SMME) have been identified as key drivers in the quest to create more employment in all economic sectors and specifically the manufacturing sector. The Gauteng provincial government intends to support and grow SMMEs in the manufacturing sector by developing partnerships with successful SMME initiatives through agencies (governmental and nongovernmental) and local municipalities within the province.

Skills Development

In line with the objectives in SA’s human resource development strategy to ensure that the skills and capacity base of the manufacturing sector is matched with sustained economic growth and development, the GPG intends to develop partnerships with the tertiary and academic sector, the private sector and non governmental institutions to introduce skills development and training programmes that will act as a catalyst for industry based skills development.

SMMEs in the manufacturing sector will benefit from these programmes by using the opportunities available to skill current employees as well as have a skilled labour force from which to employ ne staff.

Source: Gauteng Growth and Development Strategy

COJ Economic Development Strategy

GEDA

Growth and Development Strategies at Municipal Level

The Gauteng province is made up of three main municipalities that have large manufacturing industrial areas. These three municipalities are The City of Johannesburg (CoJ), Ekurhuleni Metropolitan Municipality (EMM) and the City of Tshwane (CoT). These three municipalities house the majority of manufacturing activities in Gauteng. Each of these municipalities has their own growth and development strategies that affect the manufacturing sector.

We will briefly look at these municipal strategies in relation to the manufacturing sector by briefly discussing the strategy overview, the focus on the manufacturing sector and strategies SMME support and development structure.

The City of Johannesburg Growth and Development Strategy 2040

Strategy Overview

As a result of the economic recession of 2008/2009, approximately one million jobs were lost with Johannesburg bearing the brunt of the effects. This put the local economy under immense strain, coupled with the added pressure of a migration of unemployed individuals from other cities to Johannesburg in search of employment and opportunities. This had forced the City of Johannesburg to take the lead in job creation interventions. The recession also impacted on investment, with investors being reluctant to commit to long term investments, choosing rather to wait and reassess priorities to when the economic climate improved. With the recession firmly behind us, the City of Johannesburg Metro is aggressively approaching investors and intensifying efforts to obtain resources from private, local, and international investors to accelerate growth and development in the economic sectors.

In Line with the new Growth path adopted by parliament the COJ intends to address the area of employment creation as a critical area of change, through the extended public works programme and skill development programmes to provide unemployed citizens with skills to find employment.

Focus on Manufacturing

The city of Johannesburg has undertaken the responsibility of creating extensive support structures and initiatives that are designed to create sustainable employment opportunities in the manufacturing sector. The structures include:

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  A drive to ensure that the manufacturing sector is supported by a vibrant SMME component, indicating that SMMEs in the manufacturing sector will be enhanced through support and funding initiatives.
  
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  Through the City of Johannesburg’s five year economic development plan, a manufacturing sector intervention has been earmarked to provide infrastructure and business support to the SMME entities in the manufacturing sector.
  
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  An investment of R35 million by the province will be allocated over a five year period to assist with achieving these goals.
  
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  Another key driver in stimulating the manufacturing sector is the production of green technologies (solar geysers and alternative building materials).
  

SMME Support and Development

The City of Johannesburg indicated that mechanisms will be put into place to ensure that SMMEs become the key driver’s in growth and development not only in the manufacturing sector but across all economic sectors in the local economy. The City of Johannesburg plans to develop and support SMMEs with Financial, strategic and institutional support through initiatives such as:

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  Jozi Equity Fund (JEF) which will assist SMMEs with funding over a 5 year period.
  
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  Jozi rising Programme which developed with the DTI and Agencies to assist SMMEs with financing and institutional support.
  

Source: CoJ GDS 2040

Ekurhuleni Metropolitan Municipality (EMM) Growth and Development Strategy 2025

Strategy Overview

While Ekurhuleni is the hub of manufacturing activities in Gauteng there has to be a specific goal in terms of meeting the objectives of government by following and implementing strategies that have been designed to build a common vision across the borders of government, private sector, and society at large.

When analysing the strategic guidelines of the GDS, it is indicated that Ekurhuleni as is an area that is at an advantage. This is due to the fact that the EMM’s economic strength lies in the vast manufacturing sector that is based on the East Rand, along with a skilled workforce, the availability of raw materials, and the added advantage of good air, road, and rail transport linkages.

Industrial protection relating to import parity pricing and other regulatory policies are national programmes that have an effect at a local level; the municipality seeks to facilitate improvements to these programs to be effective at a local level.

By looking at these advantages relating to the manufacturing sector as a whole Ekurhuleni could be viewed as a key geographical area to promote job creation in the manufacturing sector for the province.

In relation to job creation which is a key focus area the EMM will pursue the following actions:

• Alignment of national programs and interventions on skills development to the needs of the manufacturing sector.

• Encourage and facilitate specific manufacturing Human Resource Development (HRD) through the identification and development of core capabilities, technology needs analyses and programme initiation, and the development of supply chain measures required to create viable local industries

Focus on Manufacturing

EMM intends to stimulate/boost the local manufacturing sector by:

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  Facilitating advanced technological processes, as well as promoting labour intensity.
  
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  The local transport and logistical industry will be positioned to support the manufacturing sector; the advantage of having two airports and major freeways, as well as the City Deep container terminal provides export opportunities for the manufacturing sector.
  
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  The strategy also has a key focus in skills development training, particularly in the manufacturing sector.
  

SMME Support and Development

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  EMM plans to facilitate linkages between SMMEs and large industries through local business chambers.
  
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  EMM seeks to stimulate SMME activity in the manufacturing sector by reviving old industrial parks with plans to lease them to new and existing SMMEs which will provide the space required for SMMEs to grow.
  
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  Another key area of SMME development is access to educational and skills development programmes which many SMMEs are not taking advantage of, the EMM plans to drive SMMEs to take advantage of these opportunities by facilitating access to skills development programmes as well as National SMME development programmes through the DTI and other national agencies.
  
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  The development of a craft manufacturing and business park aimed at the international and domestic market from the JIA will be promoted. Partnerships have already been established with Dept. Of Trade & Industry (DTI) and Tourism Enterprise Programme (TEP).
  

Source: Ekurhuleni GDS 2025

City of Tshwane Growth and Development Strategy 2011 – 2016

Strategy Overview

In line with the Gauteng Provincial Government the City of Tshwane (CoT) lists one of its key economic priorities as reducing unemployment by 50%. The CoT plans to address these challenging issues through short medium and long term strategies such as:

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  Economic Sector Strategies
  
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  SMME strategies
  
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  Human resource development strategies.
  

As one of three main metro’s in Gauteng, the CoT has to align its economic development strategies to that of the GPG strategic objectives and this includes re – aligning the manufacturing sector from heavy input markets with a low value add to a more refined and high value add input market. In relation to the nation spatial development framework the CoT formulated the City Development Strategy (CDS) in 2004.
A Key priority included in the CDS is a focus on improving manufacturing and business services through infrastructure development and the strengthening of the economic clusters to gain leverage from growth trends in these sectors. The CoT also plans to address the issue of job creation through a series of sector wide programmes and initiatives that will range from Skills development to infrastructure development such as the development of new and old industrial sites.

Focus on Manufacturing

The CoT plans to grow and expand existing business and industrial areas in all sectors of the economy with a specific focus on the manufacturing activities in order to maximize opportunities in existing industries such as the automotive industry. The CoT plans to focus on labour intensive manufacturing activities.

While there is a strong focus on the Automotive manufacturing sub sector the CoT is also home to other manufacturing activities that have the potential to expand and grow considerably such as:

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  Chemicals and synthetic fiber
  
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  Electrical machinery
  
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  Metals
  
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  Basic Iron and Steel products
  
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  Machinery and equipment
  
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  Furniture
  

SMME Support & Development

The development of interventions designed to impact on conditions and opportunities for SMMEs are vital to the economy of the city. While there is no development programme that is specific to SMMEs in the manufacturing sector. Manufacturing SMMEs can be included in current available SMME interventions and programs.

The City of Tshwane’s IDP intends to address the issues of economic growth and development through current SMME’ initiatives and programmes such as:

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  Incubation of manufacturing businesses whereby 120 businesses are incubated per annum
  
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  The SMME development programme whereby 4000 SMME owners are identified and provided with support
  

The trade and development programme which provides support to SMMEs with a specific focus on export trade.

Source: CoT GDS & CoT IDP 2011 - 2016