Research on the Performance of the Manufacturing Sector

Mpumalanga

Mpumalanga Provincial Growth & Development Strategy

Overview of Strategy

As a developmental state, Mpumalanga was afforded developmental priorities which have been pursued with an interventionist and purposeful manner. The Mpumalanga Provincial Growth and Development Strategy are aligned to National Government goals, priorities, framework, strategies, and initiatives such as the Accelerated Shared Growth Initiative South Africa (AsgiSA).

Based on the development structures of Government in terms of the existing PGDS and development priorities in recent years, two stand out in relation to the manufacturing sector

• 
  Economic Growth and Development
  
• 
  Job Creation
  

The objective of the Mpumalanga PGDS is to provide a co-ordinated developmental policy and strategy to address strategic objectives. The objective that the PGDS aims to fulfill is to:

“Actively promote and support economic growth and development in terms

Of the provincial economy, it’s linkages to the national and international

Economy and with an emphasis on provincial priorities such as targeted

Growth areas, priority sectors and corridors as well as developmental priorities

such as employment and eradicating poverty”

Source: Mpumalanga PGDS

Mpumalanga’s Regional economy is significantly reliant on the primary sector which accounts for 22% of the Gross Geographical Product (GGP). Mining and quarrying account for 83% of the primary sector activities with the rest made up of agriculture and others.

The Secondary sector accounts for 22% of the GGP and is dominated by the manufacturing sector which is heavily reliant on inputs from the Primary Sector. The Secondary sector is made up of:

• 
  Petrochemicals & Chemicals,
  
• 
  Metal products(including machinery & equipment) from mining,
  
• 
  Agro Processing (food; beverages and wood products from agriculture & forestry).
  
• 
  Energy (Electricity and water are also included within the secondary sector contributing to 19% of the total value of secondary activities.
  

The province’s economic Growth strategy relies heavily on private sector investments and the facilitation of direct interventions, such as continuing to focus on public employment programmes.

The manufacturing sector, as well as the mining sector, has in the past created very few employment opportunities due to the capital intensive nature of the industries. Therefore, new capital-intensive industries need to be identified and pursued in the goal to create more employment in the province.

The PGDS scope of the priorities towards employment creation is expanded upon below, identifying three key components:

• 
  Pioneering Initiatives that could act as catalysts in new fields;
  
• 
  A range of options which might address some of the challenges in creating employment – although a thorough investigation and analysis complete to test the viability of these options.
  
• 
  Provincial government’s existing programmes.
  

The provincial government plans to support the manufacturing sector through programmes that are linked to specific outcomes

Such as:
Pioneering PGDS Initiative

• 
  Create a Food Technology Centre to identify, develop and commercialise new agro-processing technologies and opportunities.
  

PGDS supporting options related to manufacturing

• 
  Target infrastructure maintenance, rehabilitation and extension –the key factor to support movement of goods and services and the lifeblood of the economy (including water, industrial parks, ICT and spatial development initiatives including the Maputo and Moloto Corridors)
  
• 
  Target primary product value-chains – maximise synergies between provincial primary products, their use in manufacturing and the tertiary sector support required in this process
  
• 
  Target agricultural beneficiation – Mpumalanga’s agricultural products permit a significant expansion of the agro-processing sector (agro value chain centres)
  
• 
  Target forestry beneficiation – wood has traditionally been used for a variety of domestic purposes including house-roofs, floors, furniture, etc, so there is room for developing value-added products and to “reinvent” older technologies
  
• 
  Target poverty reduction initiatives – these can offer opportunities for local benefit – for instance the manufacturing of stainless steel sinks for low-cost housing developments
  
• 
  Target Eskom & Transnet capex plans – between them they plan to spend more than R 400 billion on new infrastructure over the next five years
  
• 
  Target SMME development in all economic sectors – financial and non – financial support
  

Key existing PGDS programmes and projects

• 
  Maputo Development Corridor Flagship Programme
  
• 
  Moloto Rail Development Corridor Flagship Programme
  
• 
  Industrial Park close to KMIA
  
• 
  Siyatentela (women empowerment project in construction)
  
• 
  Vul’ematfuba (bursary programme)
  

Source: Mpumalanga PGDS Framework Page 68 of 83 August 2008

Focus on Manufacturing

The Gert Sibande District was the largest contributor to the manufacturing GVA of the province at 54.8% in 2010, highlighting the potential that this district has in the manufacturing sector.

The Agricultural and Mining sectors play a critical role in the manufacturing sector value chain, through the supply of raw materials, especially for the production of wood products and the food processing industry.

The provincial government has earmarked key “Job Driver” industries in manufacturing to facilitate job creation:

• 
  Agro processing
  
• 
  Forestry (paper and pulp manufacturing)
  
• 
  Mining
  
• 
  Energy (Bio Fuels)
  

Overall, the manufacturing sector contributes approximately 20% to the provinces GVA, but is only the fifth most labour intensive sector, which highlights the capital intensive nature of the provinces manufacturing sector.

The provincial government has indicated that there are industries identified as key job creators in the manufacturing sector, however another industry has the potential to become a job creating industry and that is the production of charcoal, according to the Mpumalanga growth path strategy there is a steady increase in the demand for charcoal in the country and Mpumalanga through its forestry industry is in an ideal position to develop and grow this industry. The charcoal industry is seen as ideal for SMME development. Evidently large charcoal producer indicated a willingness to form partnerships with small‐scale producers to secure huge charcoal supplies on a regular basis. They are often prepared to provide funding, training and the initial investment required for small‐scale production plants.

According to the Mpumalanga growth path opportunities to grow, develop and expand the manufacturing sector lie in Beneficiation, Agro Processing and the ferrochrome industry as they have readily available markets locally and internationally.

When looking at the mineral resources that the province has available, investment in the manufacturing sector is critical to expand the sector as well as to develop capacity to contribute meaningfully to the economy in terms of growth and development as well as job creation.

Key areas for intervention to facilitate growth and job creation in the manufacturing sector:

1. 
   Invest in industrial infrastructure to encourage enterprise development.
   
2. 
   Enhance skills development, especially in the areas of engineering, artisan, business and project management.
   
3. 
   Provide comprehensive support to SMMEs development.
   

SMME Support and Development

According to the province’s growth path, SMME support and development is mentioned in every economic sector strategy highlighting the importance of SMME development not only in the manufacturing sector but in the provinces economy as a whole.

The province aims to provide support to SMMEs by facilitating the implementation of national SMME development strategies, programmes and interventions at a provincial and local level.

The provincial government would further solidify existing relationships with the DTI and enterprise development agencies.

The province has targeted Financial and Non financial support for SMMEs.

Municipal Growth & Development Strategy

Mbombela Local Municipality (MLM)

Strategy Overview

The MLM integrated development plan is aligned to the priorities, goals, and objectives of both National and Provincial government, The MLM IDP is linked with the following national and provincial initiatives:

• 
  Accelerated shared growth initiative South Africa (AsgiSA)
  
• 
  The National Spatial Development Perspective (NSDP)
  
• 
  Provincial Growth and Development Strategy(PGDS)
  
• 
  Medium Term Strategic Framework (MTSF)
  
• 
  Mbombela Long Term Growth and Development Strategy. (MGDS)
  

Key priorities:

• 
  Job Creation,
  
• 
  Growth and Development.
  
• 
  Skills Development
  

Focus on Manufacturing

One of the major constraints affecting the forward development of the manufacturing sector is the lack or absence of skills amongst the areas workforce. The MLM aims to address the issue of skills development by implementing:

• 
  government skills development initiatives and programmes at a local level
  
• 
  Develop internship programmes.
  

The MLM plans to enhance and expand the manufacturing sector by:

• 
  Developing Industrial Development Zones (IDZ) which will also enhance the competiveness of the manufacturing sector and to increase exports to neighbouring African countries.
  

Key objectives of the programme include:

• 
  Attract Foreign Direct Investment (FDI)
  
• 
  Attract advanced foreign production and technology methods in order to gain experience in global manufacturing and production networks
  
• 
  Develop linkages between domestic and zone-based industries
  
• 
  Provide world-class industrial infrastructure
  

SMME Support & Development

• 
  The SMME sector is seen as a key sector in the quest to create employment on a national, provincial, and local level.
  
• 
  The MLM does have a funded programme to assist SMMEs across all economic sectors however more funding is required than what is currently available.
  
• 
  The MLM does not have manufacturing sector specific programmes to assist SMMEs in the manufacturing s