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The Future of Manufacturing Industry in South Africa - An Overview of South Africa's Industrial Policy and Its Impact on Key Sectors of the Economy
Frost & Sullivan, Sep 2010, Pages: 183
This analysis provides insights into the 2010/11 industrial policy action plan as well as an overview of the key trends and success factors driving the changing dynamics in the global manufacturing industry. A detailed analysis on the South African manufacturing environment is provided, including a policy interaction and overlap diagram highlighting the importance of the IPAP2 and its potential contribution to a number of key sectors in the South African economy. Sectors covered include the automotive, clothing & textiles, renewable energy, mining & minerals and the chemicals, pharmaceuticals and plastics sectors. Market dynamics, global trends, capital expenditure and opportunity analysis are covered in each of the sectors.
Research Overview
This Frost & Sullivan research service titled The Future of Manufacturing Industry in South Africa - An Overview of South Africa's Industrial Policy and Its Impact on Key Sectors of the Economy provides an analysis of the total manufacturing industry, as well as an analysis for five key manufacturing sub-sectors. Strategic recommendations are included for all industry participants, as well as market forecasts for the five sub-sectors. In this research, Frost & Sullivan's expert analysts thoroughly examine the following market sectors: automotive and components, renewable energy, chemicals, pharmaceuticals and plastics, mining and minerals, and clothing and textiles.
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Market Overview
South Africa’s Industrial Policy Set to Promote Manufacturing Industry
The future of South Africa’s manufacturing industry is steered by two key government policies, namely the National Industrial Policy Framework, and the revised 2010/11 Industrial Policy Action Plan (IPAP2). IPAP2 is expected to create over 800,000 direct jobs in the manufacturing sector by 2020, while improving manufacturing export competitiveness. The reason behind the new Industrial Policy Plan is that there has been a growing recognition that industrial policy needs to be driven by implementable action plans that will benefit key manufacturing sectors.
“The global manufacturing industry has been drastically changed as a result of the changing focus from economic sustainability to one centred on environmental and social sustainability,” notes the analyst of this research. “This has caused governments from around the world to concentrate on high-tech, export competitive manufacturing products.” This change has left countries such as South Africa unable to compete with low-cost manufacturing bases such as China and India. However, the country has a strong existing R&D base and will be able to incorporate high-technology products and support key downstream industries in generating export-competitive products. Some of these product areas include electric vehicles, natural fibres, and high-strength metals. Since the South African market is still fairly young, it is classified as an emerging market. It is, therefore, projected to experience intermediate to high growth in the next five years to 2016, of approximately 6 per cent.
Key Action Plans to Support Critical Manufacturing Sectors
According to the Department of Trade and Industry (DTI), South Africa’s growth rates have been lower than the average growth rates of medium- and low-income countries. South Africa’s annual GDP growth from 2002 to 2006 averaged 3.2 per cent, in comparison to 5.2 per cent for medium-income countries and 4.8 per cent for low-income countries over the same period.
A strengthened coherence between macro- and micro-economic policy, supported by industrial financing being channelled to real economy sectors, as well as public and private procurement are expected to raise domestic manufacturing output and employment across a range of sectors. These include automotives, chemicals, pharmaceuticals and plastics, green energy and advanced manufacturing. “The role of the IPAP2 serves to advance the work of the DTI, economic sectors and the employment clusters,” concludes the analyst. “This will be achieved through a number of key action plans that serve to support key sectors while boosting rural development initiatives, advanced R&D capabilities, and improved manufacturing capacity.”
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Automotive and components
- Renewable energy
- Chemicals
- Pharmaceuticals and plastics
- Mining and minerals
- Clothing and textiles
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