SA’s Evaporating Manufacturing Sector
The chart below is concerning on so many fronts. It shows manufacturing as a percentage of South Africa’s GDP falling from 25% in 1980 to less than 13% today.
Manufacturing’s contribution to SA’s GDP
Source: CDE, World Bank, OECD
The chart, compiled by the Centre for Development and Enterprise (CDE), offers a number of explanations for this decline:
- Lower mining activity on which manufacturing depends
- Bad policies such as BEE that add to the costs of doing business
- SA’s deteriorating quality of infrastructure (such as loadshedding and Transnet Freight Rail’s retrogression to the point where it ships the same volumes as it did just after World War 2)
Just one in five SA firms export anything at all and of these, more than half export less than 5% of what they produce.
A protectionist policy favoured by government does more harm than good. Look at the automotive industry, which is coddled with tariff protection that makes SA vehicles more expensive (by far) than they are in the US. Yes, it creates a few thousand highly skilled jobs, but overall this raises the cost of transport for everyone.
This helps the shareholders of VW, Mercedes, Toyota and others, but it does not help SA consumers.
Just who is the government working for? It’s clearly not you or me.
