Localisation for Africa
INDUSTRY CLUSTERS : IS HISTORY REPEATING ITSELF ?
The concept of clustering is a popular one the world over . It was introduced by Michael Porter , an economic expert and Harvard professor , who defined a cluster as the geographic concentration of inter-connected companies and institutions working in a common industry . Clusters encompass an array of collaborating and competing services and providers that create a specialised infrastructure , which supports the cluster ’ s industry . Clusters draw upon a shared talent pool of specialised , skilled labour .
Although Porter ’ s definition was introduced in the 1990s and has become a popular concept in South Africa , a journey back in time suggests that it may only be the terminology that is new and that the cluster concept was widely utilised in South Africa between the 1960s and the 1980s .
Sybil Rhomberg , MD of the SA Capital Equipment Export Council , reminded me recently that the Standing Committees of the 1960s are no different to the various industrial clusters in South Africa today , such as VAMCOSA , the Pump Cluster , the Rail Cluster , etc .
Whereas today we talk about designated products and local content , in 1961 the first in a series of local content programmes was introduced and managed in clusters . At the time , the Standing Committees , as they were known , were supported by a myriad of professionals who represented state-owned companies , research and development , universities , education authorities , the Department of Trade and Industry , the Treasury Department and of course , members of industry .
A massive supplier exchange programme ( much like the UNIDO SPX ) was launched which encouraged local businesses to register and be benchmarked so that the capabilities , capacity and gaps of suppliers could be clearly understood . Ultimately , the goal was to match suppliers to buyers , who were predominantly state-owned companies . An important secondary benefit was that the process of identifying gaps allowed for measures to be put in place to close the gaps , including via joint ventures with international companies who were able to offer technology improvements .
The development of the Standing Committees , campaigns to encourage local businesses to participate and of course , the process of addressing identified gaps , took massive monetary investment from the government . There were offices in Germany , Austria and France from where requisite skills could be sourced and imported . Today we call this technology and skills transfer . The various Standing Committees were housed at the Eskom Conference Centre for many years and were successful - to the extent that South African government spending could be given the skewed reality of government spending at the time . As capital raising and foreign direct investment became scarce , the funding dried up and the Standing Committees ceased to exist .
Are there lessons to be learned from the Standing Committees of pre-democracy South Africa ?
There is no question that it is going to take some time to achieve momentum in the clusters and to understand the full value chain of each sector . On the other hand , so much good work has already been done and I have a sense that it really is just a case of knuckling down . Let ’ s move past the designated products and get them legitimised through practice notes so that industry can see some orders . The converse scenario , of course , is that if these processes are not accelerated , certain stateowned companies may decide to stockpile or simply ignore the designated products .
Funding is an important cornerstone in the success or failure of clustering . Current government structures will need to invest in the development and continued funding of clusters , as neither the Export Council nor the private sector can carry these costs . Rather , the drive for industrialisation and investment in manufacturing should be centralised with government to ensure that local businesses have a fair chance of success .
The importance of buying local cannot be overemphasised . Clusters are popular worldwide as a result of the global economic crisis . The USA has developed clusters and industrial summits to support manufacturing and has worked hard to drive the message that buying locally manufactured products means
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