Localisation for Africa
We believe in the importance of partnerships with labour to support manufacturing growth , which is why we work with them on issues such as local procurement and trade remedies . Higher productivity and bigger volumes is key if we want to sustain higher salaries for factory workers .
What are the current major issues facing the manufacturing sector ? The stability and competitiveness of the exchange rate is a concern . We also have to address unfairly incentivised and illegal imports . We drive the localisation of manufacturing , focusing our attention and energy on the need to curb bunched-up administered price increases .
How does the Rand affect the costs associated to exporting ? What is the best possible scenario ? The volatility and the strength of the rand often makes it very difficult to compete with imports from manufacturing economies where there is a greater degree of monetary policy intervention to keep their currency at advantageous levels . It also makes it difficult to nurture and develop exports , as exporters have to reduce their margins to unsustainable levels to compete .
The instability of the exchange rate also makes it difficult to plan around imports and exports without having to get involved in risky derivatives to hedge any major exchange rate changes .
Input prices are constantly challenged and drive the customer base to source from foreign suppliers . Generally it leads to lower volumes , which increases production costs , putting further pressure on margins . This situation undermines the sustainability of local manufacturing .
South Africa ’ s fiscal policy is in need of a complete overview to ensure that development through the different government spheres is strengthened and that funds for infrastructure development are sourced , spent , recouped and repaid in the most appropriate and efficient way .
We believe that in this process it would be important to benchmark South Africa ’ s fiscal policy against our key competitor markets , such as China , India , Vietnam , Indonesia , the Philippines , Korea , Thailand , Turkey and Argentina .
As a further point to note , South African exports also face discriminatory import duty structures
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