Localisation for Africa in the same key markets that we export to , as well as many non-tariff barriers , few of which we apply ourselves .
Customs and Imports ? South African manufacturers face huge challenges because of cheap imports from amongst other China , India and Vietnam coming into the South African market at prices that are , in certain instances , below the prices of locally sourced raw materials .
Manufacturers also complain about customs tariffs on raw materials , when end product finished goods enter the country duty-free from some countries . In the case of Chinese imports , fixed currency levels are reported .
The influx of cheap imports has aggravated this margin squeeze .
Labour intensive , added value products find it difficult to compete in the domestic market in the face of such unfair competition . It reduces the economies of scale , which results in destructive marginal squeeze .
This makes it difficult for local manufacturers to maintain their labour forces . It also impacts on their ability to contract out to smaller suppliers , which in turn impact negatively on small business growth . Ultimately , this situation has in numerous instances caused business failure .
In addition , where abuses occur , the lack of transparency caused by outdated provisions in the Customs Act makes it difficult to trace problem products back to importers .
Where stage consignments are granted , the degree to which imports under such provisions enter the country unchecked has yielded massive opportunities for goods that find their way onto the domestic market without attracting import tariffs .
In terms of discriminatory tariff and non-tariff barriers , the impact is obviously negative on the ability of South African manufacturers to leverage demand in export markets .
The Manufacturing Circle is currently engaged with SARS , ITAC and the DTi in this regard . Notwithstanding significant initiatives under way , the Manufacturing Circle in general believes there should be a much greater degree of co-operation between our trade administration , trade policy , standards and customs authorities to facilitate the following :
• Tighter monitoring and control , with regular random sampling to ensure that all imports comply with the necessary quality and safety standards ;
• Amending section 4 of the Customs Act to bring it into line with global practice on transparency of imports ;
• Rolling out price referencing systems to key / problem industries ;
• Reviewing and benchmarking tariff and non-tariff barriers for products being imported to and exported from South Africa on a regular basis to ensure a level playing field and the appropriate apportionment of human and other resources in terms of the operations at our border posts and otherwise ;
• A more assertive and bold stance in our trade negotiations with major trading partners that leverages our strategic advantages in raw materials and otherwise to ensure a level playing field for South Africa as a small , open economy , who would like to grow its domestic manufacturing industry by competing with fair imports in its domestic market , as well as competing through fair exports in foreign markets ; and ,
• The entrenchment of the promotion of domestic manufacturing , growth and job creation through the implementation of trade policy , trade administration , standards and customs provisions as a key concern of the institutions that are responsible for their implementation .
In this regard , the Manufacturing Circle would like to see the willingness of these institutions to provide clarity and a willingness to assist with quick turnaround times in situations where unfair competition is experienced .
What prospects are there for local manufacturers to export into Africa ? It is a fact that Africa is growing rapidly , albeit from a low base , and it is expected to maintain its well-above-global average growth for the next few decades . As such , SA needs to have a strategy that gives us a competitive edge within Africa . Such a strategy should have both short and medium term elements .
Numerous members of the Manufacturing Circle have had longstanding arrangements to export into Africa . Namibia , Botswana , Zambia , Kenya and Swaziland are some of the markets that have seen the longest involvement by South African manufacturers . There is also activity in Angola , Botswana , Zambia , Lesotho , Malawi and DRC . Further opportunities are currently investigated in markets like Mozambique , Ghana , Zimbabwe , Mauritius and Nigeria .
In certain cases , manufacturing needs to happen in the destination market rather than imported , which means limited opportunity for exports . In cases such as these , local producers have engaged in scouting for export opportunities on behalf of their South African manufacturing customers . Research into market possibilities is ongoing and the longterm prospects to leverage the demographic trends in Africa through the production of durable consumer goods are under consideration . South African manufacturers compete in these markets on superior service and quality and by developing products that are suited to the affordability , quality and functionality requirements of customer demands .
And challenges in the African market ? Lack of basic rail infrastructure and poor road networks to markets , along with protracted border clearance procedures mean significant costs and delays for manufacturers exporting to African markets . Logistics into Africa Overland is also a stumbling block as very few South Africanbased transport companies are geared for cross border travel or have the fleet strength to support this . Credit risk has also rendered challenges for manufacturing Circle members as credit insurance companies take precautionary approaches when dealing with African countries that are of high risk . This necessitates credit insurance companies that are more Africa-focused .
What are the ramifications to the manufacturing sector after Lonmin and the transport sector mass industrial action ? Interruptions in the output of the mining sector are always a concern , as manufacturing output is heavily dependent on the mining industry for its sustenance . It is also a concern that a precedent has been set where a violent and unprotected strike has resulted in a superinflationary settlement .
How will the Moody cut effect the manufacturing sector ? The rating downgrades will no doubt impact on Government ’ s ability to roll out infrastructure at competitive costs , which could lead to less demand for South African manufactured infrastructure inputs , as well as to higher administered prices in the long run .
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