Andrew Layman, the Durban Chamber of Commerce and Industry
Andrew Layman, the Durban Chamber of Commerce and Industry



more share options...

RSS

‹ Back

Moving and Shaking Business in Durban

2014-11-22

In any thriving and dynamic economy, the moving and shaking is done by the private sector, either in terms of its own powerful business imperatives
or its ability to shape the regulatory framework, or both. In South Africa,
with the tacit approval of the business community, it is government which has occupied the pre-eminent role. This is the expectation of the majority
of the people whose distrust of the private sector and its profit motive shapes a vision of the economic landscape. It is a vision of "radical transformation" and job creation, but lacking sufficient recognition of the engines of growth. Government is able to provide the infrastructure, albeit
belatedly, and it might even have a hand in the vehicles, but it cannot
ensure that the engines run at optimal efficiency and power.
In its recent report, "The Future of Manufacturing: Driving Capabilities, Enabling Investments", the Global Agenda Council stated that in the global context manufacturing has taken on a new face over the past
few decades. The industrialised countries have seen rapid declines
in manufacturing, while this has shown significant increases in
the developing world. The index known as Manufacturing Value Added (MVA) is significant.
According to the report, the world's MVA reached an alltime high in 2013, amounting to $12 000 billion. In two decades, the global MVA increased two and a half times, despite the fact that, especially in the advanced
economies, manufacturing employment declined. The most  improvement occurred in the industrialising countries (by more than three times, in fact). In these, there has been a notable increase in so-called "informal" employment which allows manufacturers to be more agile and more competitive, by employing on the basis of need. Regrettably, South Africa cannot claim to have benefited from the trends, despite the action plans and the stated commitments to industrialisation. It is politically fashionable to point to unused trillions hoarded by the private sector rather than being used to invest in the country and its future. But, just as the sowing of seed in expectation of a good harvest depends on fertile ground, investment requires the certainty and predictability of a conducive environment. The report identifies "three pillars" of manufacturing: factors, standards and costs. Among the factors are labour, land, infrastructure, resources (energy), technology, capital and market. We have some in abundance, but others are scarce, and, in fact, inhibitively so. The national agenda of job creation is at odds, in a way, with the exploitation of technology, while this is difficult considering the
low levels of education within a numerically vast labour force.
The domestic market is limited in size, but the ones that lie beyond
our borders are massive. They are also difficult to access because of transport costs and inadequate infrastructure. The unreliability and shortage of energy have led us just about to crisis point.
In the sphere of standards, the relevant matters are: quality, interoperability, consistency, reliability, environment, safety, security. Some production generated in this country is world class, but some is not,
because it is difficult to achieve high quality without far greater commitment to manufacturing processes. There is too little value chain development, safety and security issues are not pursued as vigorously as they might be, and production is plagued by disruptions of one type or another.
Relevant cost factors relate to the input costs, those to do with distribution and finance and, significantly for our country, those required to comply with the regulatory framework. In none of these areas are we able to match competitors in some other countries.
However, wherever business operates, there is an environment which shapes its progress. It is said that the true entrepreneur does not concern himself with this because it represents circumstances beyond his control, and he finds the way through what others may see as minefields to take the risks that lead to profit. The question is: are we to be victims of perceived constraints or seek the space to move and shake? To use a rugby analogy, there are those who score tries by finding space and using their skills to exploit it, and there are those who arrest their progress by running at the opponent.




Moving and Shaking Business in Durban

Copyright © 2024 KwaZulu-Natal Top Business
x

Get the Flash Player to see this player.