An analysis of South Africa's manufacturing sector export potential using the Growth Identification and Facilitation Framework (GIFF)

Abstract

Increased world trade has enhanced competition between manufacturers globally across countries. However, over the past 20 years, the manufacturing industry's share in South Africa's GDP, employment, and exports has been waning. In the wake of these changes, this study seeks to identify the potential export products of the South African manufacturing industry. Further, this study seeks to identify the sector's main constraining factors and suggest mitigation policies. To this end, the Growth Identification and Facilitation Framework (GIFF) is utilised. This is an industrial development approach that identifies other countries with similar economic endowments as South Africa whose manufacturing sectors and exports have grown relatively faster over the 20 years between 1998 and 2018, but which now have lost that export competitiveness. It is envisioned that if the benchmark countries can grow manufacturing export competitiveness relatively faster than South Africa by exporting these products, then South Africa may realize similar success by trailing their manufacturing sector and targeting similar goods for export. Utilising the GIFF, this study identifies Vietnam, India and China as the benchmark countries and uses the Normalised Revealed Comparative Advantage (NRCA) index on 200 manufacturing sub-sectorial export data to determine the competitiveness of these subsectors from 1998 to 2018. A total of 24 manufacturing subsectors from the benchmark countries are identified for South Africa’s production focus. In addition, this study identifies scaling-up potential in subsectors where South Africa exhibits fast export growth through gaining more competitiveness in the export market. A total of 37 of the 199 South African manufacturing subsectors were found to be competitive as at 2018 and are forecast to remain competitive through to 2023. However, while 15 manufacturing subsectors were not found competitive, their NRCA has been increasing such that they are forecast to attain competitiveness by 2023. Of the 33 subsectors identified as labour-intensive and resource-intensive manufactures, the study found a general increase in imports of natural resource manufacturers, 25 of the 33 subsectors did not show any export competitiveness from 2000 to 2018 and neither are they forecast to gain it. Consequently, the lack of export competitiveness of these sectors may instead justify their importation as necessary raw materials for South Africa. However, within the list, South Africa possesses the capability to manufacture certain goods locally. The study finds that rising wages in the benchmark countries presents an opportunity for South Africa to attract labour-intensive firms that seek new, low-cost production locations. However, while South Africa had the lowest electricity costs prior to 2017, from 2018 electricity costs for South Africa became the second highest among these countries which now suggests that other constraints may have limited the improvement of manufacturing competitiveness prior 2017. Compared with its benchmark countries, South Africa had the highest real interest rate in 2018, representing the highest cost of borrowing for manufacturers. The current sunset industries of China, India and Vietnam have potential to be South Africa’s sunrise industries that can improve locally manufactured exports and create local employment. This study concludes by recommending that South Africa improves the quality and policies governing exports, and that it addresses the constraints of interest rates, labour, and electricity costs (amongst other factors) to safeguard and strengthen the dynamics that enable South Africa’s competitive subsectors.

Nakuba ukwanda kohwebo lwamazwe ngamazwe kukhuphule ukuncintisana phakathi kwabakhiqizi emhlabeni jikelele, kule minyaka engama-20 edlule, isabelo semboni yezokukhiqiza ku-GDP yaseNingizimu Afrika, ukuqashwa kanye nokuthunyelwa kwempahla kwamanye amazwe besilokhu sincipha. Ngemuva kwalezi zinguquko, lolu cwaningo luhlose ukuhlonza imikhiqizo engase ibe khona embonini yokukhiqiza yaseNingizimu Afrika. Ngaphezu kwalokho, lolu cwaningo luhlose ukuhlonza izici ezingqala eziyisithiyo kulo mkhakha futhi luphakamise nezinqubomgomo zokunciphisa lokhu. Kuze kube manje, kusetshenziswa i-Growth Identification and Facilitation Framework (GIFF). I-GIFF iyindlela yokuthuthukisa izimboni ehlonza amanye amazwe anekhono lezomnotho elifana nelaseNingizimu Afrika futhi imboni yawo yezokukhiqiza kanye nokuthunyelwa kwempahla kwamanye amazwe kukhule ngokushesha uma kuqhathaniswa phakathi neminyaka engama-20 phakathi kunyaka we-1998 nowezi-2018 kodwa manje aselahlekelwe yilelo khono lokuncintisana kwamanye amazwe. Kucatshangwa ukuthi uma amazwe okulinganisa angakhulisa ukuncintisana kwezokukhiqiza ngokushesha kuneNingizimu Afrika ngokuthumela le mikhiqizo emazweni angaphandle, iNingizimu Afrika ingase ithole impumelelo efanayo ngokulandela umkhakha wawo wokukhiqiza futhi iqondise izimpahla ezifanayo ezizothunyelwa kwamanye amazwe. Kusetshenziswa i-GIFF, lolu cwaningo luhlonza iVietnam, Indiya kanye neShayina njengamazwe okulinganisa futhi lisebenzisa inkomba ye-NRCA ye-Normalized Revealed Comparative Advantage (NRCA) kudatha yokukhiqiza enga-200 yokuthekelisa engaphansi ukuze kutholwe ukuncintisana kwalezi zigaba ezingaphansi kusukela ngonyaka we-1998 kuya kowezi-2018. Isamba sezigatshana zokukhiqiza ezingama-24 emazweni okulinganiswa ahlonzwe ukuze iNingizimu Afrika igxile ekukhiqizeni. Ukwengeza, lolu cwaningo luhlonza amandla okukhula emikhakheni engaphansi lapho iNingizimu Afrika ikhombisa ukukhula okusheshayo kokuthunyelwa kwempahla kwamanye amazwe ngokuzuza ukuncintisana okwengeziwe emakethe yokuthekelisa. Isamba esingama-37 kweziyi-199 zezimboni zezokukhiqiza zaseNingizimu Afrika ezitholwe zikwazi ukuncintisana ngonyaka wezi-2018 futhi kubikezelwe ukuthi zizoqhubeka nokuncintisana kuze kube ngunyaka wezi-2023. Izigatshana eziyi-15 zokukhiqiza zitholakale zingakwazi ukuncintisana, nokho, i-NRCA yazo ibilokhu ikhula kangangokuthi kulindeleke ukuthi ifinyelele ukuncintisana ngonyaka wezi-2023. Ezigabeni ezingaphansi ezingama-33 ezihlonzwe njengabakhiqizi abasebenza kakhulu nabasebenzisa izinsizakusebenza, izigaba ezingaphansi ezingama-25 kwezingama-33 ezingabonisi noma yikuphi ukuncintisana kokuthekelisa phakathi konyaka wezi-2000 nowezi-2018 futhi azibikezeli ukuthi zizokuzuza. Ngakho-ke, ukuntuleka kokuncintisana kwamanye amazwe kwalezi zinkampani kungase kuthethelele ukungenisa kwazo izimpahla zokusetshenziswa ezidingekayo eNingizimu Afrika. Kodwa-ke, iNingizimu Afrika inamandla okwenza kuleli lizwe izimpahla ezithile ohlwini lokungeniswa kwamanye amazwe Ucwaningo luthola ukuthi ukukhuphuka kwezindleko zikagesi kanye nenzalo ephezulu yangempela yizingqinamba emkhakheni wezokukhiqiza wezwe. Izimboni zamanje zokushona kwelanga eShayina, eNdiya naseVietnam zinamandla okuba izimboni zaseNingizimu Afrika eziphuma ngaphandle, zithuthukise ukuthengiswa okukhiqizwa kuleli kanye nokudala amathuba omsebenzi akuleli. Lolu cwaningo luphetha ngokuncoma ukuthi iNingizimu Afrika kufanele ithuthukise izinga kanye nezinqubomgomo ezilawula ukuthunyelwa kwayo emazweni angaphandle, nokuthi kufanele ibhekane nezingqinamba zentela yenzuzo, izindleko zabasebenzi kanye nogesi (phakathi kwezinye izinto) ukuze kuvikelwe futhi kuqinise amandla okwenza iNingizimu Afrika ibe nokuncintisana kwezigaba

Nangona urhwebo lwamazwe ngamazwe ehlabathi lwandise ukhuphiswano phakathi kwabarhwebi behlabathi kule minyaka ingama-20 idluleyo, isabelo sabarhwebi baseMzantsi Afrika kwiGDP siya sisihla. Ngenxa yezi nguqu, esi sifundo sifuna ukuchonga iimveliso zorhwebo loMzantsi Afrika ezinokuthunyelwa kwamanye amazwe. Ngaphezulu, esi sifundo sifuna ukuchonga izinto ezibambezela urhwebo, emva koko sicebise ngeenkqubo ezinokuba luncedo. Ukuze kuphunyezwe ezo ngcebiso, kusetyenziswe isakhelo sokusebenza esaziwa ngokuba yiGrowth Identification and Facilitation Framework (GIFF). Le GIFF yindlela yophuhliso echonga amanye amazwe anemithombo yezoqoqosho efanayo neyoMzantsi Afrika, mazwe lawo anamacandelo okuvelisa nokuthumela kumazwe ehlabathi akhule ngokukhawuleza kule minyaka idluleyo ingama-20 nebiphakathi kweminyaka ye-1998 kunye nama-2018 ekubonakala ukuba ngoku liyehla izinga lokhuphiswano phakathi kwaloo mazwe. Kukholelwa ukuba xa la mazwe achongiweyo enokukhulisa izinga lokhuphiswano ngokukhawuleza okudlula uMzantsi Afrika ekuthumeleni iimveliso zawo kwihlabathi liphela, uMzantsi Afrika unganempumelelo ekulandeleni loo macandelo amanye amazwe, nawo uzame ukuthumela iimveliso ezifanayo kumazwe ehlabathi Ngokusebenzisa iGIFF, esi sifundo sichonge iVietnam, i-India kunye neChina njengamazwe othelekiso, sabuya sasebenzisa isalathisi esiyiNormalised Revealed Comparative Advantage (NRCA) sengxelo yokuthunyelwa kweemveliso ezingama-200 kumazwe ehlabathi phakathi kweminyaka ye-1998 nama-2018 ngenjongo yokuqwalasela amandla okukhuphisana kula macandelo. Angama-24 ewonke amacandelo okuvelisa achongiweyo kula mazwe othelekiso, ngenjongo yokuqwalasela ukuvelisa koMzantsi Afrika. Ngaphaya koko, esi sifundo sichonge Amandla okuziphucula kumacandelo apho uMzantsi Afrika ubonakalisa ukukhawuleza kokukhula ekuthumeleni iimveliso ehlabathini ngokuthi ukhulise ukhuphiswano kwimarike yokuthumela iimveliso kwihlabathi ngokubanzi. Angama-37 kwi-199 amacandelo oMzantsi Afrika afumaniseka enokhuphiswano ngonyaka wama-2018, nekwaqikelelwa ukuba aya kuhlala enjalo de kube ngowama-2023. Amacandelo okuvelisa ali-15 afumaniseka engenalo ukhuphiswano, noxa kunjalo iNRCA yawo iyakhula, kangangokuba kuqikelelwa ukuba amandla awo okhuphiswano aya kuba ekhule ngokwaneleyo ngowama-2023. Kumacandelo angama-33 achongwe njengalawo asebenzisa nzima nafuna imithombo emininzi, angama-25 akabonisanga mandla okhuphiswano phakathi kweminyaka yama-2000 neyama-2018 kwaye akuqikelelwa ukuba angakhula loo mandla okhuphiswano. Ngoko ke, ukungabikho kwamandla okhuphiswano kula macandelo, ekuthumeleni iimveliso kwihlabathi kungasisizathu esivakalayo sokubizela ngaphakathi imithombo ekrwada yokuxhasa ukuvelisa eMzantsi Afrika. Noxa kunjalo, uMzantsi Afrika unawo Amandla okuvelisa iimveliso ezithile ezikuluhlu lwezo zidweliselwe ukubizelwa ngaphakathi. Esi sifundo sifumanise ukuba ukunyuka kwamaxabiso ombane nawenzala yeebhanki kuyimiqobo ekukhuleni kwecandelo lorhwebo. Urhwebo olukhoyo lweemveliso eziphelelwayo (olwaziwa ngokuba yisunset industries) eChina, eIndia naseVietnam lunakho ukukhokelela kurhwebo lweemveliso eziphelelwayo eMzantsi Afrika, lukhulise ukuthunyelwa ngaphandle kweemveliso ezenziwe apha ekhaya, ludale namathuba engqesho. Esi sifundo sivala ngokucebisa ukuba uMzantsi Afrika mawuphucule umgangatho nemigaqo nkqubo elawula ukuthunyelwa ngaphandle kweemveliso zawo, kwaye kufuneka uqwalasele imiqobo edalwa sisantya senzala yeebhanki, iindleko zokusebenza nezombane (phakathi kweminye imiba) ukwenzela ukuba ikhusele kwaye yomeleze imibandela eguquguqukayo ekhulisa amandla okhuphiswano kumacandelo orhwebo eMzantsi Afrika.