R500m incentive gives steel industry a leg up

Seifsa CEO, Kaizer Nyatsumba.

The new R500-million incentive programme for the metals and engineering sector launched last week by Trade and Industry Minister, Rob Davies could help manufacturers to penetrate new international export markets and help the industry to grow its exports into Africa.

This according to Steel and Engineering Industries Federation of Southern Africa (Seifsa) CEO, Kaizer Nyatsumba, who said the programme would help to improve productivity, competitiveness and make local industry more attractive to international markets.

“The largest challenge for the industry has been in increasing the levels of productivity, and one reason manufacturers are left behind is that they don’t have access to finance to invest in improving their capabilities,” he told FTW Online. “The incentive will help manufacturers make the necessary investments in the latest technologies in order to produce goods at lower unit costs, making the sector more competitive.”

He said that Africa was already South Africa’s biggest export market – but that there was a lot of potential to grow this even further. To do so local industry needed to be able to compete with China and the US on the continent, he added.

“I can’t quantify what the impact of the incentive will be, but I can say that it will lead to higher levels of manufacturing for both domestic and international markets,” added Nyatsumba.

“The metals and engineering sector has struggled over the past few years, so any action by government to incentivise production is welcome as incentives are an important supporter of manufacturers,” Nyatsumba said.

According to dti deputy director-general for incentive development and administration, Malebo Mabitje-Thompson, the programme is intended to support the purchase of equipment and enhance the activities of an enterprise.

“We are worried that if the sector continues to decline in the manner in which it is declining now, we will quickly de-industrialise,” she said. “We want to stabilise the foundry sector and in doing so also work with the engineering services.”

Mabitje-Thompson told FTW Online that it was government’s responsibility to partner with industry in order to maintain a competitive and growing industry through continuous support.

She said that government was looking to make the M & E sector “world class” by helping manufacturers to refurbish and reinvest in their enterprises rather than competing in export markets with their current capabilities.

“We are looking to increase the level of output and hopefully create additional jobs along with opportunities for transformation as research has shown that the economies of more equal societies grow faster,” added Mabitje-Thompson. “The majority of the population in South Africa is still excluded from participating in or contributing to the economy, thus stagnating growth.”

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