africagrowth institute sme conference: sept2012

BLACK INDUSTRIALISATION – QUO VADIS?

Innovative Enterprise Development Thinking

Enterprise Development • Research • Evaluation

AFRICAGROWTH INSTITUTE SME CONFERENCE: SEPT2012

“We think South Africa is faced with the imminent fate of de-industrialisation”

Garth StrachanChief Director: Industrial Development DivisionDepartment of Trade & Industry

Source: www.ru.ac.za/latestnews/name,66828,en.html (released Thursday 23 August 2012, accessed 26 September 2012)


THE ISSUE STARTS HERE

http://www.ru.ac.za/latestnews/name,66828,en.html

“… the dti will facilitate the development and implementation of a medium- to long-term industrialisation programme, guided by the following goals:

•Industrialisation, characterised by broader participation of historically disadvantaged people and marginalised regions”

Source: the dti, Medium-Term Strategic Framework 2010-2013, p.35


THEN MOVES HERE

“Black industrialists needed as South Africa shifts to investment-led growth path”

Attributed to Minister Pravin Gordhan, speaking at the launch of the Black Business Council (Engineering News 1 March 2012)

“President Jacob Zuma has urged black businessmen to move away from only owning shares or fronting to becoming authentic industrialists who own factories and mines”

(Mpho Masondo, Times Live, 6 September 2011)


AND THEN HERE …

“… the dti will facilitate the development and implementation of a medium- to long-term industrialisation programme, guided by the following goals:

•Contribution to industrial development on the African continent, with an emphasis on building productive capacities”

Source: the dti, Medium-Term Strategic Framework 2010-2013, p.35


AND THEN FINALLY HERE …

Black industrialisation is about:

•Black entrepreneurship

•South Africa’s and

•Africa’s economic progress

That’s why it’s such an important project!!


THEREFORE


WE HAVE A LONG WAY TO GO

SIC Major Division SMME size category Total Per centMicro Very

smallSmall Medium

Agriculture, hunting, forestry and fishing 7995 3435 5512 1252 18194 3.4%

Mining and quarrying 529 1049 309 373 2260 0.4%

Manufacturing 15543 33480 6328 4803 60154 11.3%

Electricity, gas and water supply 380 699 90 61 1230 0.2%

Construction 11868 20137 3254 3536 38795 7.3%

Wholesale and retail; repair of motor vehicles,

motor cycles and personal and household goods;

hotels and restaurants

33643

68259

16205

4268

122375

22.9%

Wholesale trade, commercial agents and allied

services

7321 17747 4744 922 30734

Retail and motor trade and repair services 2054 38579 11165 2607 72895

Catering, accommodation and other trade 5778 11933 296 739 18746

Transport, storage and communication 5895 9379 2434 596 18304 3.4%

Financial intermediation, insurance, real estate

and business services

108,307 102678 21728 4720 237433 44.4%

Community, social and personal services 16015 11644 7080 1077 35816 6.7%

Total 200175 250760 62940 20686 534,561 100%Source: Based on the Annual Review of Small Business in South Africa: 2005-2007, the dti, pp62-63

“African manufacturing industries are squeezed by

competition pressure on two fronts. On one front, Africa

faces competition from knowledge-intensive economies

in the industrialized countries, which occupied 70 percent

of the global manufacturing market in 2005”


EVEN MORE SO IF YOU CONSIDER THIS [1]

“On another front, Africa must compete with other

developing and transition economies, including the

emerging manufacturing giants in Asia, which derive

much of their competitive strength from low labor costs ”



“Together, other developing and transition economies

enjoyed a market share of over 20 percent in 2005,

leaving only 1 percent for Sub-Saharan African firms, of

which South Africa alone accounts for more than half ”

Source: The World Bank, “Fostering technology absorption in Southern African enterprises”, 2011




WE HAVE A REALLY LONG WAY TO GO

Composition of global manufacturing value added, 2005

Economies Global share (%)

Industrialized countries 69.4

South Africa 0.4

Sub-Saharan Africa excluding South Africa 0.3

China 9.8

East Asia and the Pacific excluding China 7.7

Mexico 1.7

Latin America and the Caribbean excluding Mexico 4.7

Middle East and North Africa 2.2

Transition economies 1.7

India 1.4

South Asia excluding India 0.4

Least-developed countries 0.3

I was asked this question in February 2010 in Taiwan. My answer was:

“Something extraordinary”

I still maintain that position.


SO WHAT SHOULD WE DO?

I believe the answer lies in a single-minded focus on

Entrepreneurship driven by innovation, technology transfer and technology commercialisation


WHICH IS WHAT?

“Technological transfer and absorption play a critical role

in development. Technology absorption is particularly a

driver for ‘catch-up growth’. Knowledge acquired from

the global economy is thus the fundamental basis of

economic catch-up and sustained growth”


• Put in place the right incentives for firms (market structure and competition, open trade, sound investment climate)

• Foster access to technology (inter-country, intra-country, intra-industry, intra-firm)

• Build absorptive capacity (education and learning)


SO WHAT SHOULD WE FOCUS ON?

• Technology Innovation Agency’s Funds and Technology Stations Programme

• SEDA’s Technology Programme / Incubation

• Various dti offerings, e.g. Support Programme for Industrial Innovation, BBSDP, Technology for Women in Business

• Research Institutes and universities

• Multilateral agencies such as UNIDO, Technonet


WE HAVE THE INSTRUMENTS

We need to harness all these instruments – and more – to do something extra-ordinary to drive the country’s industrialisation through small (Black) entrepreneurs.

The key question is: Who’ll be the driver?

1. The dti?

2. BBC’s National Industrial Development Forum?

3. Or who?


WHO WILL DRIVE IT?

Septi M. Bukula

Ground Floor, Block FThe Palms Office Park391 Main Avenue, Ferndale Randburg, South Africa

T: 011 326 4082C: 081 561 7610E: [email protected]: www.osiba.co.za


CONTACT DETAILS

africagrowth institute sme conference: sept2012

Documents