Western Cape to focus on developing manufacturing sector to stimulate job creation and economic growth

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Western Cape to focus on developing manufacturing sector to stimulate job creation and economic growth
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Western Cape to focus on developing manufacturing sector to stimulate job creation and economic growth
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09 April 2019

Source: The Department of Economic Development and Tourism.

The Department of Economic Development and Tourism in the Western Cape will be focused on developing the manufacturing sector in the province in the 2019/20 financial year as a way to stimulate the economy and create new jobs.

The Department has allocated R132 million in stimulus funding over the next three years to support manufacturing in non-metro municipalities across the province.

Minister of Economic Opportunities, Beverley Schäfer said “we import too much and we produce too little. As a country, our imports of clothing, textiles and leather goods have sky-rocketed from just over R5 billion in 2000 to almost R60 billion now.”

Minister Schäfer said: “South African labour is considerably cheaper than elsewhere in the world. In the clothing and textile sector, South African labour is 45% cheaper than in China at the moment and it makes no sense that we are not producing more locally. This region used to be well known for its clothing and textiles production and we want to rebuild this industry and use the skills we already have, while developing new ones.”

“We must produce more locally, import less and export more,” she said.

“Our energy costs, notwithstanding energy price increases are still cheaper than many of our trading partners. What we are however not seeing is investment by businesses into machinery and management techniques that lead to an improvement in the productivity of their labour force. We must create incentives for firms to invest in new machinery and productivity techniques and that is what this stimulus allocation will seek to do,” Minister Schäfer  said.

The Western Cape is already home to several local and international companies that have invested in manufacturing facilities in the province. Among them are Hisense who manufacture home appliances at their facility in Atlantis and the Foschini Group (TFG), which has set up a factory in Caledon which now employs 500 people.

“In the case of TFG, they benefit from speed to market and the flexibility of producing their own goods. Their strategy shows a 150% increase in production by 2025, which has the potential to create more than 1000 new jobs that do not require matric,” Minister Schäfer said.

Manufacturing remains one of the few sectors that can absorb people without a matric qualification.

“While we must also focus on the new economy, we cannot lose sight of the fact that more than half of our population does not have a matric. There are 600 000 people in the Western Cape who are unemployed and our focus on the manufacturing sector is aimed at addressing unemployment for all people in our province,” Minister Schäfer said.

“As a province, we are also driving green manufacturing, and developing the green manufacturing hub at the Atlantis SEZ, which provides more opportunities to create jobs and stimulate economic growth in areas outside of the metro,” she added.

Non metro municipalities have additional value propositions for investors: lower traffic congestion, lower crime rate, lower property costs and a generally lower cost of living.

StatsSA data for the fourth quarter of 2018, indicates that manufacturing was the fourth largest contributor to the country’s GDP, contributing 14% towards the country’s GDP and creating over ten percent of jobs in South Africa.