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South African Business 2021

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Welcome to the ninth edition of the South African Business journal. First published in 2011, the publication has established itself as the premier business and investment guide to South Africa. This issue has a focus on economic recovery plans which have been put in place to tackle the challenges thrown up by the global Covid-19 pandemic. National government’s focus on infrastructure and the use of Special Economic Zones is highlighted, together with a feature on the nascent maritime economy. Regular pages cover all the main economic sectors of the South African economy and give a snapshot of each of the country’s provincial economies. South African Business is complemented by nine regional publications covering the business and investment environment in each of South Africa’s provinces. The e-book editions can be viewed online at www.globalafricanetwork.com.

OVERVIEW Manufacturing

OVERVIEW Manufacturing TFG plans to double manufacturing capacity. TFG, whose South African brands include TotalSports, Markhams and Foschini, has a five-year plan to double its manufacturing capacity. Having purchased Prestige Clothing Maitland and Prestige Clothing Caledon in 2012 and spent R75-million on expanding the factory in Caledon in 2017, TFG now plans to significantly increase the percentage of locally-made clothing items from the current level of 35% to 55%. This expansion should lead to more jobs within the group, which expanded in 2020 with the purchase of Jet from Edcon. The Manufacturing and Competitiveness Enhancement Programme (MCEP) of the Department of Trade, Industry and Competition (the dtic) has disbursed grants which have resulted in 230 000 jobs being “sustained”. Because of the Clothing and Textile Competitiveness Programme, that sector currently now employs around 95 000 workers, contributing 8% to manufacturing GDP and 2.9% to overall GDP. In the leather sector 22 new factories have been opened, supporting 2 200 jobs. In the Western Cape, this revival is reflected in member companies of the Cape Clothing and Textile Cluster hiring 35% more staff in four years. About 23 600 people are employed in the province and exports from the Cape amounted in 2017 to R4.4-billion with sales up by 34% above inflation. SECTOR INSIGHT The furniture sector is finding ways to grow. The furniture manufacturing sector earned R3.9-billion in exports in 2018 and contributed 1% to the country’s gross domestic product (GDP). Employment across the sector amounts to more than 26 000, but that figure is markedly down from a high of 80 000 in the 1990s. Exposure to foreign imports and distance from lucrative markets continue to pose threats to the sector, but a group of manufacturers, buyers, government and traders has set out to do something about it. A first Furniture Sector Forum (pictured) was held SOUTH AFRICAN BUSINESS 2021 74

OVERVIEW Johannesburg in 2019 where government incentives and ideas about how to reduce the cost of expensive machinery through co-ownership and partnerships were shared. The forum was cohosted by the South African Furniture Initiative (SAFI), Proudly South African, PG Bison and the Department of Trade, Industry and Competition. The second Forum took place in October 2020, with the support of Interior Design Professions (IID) and Trend-Forward. The dtic’s Agro Processing Support Scheme (APSS) includes furniture manufacturing as a core sector for future growth and support. Other efforts to get government departments to buy locally were explained. Average employment per manufacturer is 13 people per facility which makes the sector well suited to expansion and to measures requiring flexibility, but it can lead to manufacturers feeling isolated. The idea-sharing forum is one way of overcoming that. Contribution to GDP Manufacturing’s contribution to South African GDP is 13%, less than half its contribution in the 1980s and a drop of about 11% from the 1990s. In 2018, the real-term contribution to GDP was R386.8-billion (Stats SA). The manufacturing sector employs the third most people of South Africa’s economic sectors, about 1.7-million, after financial services and retail. Two of the manufacturing sectors that have achieved the best results in recent years, automotive and food and beverages, are featured separately. Food and beverages is the most significant, contributing 25% to total manufacturing activity. The global surf ski market is worth about R220-million. According to Dale Granger of biznews, some 30-40% of that niche market belongs to South African manufacturers such as East London’s Fenn and Durban-based Revo and Carbonology. The South African after whom the world’s first surf ski was named, Oscar Chalupsky, is now CEO of Nelo Surf Skis in Portugal. A new surf ski sells for between 000 and 000. South Africa’s pharmaceutical sector is worth approximately R20-billion annually. Although there are more than 200 pharmaceutical firms in the country, large companies dominate, with Aspen (34%) and Adcock Ingram (25%) the key players, followed by Sanofi, Pharmaplan and Cipla Medpro. The National Association of Pharmaceutical Manufacturers (NAPM) ONLINE RESOURCES Chemical and Allied Industries’ Association: www.caia.co.za Manufacturing Circle: www.manufacturingcircle.co.za South African Furniture Initiative: www.furnituresa.org.za South African Textile Federation: www.texfed.co.za has re-branded as Generic and Biosimilar Medicines of Southern Africa. The opening in May 2018 of a R1-billion specialised product facility at the Port Elizabeth plant of Aspen Pharmacare will add 500 jobs to the existing complement of 2 000 staff members. South Africa’s chemical industry contributes 5% to national gross domestic product and about 60% of earnings are derived from exports. The complexes run by Sasol at Secunda (Mpumalanga) and Sasolburg (Free State) underpin the national manufacturing capacity. Sasol Chemical Industries makes about 60% of South Africa’s polypropylene. AECI is one of South Africa’s biggest groups. The two principal divisions are AEL Mining Services (with a large factory site at Modderfontein near Johannesburg) and Chemical Services, which has 20 separate companies. Foskor is the country’s only vertically integrated phosphates producer. The by-products of the sugar and forestry processing plants of KwaZulu-Natal benefit the chemicals sector. Illovo Sugar manufactures downstream products such furfural, furfuryl, alcohol, diacetyl and ethyl alcohol. Sappi makes 17% of the world’s dissolving wood pulp. Two of the companies three mills are in South Africa, Ngodwana (Mpumalanga) and Saiccor (KwaZulu-Natal). ■ 75 SOUTH AFRICAN BUSINESS 2021

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