AFRICAGROWTH INSTITUTE SME CONFERENCE: SEPT2012

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AFRICAGROWTH INSTITUTE SME CONFERENCE SEPT2012
BLACK INDUSTRIALISATION QUO VADIS?
Innovative Enterprise Development Thinking
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THE ISSUE STARTS HERE
We think South Africa is faced with the imminent
fate of de-industrialisation Garth
Strachan Chief Director Industrial Development
Division Department of Trade Industry Source
www.ru.ac.za/latestnews/name,66828,en.html
(released Thursday 23 August 2012, accessed 26
September 2012)
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THEN MOVES HERE

• 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

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AND THEN 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)
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AND THEN FINALLY 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

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THEREFORE

• Black industrialisation is about
• Black entrepreneurship
• South Africas and
• Africas economic progress
• Thats why its such an important project!!

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WE HAVE A LONG WAY TO GO
SIC Major Division SMME size category SMME size category SMME size category SMME size category Total Per cent
SIC Major Division Micro Very small Small Medium Total Per cent
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       22.9      
Retail and motor trade and repair services 2054 38579 11165 2607 72895       22.9      
Catering, accommodation and other trade 5778 11933 296 739 18746       22.9      
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
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EVEN MORE SO IF YOU CONSIDER THIS 1

• 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

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EVEN MORE SO IF YOU CONSIDER THIS 2

• 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

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EVEN MORE SO IF YOU CONSIDER THIS 3

• 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
  

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WE HAVE A REALLY LONG WAY TO GO

Composition of global manufacturing value added, 2005 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
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SO WHAT SHOULD WE DO?

• I was asked this question in February 2010 in
  Taiwan. My answer was
• Something extraordinary
• I still maintain that position.

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WHICH IS WHAT?

• I believe the answer lies in a single-minded
  focus on
• Entrepreneurship driven by innovation, technology
  transfer and technology commercialisation

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• 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

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SO WHAT SHOULD WE FOCUS ON?

• 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)

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WE HAVE THE INSTRUMENTS

• Technology Innovation Agencys Funds and
  Technology Stations Programme
• SEDAs 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

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WHO WILL DRIVE IT?

• We need to harness all these instruments and
  more to do something extra-ordinary to drive
  the countrys industrialisation through small
  (Black) entrepreneurs.
• The key question is Wholl be the driver?
• The dti?
• BBCs National Industrial Development Forum?
• Or who?

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CONTACT DETAILS

• Septi M. Bukula
• Ground Floor, Block F
• The Palms Office Park
• 391 Main Avenue, Ferndale
• Randburg, South Africa
• T 011 326 4082
• C 081 561 7610
• E septi_at_osiba.co.za
• W www.osiba.co.za

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