Generation Next

OPINION PIECE from Proudly South African CEO, Eustace Mashimbye

Proudly South African member companies are able to thrive in difficult economic times

We continued at the beginning of the financial year to feel the aftershock of the cabinet reshuffle and its political fall-out, as ratings agency S&P downgraded South Africa to ‘junk status’ on April 3. Soon after, Fitch followed suit rating the country as ‘non-investment’ grade. Later, in early June, Moody’s sealed the country’s short term fate in awarding us their lowest ‘negative outlook’ rating.

Together with other economic data, including a contraction of 0.3% of GDP in the 4th quarter of 2016, and a further 0.7% decline in the first quarter of this year, these ratings confirmed that South Africa is officially in a recession.

On August 7, new labour force figures were released which showed the balance between job losses and some modest gains left the unemployment levels the same as the previous quarter at 27.7%. Job seekers in the 15-24 age bracket remain the most vulnerable with more than 50% unemployed (56%). The agricultural sector faced the biggest losses with 40 000 jobs gone, many in the beleaguered poultry industry. However, manufacturing saw the creation of an additional 10 000 jobs – a small but positive upturn.

Whilst it is undeniable that we are working in a severely constrained economic climate, we continue to build on our successes and Proudly South African is well positioned to exploit the need for increased domestic consumption of home grown products, as the Rand’s value makes imports more and more expensive. Our value proposition for members is ever more enticing as they feel the pinch and see the advantages of the movement and the benefits in can bring.

Many of our larger member companies continue, despite these constrained economic conditions in which they are operating, to invest in the country and expand their operations, demonstrating their abiding faith in the country and its future.

This is especially true in the retail sector which has been hit by the downturn in the economy and by the consequent impact on consumer spending. Edcon, with its 1300+ stores, its Celrose and Eddel plants in KZN, manufacturing apparel and shoes respectively, continues to grow its local lines, and has increased its local offering from 18% to over 50% by the next summer season (achieved in just two years). In addition, its investment in people through its Design Innovation Challenge and Orange Day Campaign demonstrates its commitment to job creation, both inside and outside the organisation.

Another retail giant, The Foschini Group has also shown that it can thrive even as others contract their operations. A R75M investment into the expansion and improvement of its Caledon, W. Cape manufacturing plant, Prestige Clothing Factory, has seen floor space expand from 900m2 to 4000m2. TFG is increasing its capacity, its skills transfer as well as its investment in state of the art machinery, making it more competitive at home and for export. Its training school is empowering 300 women whose new skills will go on to support many more people in their community.

Also in the Western Cape, Hisense is this year celebrating the 21st birthday of its operations in South Africa, and has marked the anniversary with the launch of a new high end TV set and new generation cell phone, plus a completely new range of locally manufactured ovens and hobs. Their existing range of fridges and TV sets saw the one millionth of each come off the production line this quarter.

In the pharmaceutical sector, Adcock Ingram show cased their Wadeville tablet and capsule factory to Proudly SA and Minister Rob Davies in May of this year. Utilising support from the dti’s Strategic Integrated Projects and Manufacturing Competitiveness Enhancement Programme initiatives, Adcock Ingram is investing R66 million to upgrade the facility to capacitate it as the leading supplier of ARVs to both the public and private sectors. Their further investment in a distribution company shows their commitment to ensuring that the manufacturing and distribution of critical drugs to wholesalers, hospitals, pharmacies and even to patients’ homes is seamless and assured.

The Minister of Health, along with the Deputy President and Proudly South African paid a visit to another of our pharmaceutical sector members, namely Aspen Pharmacare. Aspen has become the world’s leader in anaesthesia, which includes general anaesthetics, some of the most sophisticated pharmaceutical technologies globally. Aspen will be investing R3billion in further capex at its Port Elizabeth plant in the forthcoming 12 months to further develop steriles and high potency capability, a significant part of which will be for export to both developed and developing markets.

Benefitting from R2.9Bllion of foreign direct investment over five years, Nestlé South Africa in 2016 began a R1.2bn refurbishment of its instant coffee plant in Estcourt in KZN, creating 20 direct jobs and countless others indirectly. At Proudly South African’s Buy Local Summit & Expo in April this year they also signed a MOU with the Department of Small Business Development for a micro distributor enterprise development initiative, creating 200 township and rural micro distributors between now and 2020, with financial and skills support designed to create 600 jobs.

In the important automotive sector, Nissan South Africa has demonstrated its faith in the country by announcing that it will be investing in new plant infrastructure and technology at their Rosslyn plant where it manufactures two models of their famous bakkies. The company is also in negotiations with its parent company Nissan Motor Company of Japan to add a new line and manufacture a one-ton truck at the South African plant.

SMMEs also have something to look forward to following FNB’s announcement of a R2.6 billion loan agreement between its parent company, First Rand and the International Finance Corporation, money which is aimed at supporting SMMEs in a number of projects. This important sector has shown enormous growth, tripling in size from 1.6M SMMEs in 2000 to 5.6M in 2010. The sector is ear marked as a major source of job creation, and is expected to take up 90% of the country’s work force by 2030.

Our renewed belief in ourselves is translating into positive results, as Proudly South African continues to recruit large corporates as well as SMMEs who in turn share our tried and tested belief that together we can have a positive impact on the economy and job creation by increasingly buying locally made products and services, manufactured by Proudly SA companies including those mentioned here.

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