Updating ourselves on the economy

At an economic task team meeting in June, Numsa invited various people to update it on what progress has been made on some of the job security conference items and other issues.

Procurement of locally produced goods by government and state-owned enterprises was high on Numsa’s list of measures last year to create jobs.

The trade and industry department’s deputy director general, Nimrod Zalk, reported that the finer details are still being negotiated.

What has been agreed with the national treasury, Zalk said, is that certain products that all government departments buy “must be bought locally”.

But there is no agreement yet with the treasury on a “general bias towards local production in each and every procurement”.

Nor is there agreement with the treasury on an export tax on scrap metal to protect the foundry industry.


Both Zalk and the CEO of Plate Glass, Stewart Jennings, who also chairs the Manufacturing Circle, a manufacturers’ interest group, warned of the fallout in South Africa from the spread of the world financial crisis to Europe.

Some manufacturers had earlier stopped production because of cheap imports from China and other countries.

The growing strength of the rand against both the dollar and the Euro because of this new financial crisis is now hitting exporters.
“We had to turn down an order for 150 000 windscreens because of this,” Jennings said.

The Manufacturing Circle is calling for a weaker and more stable rand, while Zalk hinted that the treasury should introduce capital controls on speculative money to weaken the currency.

Jennings also cited the high cost of electricity, port tariffs and high interest rates as other factors that were negatively affecting business.

He warned of the danger of the increasing numbers of imported cars in South Africa.

Such a trend, he said, would reduce the numbers of cars produced locally and lead to job losses among vehicle assemblers and components suppliers.

Imported cars used far fewer local components. Another way of hanging on to jobs was to increase the required local content of cars.

Beneficiation has long been Numsa’s mantra. Zalk warned that government is not monolithic.

While the DTI was keen to use mineral rights to promote downstream beneficiation and industrialisation, the minerals department seemed to be promoting narrow black economic empowerment.

The meetings also heard inputs from Cosatu on its new growth path, and on progress in its South African Reserve Bank campaign and section 77 campaign on Eskom tariffs (see the parliamentary page for details of this).

The meeting agreed that on some issues, such as that of beneficiation, Numsa should meet the National Union of Mineworkers to finalise its position before going to government.

A meeting should be held with the treasury to spell out Numsa’s views on the exchange rate, procurement and the tax on scrap metals.
Watch this space!


Numsa News No 2 2010