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- Janet Wilhelm
Janet Wilhelm
Business Day - 27 February 2024 by Neva Makgetla (TIPS Senior Economist)
Industry Study: Automotive Manufacturing 2023
TIPS industry studies aim to provide a comprehensive overview of key trends in leading industries in South Africa. For each industry covered, working papers will be published on basic economic trends, including value added, employment, investment and market structure; trade by major product and country; impact on the environment as well as threats and opportunities arising from the climate crisis; and the implications of emerging technologies. The studies aim to provide background for policymakers and researchers, and to strengthen our understanding of current challenges and opportunities in each industry as a basis for a more strategic response.
The automotive industry is one of South Africa’s core industries, accounting for almost 12.8% of total manufacturing output in 2022. Although considered a marginal player in the global automotive industry, South Africa is Africa’s leading passenger vehicle manufacturer and exporter of vehicles. In 2022, South Africa produced 555 889 units of passenger cars and light commercial vehicles, accounting for 54.4% of Africa’s total vehicle production, although only 0.7% of total global production (OICA, 2023). South African-based vehicle original equipment manufacturers (OEMs) and component suppliers’ manufacture predominately for the export market. Approximately 70% of all vehicles produced in South Africa are exported.
Industry Studies
Technological Change in the Food Processing Industry 2024
Technological Change in the Plastics Industry 2024
South Africa's International Trade in Plastics 2024
Technological Change in South Africa's Automotive Industry 2024
Technological Change in the Capital Goods Industry 2024
Clothing and Textiles International Trends 2024
International Trends in the Capital Goods Industry 2024
International Trade in South Africa's Automotive Industry 2024
Capital Goods in South Africa 2024
Additional studies for other industries will be added when finalised
Import Tracker - Q3 2023
South Africa maintained a trade surplus in the third quarter of 2023, at R41 billion, up from R10 billion in the second quarter of 2023, but lower than the R53 billion from the third quarter of 2022. Exports declined by R41 billion to R529 billion in the year to the third quarter of 2023, while imports declined by R29 billion to R487 billion in the same period. The export decline was in part driven by a R42 billion decline in coal exports, with volumes declining by six billion kilograms in the year to the third quarter of 2023. The decline in imports was driven by decreasing local demand for diesel and petrol, which saw the value of both decline by R10 billion and R11 billion respectively, while volumes declined by almost one billion litres apiece.
FDI Tracker Q3 2023
In the third quarter of 2023, the Tracker added 28 projects that are at varying stages of development. The total pledged investment value is R53.5 billion recorded from 11 projects. (The investment values of the remaining 17 projects have not yet been disclosed.) There are five projects that reported employment opportunities that sum up to 7533 jobs, of which 887 are permanent and 6646 are temporary. The majority of these jobs (5200) result from the construction of Amazon’s headquarters. Monitoring further updated 10 pre-existing projects in the Tracker.
Solar, battery, inverter imports surged to R70bn in 2023 as wind turbines recovered from two-year lull
Engineering News - 4 March 2024 by Terence Creamer
The Real Economy Bulletin - Fourth Quarter 2023
Main Bulletin: The Real Economy Bulletin - Fourth Quarter 2023
In this edition
GDP growth: The GDP eked out a 0.1% increase in the fourth quarter of 2023, reversing the decline in the third quarter. For the year, growth came to 0.6%, driven almost exclusively by business and personal services. Mining was flat for the year, manufacturing shrank by 0.1%, and agriculture by 0.4%. Most of the growth occurred in the first half of 2023, with losses in the second half. Read more.
Employment: Employment grew by 800 000 or almost 5% in 2023, far more rapidly than the GDP or the working-aged population. The informal sector expanded particularly rapidly, but formal employment also climbed. In contrast, domestic work continued to stagnate. Construction employment reportedly grew particularly rapidly, apparently mostly due to investment in housing rather than infrastructure. Read more.
International trade: South Africa maintained a trade surplus in the fourth quarter of 2023, but its value fell by half from the previous quarter. Platinum and coal revenues dropped sharply as world prices plummeted in the past year. Still, mining revenues remain well above pre-pandemic levels in constant rand terms, which contributed to the resilience of the South African economy in the face of domestic and external headwinds. In manufacturing, the auto industry accounted for most of the increase in exports, followed at a considerable distance by food and metal products. Read more.
Investment and profitability: Investment climbed 4% in 2023, for the second year of growth since the pandemic downturn. It was still well below pre-pandemic levels, however. State-owned companies remain a weak point. At industry level, investment has climbed steadily in mining and manufacturing, as well as most other sectors, since 2021. It remains depressed in electricity and water, however. Read more.
Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects quarterly, using published investment information. The Tracker added 23 projects in the fourth quarter of 2023. Projected investment for the quarter amounts to R476.7 billion, recorded from 10 projects. The other 13 projects have not yet reported the respective project values. The Tracker updated 27 existing projects this quarter. Read more
Briefing Note: The budget and industrial policy- by Neva Makgetla. The recent budget was not good news for industrialisation. In particular, it brought deep cuts to funding for the Department of Trade, Industry and Competition (dtic), especially for industry-level incentives. More broadly, the economic vision that framed the national budget downplayed efforts to promote more inclusive industrialisation. Read the Briefing Note online: The budget and industrial policyBriefing Note: CBAM and South African exports - by Seutame Maimele. Although the European Union’s Carbon Border Adjustment Mechanism (CBAM) is pursuing the critical aim of reducing carbon emissions and to avoid carbon leakage, arguably it throws unfair burdens on the Global South. In response, the South African government has begun to challenge CBAM in any form and at many forums. At the same time, government and exporters have to find ways to mitigate the impacts of CBAM by developing the required systems to report on greenhouse gas emissions and finding ways to reduce the carbon intensity of exports. Read the Briefing Note online: CBAM and South African exports
MyBroadband - 2 March 2024 by Shaun Jacobs
Green hydrogen and industrial policy
Presentations
Muhammed Patel (TIPS): Green H2: a potential export commodity in a new global marketplace
Jason Bell (CREDD): Insights from green hydrogen for sustainable (re)industrialisation in South Africa paper
Sören Scholvin (UCN): Green hydrogen and linkage-based development in Chile
Bruce Young (Wits Energy Centre): TIPS Development Dialogue Green hydrogen and industrial policy slides
Background
This Development Dialogue seeks to unpack whether green hydrogen is really the technology of the future and its commercial viability. As well as to understand global demand and some of the miss information in the industries for carbon neutralisation.
Globally, countries are mobilising resources to deal with the climate crisis. Climate change stands to impact countries collectively, with the impacts most severely felt by the vulnerable in society. Countries, including South Africa, have to think carefully about improving their resilience to the direct physical impacts of climate change and the effects of the transition. Part of the response involves transforming notorious, high-emitting industries, such as energy and petrochemicals, towards cleaner production.
Given South Africa’s high dependency on coal, and the combustion of coal being associated with high CO2 emissions, South Africa will have to transform key value chains towards more sustainable production. This transformation not only protects the country’s resources from future climate events but also secures South Africa’s future in the global marketplace. The hydrogen economy offers one potential and complementary pathway to a sustainable future. South Africa’s rich endowment of ideal weather conditions for solar and wind power generation, technological capabilities around the Fischer-Tropsch (FT) process, and access to platinum resources, place the country at an advantage for developing the hydrogen value chain and being a key supplier into the global hydrogen market.
While green hydrogen development has gone through a number of historical waves of interest, the current momentum is being driven globally, with a number of countries developing hydrogen roadmaps and strategies to capitalise domestically and in the global marketplace.
This provides South Africa with a window of opportunity to investigate and develop a domestic hydrogen economy, attract investment into developing a new capability, and benefit from this heightened interest in the creation of a new export product. Developing this sector has many potential benefits for the country.
TIPS is partnering with the Department of Trade Industry and Competition (the dtic).
About the Speakers
Presenters
Muhammed Patel is Senior Economist at TIPS. Muhammed’s background spans work in industrial development, and competition and regulatory economics as well as telecommunications and the energy sectors.
Jason Bell is an Economist and Researcher at the Centre for Competition Regulation and Economic Development. He is interested in political economy and industrial development issues, focusing on the role of regulation, governments and institutions in fostering growth and the evolution and distribution of power. his sectoral focus covers metals, machinery and equipment, development finance institutions, automotives, climate change and green hydrogen in South Africa.
Bruce Young is Senior Lecturer, Africa Energy Leadership Centre, Business School, University of the Witwatersrand. He is a Chemical Engineer with broadly based business development and technical experience related to the global petrochemical industry with specific expertise in petrochemicals. Expertise in chemical opportunities associated with Fischer Tropsch technology and synthesis gas processing. Specific expertise in formulating business unit technology strategy to support the business strategy. Significant commercial experience relating to technology and licensing agreements. Experienced in mergers and acquisitions in the chemicals business area.
Sören Scholvin is a professor at the Department of Economics, Catholic University of the North, in Antofagasta, Chile. He is affiliated with the Policy Research in International Services and Manufacturing (PRISM) unit at the University of Cape Town. Sören's research interests are extractive industries, global value chains and regional development.
TIPS Dialogues bring together academics, policymakers, civil society organisations, workers, and practitioners
to discuss important issues and share ideas on industrial policy.
TIPS is partnering with the Department of Trade Industry and Competition (the dtic).
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