President Cyril Ramaphosa says South Africa’s R1 trillion infrastructure programme over the next three years must become the foundation of a new era of industrialisation, warning that the country cannot allow its manufacturing base to decline while expanding its infrastructure.
Addressing the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Presidential Business Breakfast in Ekurhuleni on Thursday, Ramaphosa said the country was entering one of its most important periods of infrastructure investment and economic reform since the advent of democracy.
“Government’s infrastructure programme amounts to around R1 trillion over the next three years. We should view this not simply as a construction programme. We should view it as an industrial strategy,” Ramaphosa said.
He said infrastructure investment should be used to expand South Africa’s productive capacity by creating factories, developing skills, strengthening supply chains, supporting new industrialists and creating jobs.
“Every transmission line we build, every railway we rehabilitate, every port we expand and every water system we construct should contribute to expanding the productive capacity of our economy.”
Ramaphosa said the metals and engineering sector was strategically important to the economy, but continued to face weak domestic demand, logistics constraints, high electricity costs, infrastructure bottlenecks and growing import competition.
“We cannot accept the continued erosion of South Africa’s industrial base,” he said.
“Manufacturing is not simply another sector of the economy. It is fundamental to our economic sovereignty.”
Manufacturing generated skills, drove innovation, supported exports, created productive employment and sustained thousands of businesses.
Ramaphosa said electricity reform remained critical to the future of energy-intensive industries.
While the government had succeeded in bringing load shedding to an end, electricity also needed to become more affordable.
“Once a smelter closes, we lose productive capacity. We lose skills. We lose export earnings. We weaken entire industrial value chains. And we lose jobs that are extremely difficult to recreate.”
The next phase of electricity reform would focus on reducing the cost of electricity, with the South African Wholesale Electricity Market expected to begin operating next year.
Ramaphosa also highlighted the scale of the country’s planned electricity transmission expansion as a major opportunity for local manufacturing.
“Over the coming decade, South Africa needs around 14,000 kilometres of new transmission lines, together with major investment in substations and transformation capacity,” he said.
“This should become one of the great industrial projects of our generation.”
The project would require transmission towers, fabricated steel, conductors, cables, transformers, switchgear, engineering services and other equipment, creating opportunities for South African factories, workers, engineers, artisans and suppliers.
Ramaphosa warned against a situation where South Africa expanded its transmission network while its domestic manufacturing industry declined.
“We should not find ourselves, ten years from now, with a vastly expanded transmission grid but a diminished domestic manufacturing industry. That would represent a missed historic opportunity.”
The transmission programme should also become a national skills programme, providing apprenticeships and training opportunities for thousands of young South Africans.
The President said the same industrial approach should be applied to rail, ports and water infrastructure.
South Africa needed to rebuild its railway engineering and equipment manufacturing capabilities and increase local production of locomotives, wagons, wheels, axles, signalling equipment and components.
Government is also investing approximately R24 billion a year through national grants in municipal water and sanitation infrastructure, Ramaphosa said, as part of the National Water Action Plan.
The energy transition presented opportunities for local manufacturing.
“South Africa should not simply import the technologies required for the new energy economy. Where we have the capability, or can realistically develop it, we should manufacture them here.”
Ramaphosa pointed to opportunities in renewable energy equipment, green metals, mineral beneficiation, battery manufacturing and green hydrogen.
However, he cautioned that localisation should not become a protection for inefficient producers.
“Nor should localisation become a licence for inefficiency or excessive prices.”
He said local manufacturing needed to be competitive, meet technical standards, deliver quality and meet deadlines.
At the same time, manufacturers needed greater certainty about future government demand to justify major investments.
“Predictability creates investment. Investment creates capacity. Capacity creates jobs.”
Ramaphosa said South Africa’s manufacturing future also depended on exports, particularly as the African Continental Free Trade Area creates a market of more than a billion people.
“South Africa should aspire to become the engineering workshop of the African continent,” he said.
The country should export transformers, mining machinery, railway equipment, pumps, valves, fabricated steel, electrical equipment and engineering expertise.
“For many years we have spoken about the decline of South African manufacturing. We must now speak about its renewal.”
Ramaphosa said government, business and labour needed to work together to turn infrastructure investment into industrial development.
“If we do these things together, South Africa can once again become a country that makes things.”
“Let us make this infrastructure programme the foundation of a new era of industrialisation.”
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