Cape Town – Science and Technology Director General, Dr Phil Mjwara, says in order for the country’s economy to be diversified, it needs to go through a transition to a knowledge-based growth that will boost the country’s competiveness.
The Director General said this when he addressed the opening of the 65th International Academy for Production Engineering General Assembly (CIRP) at the Cape Town International Convention Centre, on Tuesday.
“…The Department of Science and Technology, as a custodian of the South African National Systems Innovation, we firmly believe that transitioning South Africa’s economy from a resource-based economy to a knowledge-based economy will contribute to addressing the diversification of our economy and hopefully, an increase into the GDP contribution going further.
“This has also been articulated by our President Jacob Zuma at the recent State of the Nation Address and recently, during the Cabinet Lekgotla,” he said.
The Director General said this as government has announced several measures to diversify the economy.
During the budget vote, Economic Development Minister Ebrahim Patel announced a R23 billion fund aimed at contributing towards the industrialising of the economy, as well as setting the country on a path of economic transformation.
Addressing the world's greatest minds in production engineering, the Director General said investing in research and development would assist, amongst others, the manufacturing sector to come out of a production slump that has affected its competitiveness ever since the dawn of democracy.
According to Statistics South Africa (Stats SA), manufacturing production dropped by 2.3% in January 2015 when compared with January 2014.
He said that a 2013 Deloitte study into manufacturing competitiveness revealed that South African manufacturers ranked talent-driven innovations seventh out of 10.
“In the post-apartheid South Africa, the manufacturing sector benefitted from protected local markets and had access to cheap labour materials and electricity.
“Competitiveness was based on being a low-cost producer.
“However, trade liberalisation in the early 1990s around the time of South Africa’s first democratic elections led to a surge in cheap imports.
“This together with steep rises in electricity, labour, transport and input costs had largely eroded the competitiveness of many South African manufacturers who relied on a low cost base,” he said.
The Director General said the manufacturing sector has been on a decline in terms of its contribution to growth - from a high of approximately 24% in the early 90s to only contributing approximately 11% to South Africa’s Growth Domestic Product (GDP).
He said this was a cause of concern for government.
“We also note that manufacturers also appear reluctant to invest in new technologies and new knowledge to regain competitiveness.”
The Director General said it was important that while government was doing all it can to increase the competitiveness in various incentives, it was important that the private sector invests in research and development in order to diversify and industrialise the economy. – SAnews.gov.za
