By Mamiki Matlawa, Group Business Development Executive at ACTOM (Pty) Ltd
South Africa is at a critical juncture, facing stagnant growth, rising unemployment, and persistent inequality. To address these pressing challenges, the government has recognised the importance of localisation and industrialisation as key drivers of economic recovery. But why is localisation being hailed as a beacon of hope for the South African economy?
In simple terms, localisation refers to the process of reducing imports and promoting domestic production to boost the Gross Domestic Product (GDP), promote industrialisation, and generate employment opportunities. With the current economic trajectory considered unsustainable, urgent reforms are needed to spur short-term growth and lay the foundation for long-term sustainable development.
Fortunately, South Africa has the necessary funding channels to support large-scale industrial projects. Banks and the development finance sector play a crucial role in providing financial support. Additionally, the presence of 13 Special Economic Zones (SEZ) and government schemes, coupled with tax incentives, further contribute to reducing project risks and raising returns on investment. These resources are instrumental in supporting the growth of local industries and creating employment opportunities on a significant scale.
In a society burdened with staggering levels of unemployment and poverty, it becomes imperative to explore commercially sustainable methods of generating new jobs in the private sector. Although public employment opportunities can provide some relief, job growth stimulated by the production of goods and services has the potential for significant economic expansion. This can be achieved through a combination of expanded domestic demand and increased exports. By actively pursuing these drivers of growth, South Africa can foster private-sector job creation and pave the way for a more prosperous future.
Effective localisation requires collaboration and engagement with local stakeholders. Proactive communication with ward councillors is essential to identify and leverage embedded localisation opportunities within projects. This collaborative approach ensures that the initiatives align with community needs and contribute to local job creation. The development of labour histograms to forecast human resource requirements, facilitated by Community Liaison Officers (CLO), can ensure efficient resource allocation. Moreover, by circulating lists of subcontract opportunities among local business forums, fledgling ventures can be identified and integrated into the value chain, fostering entrepreneurship and fostering economic growth at the grassroots level.
Localisation not only has economic benefits but also addresses social and political concerns. South Africa currently faces high levels of unemployment, rising poverty, and increasing political uncertainty. Investors are understandably cautious, and failing to reverse the trend could result in further deindustrialisation and job losses. The strain on the state to provide basic income grants, which are essential for approximately eighteen million people, is simply unsustainable. By revitalising domestic manufacturing and prioritising local employment, South Africa can address these challenges head-on. International companies often bring their workforce to South Africa, contributing to job losses among local communities and potentially triggering social tensions. A renewed focus on localisation is an opportunity to reduce dependence on external forces and empower indigenous populations through job creation and economic self-sufficiency.
To fully capitalise on the benefits of localisation, a comprehensive approach involving government, businesses, and communities is necessary. An enabling environment must be created, one that fosters entrepreneurship, provides access to financing and supports skills development programmes. By nurturing local businesses and equipping the workforce with the necessary tools, South Africa can stimulate economic growth, reduce poverty, and build a globally competitive economy.
South Africa has the potential to unleash a new era of economic prosperity by embracing localisation. By reducing imports, promoting domestic production, and harnessing the power of the private sector, the country can create a virtuous cycle of growth, industrialisation, and employment generation. Benefits extend beyond GDP figures, including improved livelihoods, social stability, and national pride in local industries.
The time is ripe for South Africa to take advantage and make localisation a cornerstone of its economic strategy. Through collaborative efforts and a shared commitment to inclusive growth, we can shape a future where South Africa thrives, its people prosper, and the nation stands as a beacon of economic resilience.