UPDATE:Database of Imported Products That Could Potentially Be Produced Locally

LOCAL PROCUREMENT

• The procurement of local content is not just a recommendation, it is a legal requirement for state entities, says Trade and Industry Minister Rob Davies

• The South African Bureau of Standards (SABS) serves as the Local Content Verification Agency, with the Local Content Verification Office officially launched in June 2013

• The SABS publishes the approved South African Technical Specification (SATS 1286) for the measurement and verification of local content.

• Warning> Products labelled as “Made in South Africa” are often assembled in South Africa, with more than 90% of foreign content.

STRATEGIC POLICY THRUST

Sector Specific Interventions

Regional Integration

Job Creation and Economic

growth

Beneficiation

Skills Development

Unem

ployment, Poverty and

Inequality

Export Development

Investment Attraction

Resource optimisation

Rural Development and Spatial Planning

Sustainable Development

Economic Transformation

Sectoral Performance in KZN

Share of GVA-R Contributions, KZN, 1996-2013

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

26%

Government, social & personal servicesFinance & business servicesWholesale & retail tradeManufacturingTransport & communicationAgriculture, forestry & fish-ingConstructionElectricity, gas & waterMining & quarrying

Gross Value Added Share contribution by Manufacturing has declined significantly, over taken by Government services, Financial services and Wholesale & retail trade.

o Is KZN becoming a consumption driven economy rather than a production driven economy?

o Manufacturing plants converted to storage facilities.

RSA & KZN export & import values, 2005—2014

Source: Quantec (2015)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 200,000,000,000

300,000,000,000

400,000,000,000

500,000,000,000

600,000,000,000

700,000,000,000

800,000,000,000

900,000,000,000

1,000,000,000,000

1,100,000,000,000

1,200,000,000,000

Exports Import value

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20,000,000,000

30,000,000,000

40,000,000,000

50,000,000,000

60,000,000,000

70,000,000,000

80,000,000,000

90,000,000,000

100,000,000,000

110,000,000,000

120,000,000,000

Export value Import value

RSA & KZN trade balance, 2005—2014

Source: Quantec (2015)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

-140,000,000,000

-120,000,000,000

-100,000,000,000

-80,000,000,000

-60,000,000,000

-40,000,000,000

-20,000,000,000

-

20,000,000,000

40,000,000,000

60,000,000,000

-30,335,424,112

-81,467,631,148 -88,121,977,934 -91,075,221,980

-34,714,509,647

48,899,514,362

32,890,165,690

-52,536,280,009

-91,032,109,684

-120,407,462,280

-6,1

53,2

23,6

62

-6,5

96,2

74,1

25

-10,

308,

221,

898

-7,5

49,0

80,0

76

-3,4

63,0

87,8

71

-6,3

93,9

89,4

03

-10,

507,

277,

384

-13,

612,

931,

695

-19,

273,

416,

159

-1,4

37,0

44,8

77

RSA KZN

Top Agricultural Products Imported into KZN by value

• Oil-cake and other solid residues, resulting

from the extraction of soyabean oil

• Semi-milled or wholly milled rice

• Frozen meat, livers and offal

• Crushed or ground (Tea and coffee)

• Animal and vegetable oils

• Groundnuts

• Boneless meat

• Fresh fruit and vegetables – imported

from RSA provinces

• Wheat

• Kidney and white pea beans

• Edible fruits, nuts, peels and citrus fruits

• Sardines, tuna and other fish

• Cotton

• Sugar and sugar confectionery

• Guts, bladders and stomachs of animals

• Live sheep and goats

• Seed (cereal, grain, sorghum)

Source: Easy Data by Quantec Research

Top Manufactured Products Imported into KZN by value

• Antiques of an age exceeding one hundred years

• Aluminium oxide

• Vehicles and parts

• Petroleum oils, coke, bitumen and other residues

• Nuclear reactors, broilers, machinery and mechanical appliances

• Salt; sulphur; earths and stone, plastering materials, lime and cement

• Ferronickel

• Paper and paper board

• Electrical appliances and components

• Solvents in the manufacturing of surface active gents, lubricants and insulating oils

• Clothing, leather and footwear

• Products made of iron and steel

• Light oils and preparations

• Diesel and semi diesel engines

Source: Easy Data by Quantec Research

AUTOMOTIVE• Automotive components have been reviewed for localisation opportunity alongside enablers and

blockages• Priority components for localisation support:

• Seat / seat component localisation• Drive shafts• Heat exchange unit localisation• Prop shafts and side shafts

• & others directly via OEMs and tier 1s

• Support activity in KZN to realise these opportunities• dti policy and incentive support schemes • Automotive Supply Chain Competitiveness Initiative (ASCCI) support• Automotive Supply Park – in development• Gijima localisation investment incentive• eThekwini- Industry PPP: DAC programme includes:

• Material and component specific support including the National Localisation Indaba– Facilitated meetings between national buyers and local suppliers – Facilitated meetings between international technology partners and local suppliers– Exhibition by OEMs and tier 1s of parts for localisation

Despite recent low growth, localisation, downstream beneficiation and export led investment opportunities exist including:

CHEMICALS

Sector Rationale Enablers BlockagesCoatings, inks, adhesives and dyes

Growing Sub Saharan African government infrastructure and consumer expenditure

Rand weakness supports export competitiveness and localisation rationale

Logistical advantage for export to Sub Saharan African markets

Local market weakness, especially mining and manufacturing

Rand weakness decreases imported material competitiveness

Stringent environmental legislation locally that international competitors are not subject to.

Resins and polymers Growing Sub Saharan African export and local downstream beneficiation opportunities

Water treatment chemicals/ services

SA and Sub Saharan African government and mining/industrial expenditure

Pesticides and other agro-chemical products

Growing Sub Saharan African agricultural expenditure

CLOTHING, TEXTILES, FOOTWEAR & LEATHERSector Investment

requirementRationale Enablers Blockages

Home Textiles

Wide gauge rotary printing

Needed to print duvet sets. All fabric currently imported (largely from Pakistan).

Great advances in lead times.

Significant investment and training required.Footwear Local

polyurethane (PU) production

PU most often used to produce synthetic footwear.

There is great demand for PU footwear in SA.

Increased local leather dyeing and finishing

Most finished leather is imported from China and India

Raw materials available in South Africa but exported in “blue” format (i.e. undyed and finished)

Fashion Apparel

Digital printing More versatile than rotary printers and will allow local textile mills to rapidly respond to trends.

Significant local and international demand.

Yarn dyed printing capability

This type of fabric is often used for men’s formal shirts and is currently imported.

Producing the fabric locally could reduce lead times by almost three months

Sector Growth Constraints

Agriculture Declining investment and output Infrastructural bottlenecks- e.g. rail to

transport bulk produce such as maize Lack of broader participation- sector

characterized by Ageing farmers Decrease in the number of small

producers Excessive droughts Declining commodity prices Support of emerging farmers

Slow down in key export markets; High dependence on imported goods especially finished goods,

apparels, luxuries- Export of Jobs High dependence on commodity exports External competition External Shocks (Oil prices, recession, Japanese Crisis, EU debt crisis). Increasing wages negatively impacting on international

competitiveness Lack of ability to add value from raw materials Energy availability and costs Review some of import tariffs

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Manufacturing

Other Sectors High cost of production High cost of labour Low value addition to locally produced raw

materials Consistent availability of inputs Quality Technology Import duties Restrictive labour regulations Inadequate supply of infrastructure

(electricity and water) Inadequately skilled workforce

Recommendations Industrial hubs will go a long way in enhancing localized industrialization

There is a need to carry out a survey that will assist the Province to understand the skills

requirement and skills gap in both the agricultural and manufacturing sectors

Continues improvement in the Investment Climate at Local and Provincial levels

Enhancement of partnerships and enterprise development with the private sector

Improved turnaround time in establishing and expanding businesses in KZN

Explore Public Private Partnerships in infrastructure development

Opportunity arises to now participate in the Black Industrialist Programme

Opportunity to further participate in Government incentives

15