As the Rand continues its weakening trend against the US dollar, economists have predicted greater potential for local manufacturers to compete positively with imports.<\/p>\n
\u201cWhile the weak Rand may present certain advantages for exporters, the reality is that local manufacturers still lack the capacity to take full advantage of this opportunity.<\/p>\n
Manufacturing capacity in South Africa has been eroded for some years and it will take time to build up,\u201d said Lance Rabbie, financial director at Blue Strata, an end-to-end import and working capital specialist.<\/p>\n
The advantages that manufacturing exporters may derive from the weak Rand are certainly not significant enough to make a major impact on the economy, he says.<\/p>\n
Furthermore, the weak Rand presents inflationary pressure to the country by raising the price of imports.<\/p>\n
\u201cLocal manufacturers are still finding it difficult to take advantage of the weakening Rand, due to continued fuel price increases, industrial action in different sectors, high input costs such as electricity and a lack of skills, which are all having a negative impact on the country\u2019s ability to drive industrial growth,\u201d he added.<\/p>\n
As South Africa\u2019s current account deficit continues to widen, Rabbie says it is crucial for the government to identify and support key growth sectors in order to stimulate the expansion of local production. For example, the automotive industry, which contributes between six and seven percent to the country\u2019s Gross Domestic Product (GDP).<\/p>\n
Rabbie highlights the significance of placing a greater emphasis on skills development and creating jobs within these targeted industries.<\/p>\n
\u201cThe challenge, however, is that some products are simply not being made, or are not able to be made, in South Africa. Globalisation and the cheaper production of certain products is a reality and we need to incorporate this into our industrial objectives.\u201d<\/p>\n
\u201cIf we want to stimulate economic growth in South Africa, it is critical that Government strikes the correct balance between imports and exports, by considering both the needs of local retailers who rely on cheaper imports as well as local manufacturers that need to drive exports of products and raw materials,\u201d Rabbie said.<\/p>\n
Weak rand to hit tech<\/strong><\/a><\/p>\n Positives to weak rand: analysts<\/a><\/strong><\/p>\n