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Johannesburg - South Africa’s can’t be a "trust fund kid" living off its mineral resources but not developing new skills, Minister of Economic Development Ebrahim Patel told a group of entrepreneurs on Monday.
Patel was speaking to local manufacturers who are participating in Massmart’s supplier development programme. The goal of the programme is to empower local suppliers and help them grow their businesses.
It originated as a result of a caveat from the Competition Commission, which stipulated that Massmart had to establish a viable supplier programme when its billion rand merger with Walmart received the green light in 2011.
Patel, who helped establish the programme which celebrated its fifth birthday on Monday, said he believed it was delivering on its promises.
Many of the suppliers, for example, had managed to expand their business footprints beyond South Africa’s borders he said.
Innovation
The minister said entrepreneurs, particular in the manufacturing sector, that innovate were critical for SA’s economy and could reduce South Africa's trade deficit.
“Countries that can innovate, those are the economies that succeed,” he said.
Patel said economists often referred to countries who had an abundance of mineral resources as having to deal with a “resource curse".
"These countries often don’t have to innovate, because they are already endowed with resources.”
The only way to grow an economy in the modern ear was to turn resources into assets.
“You can’t simply live off resources,” he said. “Finished products fetch a premium on the global market. The transformation of products where huge value is gained [is what] sophisticated economies are built on. “
He said South Africa needed to increase its ability to manufacture finished goods such as cars, mobile phones, clothing and computers by using the resources that exist in South Africa.
“We have to build a more resilient manufacturing industry,” he said, adding that a volatile global commodity cycle brought too much instability to rely solely on earnings from primary resources.
Exports
The minister said since the Massmart merger, the company had gone to great lengths to empower small, local suppliers. Some of the manufacturers had tapped into Massmart’s Walmart supply chain to start exporting their products.
One of entrepreneurs in the programme is Umlilo Charcoal, based in the North West province. It supplies briquettes to all Massmart’s Builders stores in Southern Africa. But Umlilo has also now started exporting to New Zealand, the Middle East, and Walmart’s stories in Chile.
The 33 participants in the programme make products ranging from chefwear, cooking gel and instant noodles, to bath tubs, adhesives, cooler-boxes and paint.
“Interventions such as these show that when we make an effort we can make a difference,” Patel said. “We need to build a stronger, more competitive manufacturing base and both government and the corporate sector have a role to play in rebalancing our economy”.
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