Janet Wilhelm
The medical devices sector in South Africa is characterised by its complexity and diversity, involving numerous products, companies, and rapid innovation cycles. This sector, despite not being a major employment generator, plays a crucial role in healthcare delivery and offers significant growth potential through both local manufacturing and international investments. Currently, the sector contributes substantially to South Africa's trade deficit, due to high import levels driven by disease.
The development of a comprehensive Masterplan for this sector aims to address the trade deficit, encourage localisation, and boost export revenues. This Masterplan is informed by a detailed value chain analysis based on the 2022 Medical Devices Landscape study by the South African Medical Research Council and trade data from Trade & Industrial Policy Strategies. The analysis identifies key challenges and opportunities within the sector, highlighting the need for strategic interventions to foster growth.
This research comprises the main report and six annexures.
Download or read online:
Main Report: Draft of the South African Medical Devices Masterplan – Value Chain 2024
Download or read online:
Annexure 1: Trade in medical devices
Annexure 2: Methodology of HS Codes for medical devices
Annexure 3: Working group workshop on quick win interventions
Annexure 4A: Case study - Turkey
Annexure 4B: Case study - Development of medical devices value chain in Costa Rica
Annexure 5: Manufacturing financial data
The central question of this paper and policy brief is: what is the future of the South African petrochemicals and plastics, ammonia, fertiliser, explosives and other chemical value chains of the Secunda petrochemical complex in the light of Sasol’s stated greenhouse gas emission reduction plans and other assessed business constraints? Given the risks that a declining Secunda output pose to the South African economy, this paper identifies several possible economic development substitutes, roughly compared against policy objectives, as possible targets for further detailed quantitative and financial analysis. The policy brief draws on the information in the main report.
This research was supported by the African Climate Foundation.
Main Report
Download a copy or read online: South Africa's petrochemicals and basic chemicals in the context of South Africa's energy transition focussing on Sasol's Secunda coal-to-chemicals-and-liquids facility
Policy Brief
Download or read online: Petrochemicals and South Africas energy transition Sasols Secunda coal to chemicals and liquids facility
The Real Economy Bulletin - Second Quarter 2024
Main Bulletin: The Real Economy Bulletin - Second Quarter 2024
In this edition
GDP growth: The GDP eked out 0.4% growth in the year to the second quarter of 2024. That comes on top of near-stagnation from early 2023, which was largely a result of falling mining and metals prices combined with difficulties at Eskom and Transnet. Manufacturing value added climbed 1.1% in the quarter, but is still lower than it was two years ago. It is 7% below its pre-pandemic levels. Metals revenues have fallen precipitously since 2022. Read more.
Employment: In the year to the second quarter of 2024, employment reportedly expanded by just over 300 000 or almost 2% – far faster than reported GDP growth. The informal sector saw the most rapid growth, expanding by 3.3% compared to just 1.2% for the formal sector. As a result, the share of adults with paid employment stabilised at 40%, still well below pre-pandemic figures and far lower than the global norm of 60%. Manufacturing employment recovered from steep job losses in mid-2023, gaining 100 000 jobs year on year. Read more.
Infrastructure: From the mid-2010s, both Eskom and Transnet saw lower sales but higher tariffs. In the second quarter of 2024, electricity generation showed significant signs of recovery at both Eskom and private suppliers. Transnet rail and ports, however, declined further. In real terms, both electricity and rail tariffs increased faster than headline inflation. Read more.
International trade: South Africa had a surplus in goods trade in the second quarter of 2024. That continued an almost unbroken string of surpluses since the 2020 pandemic, mostly because slow economic growth has dampened imports while global mining prices, although off their peaks, remain stronger than before the pandemic. Both goods exports and imports were lower than a year earlier, although exports ticked up compared to the previous quarter. Read more.
Investment and profitability: Over the year to the second quarter of 2024, the investment rate fell to 14.6%, down from its post-pandemic peak of 15.3% and well below pre-pandemic levels. Both government and private investment shrank sharply over the year. By type of capital acquired, public works and buildings accounted for most of the decline, while machinery and equipment increased, in part reflecting large-scale investment in renewable electricity. In terms of profitability, manufacturing remained stable but mining and construction experienced a decline. Read more.
Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects quarterly, using published. It added 11 projects across four industries – electricity, services, manufacturing and mining – in the second quarter 2024. Less than a handful of projects reported values for their respective investments; the R8.1 billion investment value reported for the quarter comes from only three projects. The Tracker updated progress for 17 projects recorded previously. Read more.
Briefing Note 1: Women's economic access and the limitations of "men in hard hats" industrial policy - by Nokwanda Maseko. Post-apartheid industrial policy has for the most part fallen short of delivering economic inclusion for women, particularly Black women. While there have been some improvements in women’s economic outcomes since 1994 – in part due to policies aimed at redressing broader structural inequality – South African industrial policy has primarily focused on “hard hats” industries built under apartheid. These industries – like automotive manufacturing, petrochemicals and energy – often offer workers comparatively good economic outcomes in terms of earnings and social protection, but they are dominated by men. Read the Briefing Note online: Women's economic access and the limitations of "men in hard hats" industrial policy.
Briefing Note: SMMEs in the Just Transition - by Elize Hattingh and Michael Hector. Small, Medium, and Micro Enterprises (SMMEs) are widely acknowledged as vital drivers of economic growth and job creation globally. The National Integrated Small Enterprise Development Masterplan indicates that stimulation of the SMME sector can address unemployment – SMMEs are a source for job creation and economic growth and seen in South Africa as an integral part of achieving sustainable development. In addition, SMMEs account for 90% of businesses and provide over 50% of employment opportunities, contributing around 40% to the GDP in emerging economies. However, the potential of SMMEs to drive the Just Transition is underutilised, particularly for marginalised groups that face significant barriers to participation in the green economy. Read the Briefing Note online: SMMEs in the Just Transition.
TIPS industry studies aim to provide a comprehensive overview of key trends in leading industries in South Africa. For each industry covered, working papers will be published on basic economic trends, including value added, employment,investment and market structure; trade by major product and country; impact on the environment as well as threats and opportunities arising from the climatecrisis; and the implications of emerging technologies. The studies aim to provide background for policymakers and researchers, and to strengthen our understanding of current challenges and opportunities in each industry as a basis for a more strategic response.
This industry study reviews South Africa’s international trade in plastics, in terms of both imports and exports. It looks at global plastics production and use, as well as trends in trade.
Industry Studies
Technological Change in the Food Processing Industry 2024
Technological Change in the Plastics Industry 2024
South Africa's International Trade in Plastics 2024
Technological Change in South Africa's Automotive Industry 2024
Technological Change in the Capital Goods Industry 2024
Clothing and Textiles International Trends 2024
International Trends in the Capital Goods Industry 2024
International Trade in South Africa's Automotive Industry 2024
Capital Goods in South Africa 2024
Additional studies for other industries will be added when finalised
TIPS industry studies aim to provide a comprehensive overview of key trends in leading industries in South Africa. For each industry covered, working papers will be published on basic economic trends, including value added, employment,investment and market structure; trade by major product and country; impact on the environment as well as threats and opportunities arising from the climatecrisis; and the implications of emerging technologies. The studies aim to provide background for policymakers and researchers, and to strengthen our understanding of current challenges and opportunities in each industry as a basis for a more strategic response.
This third industry study of the automotive industry presents a comprehensive overview of the global technological trends impacting the automotive industry. The first section looks into the range of technologies influencing the automotive industry, highlighting electrification as a major technological trend and assessing the extent to which the local industry has adopted this trend. Section 2 discusses how local firms in the automotive industry are adopting these technologies, while also identifying challenges that have impacted progress. The third section concludes with policy implications and recommendations.
Industry Studies
Technological Change in the Food Processing Industry 2024
Technological Change in the Plastics Industry 2024
South Africa's International Trade in Plastics 2024
Technological Change in South Africa's Automotive Industry 2024
Technological Change in the Capital Goods Industry 2024
Clothing and Textiles International Trends 2024
International Trends in the Capital Goods Industry 2024
International Trade in South Africa's Automotive Industry 2024
Capital Goods in South Africa 2024
Additional studies for other industries will be added when finalised
The Real Economy Bulletin - First Quarter 2024
Main Bulletin:The Real Economy Bulletin - First Quarter 2024
In this edition
GDP growth: The GDP shrank slightly, by 0.1%, in the first quarter of 2024. The decline underscored the increased volatility of GDP growth since the COVID-19 pandemic started in 2020. The GDP declined in five quarters over the past three years, compared to nine from 1994 to 2018. The volatility resulted, in part, from extraordinary fluctuations in world mining prices as well as shortfalls in infrastructure. The inability of Transnet and Eskom to meet post-pandemic demand has vastly accelerated growth in private-sector alternatives. Read more.
Employment: In the year to the first quarter 2024, although the GDP grew only 0.7%, employment reportedly expanded by over half a million. The formal sector accounted for two thirds of the new jobs. Domestic work saw a sharp recovery, but remained below pre-pandemic levels. Changes in employment within manufacturing did not align with industry sales figures, with an unusually sharp decline reported in auto and extraordinary growth in clothing and textiles. Read more.
International trade: Trade continued to normalise as international commodity prices came off the speculative highs seen from 2020 to 2022 while imports gradually recovered until mid-2022. Since then, imports have fallen, due mostly to a combination of slowing growth and softer world oil prices. In manufacturing, foreign auto sales remained strong but coal and platinum exports suffered from a sharp fall in international prices. Read more.
Investment and profitability: Investment fell 1.8% in seasonally adjusted terms in the first quarter of 2024. In consequence, it dropped 6.6% from the second quarter of 2023, when for the first time since the lockdown it exceeded pre-pandemic levels. The investment rate (the share of investment in GDP) fell to 14.8%, down from 15.3% in the second quarter of 2023, 15.5% in 2019, and 18% in 2015. The sharpest fall occurred in private investment, which dropped 3.3% in the first quarter of 2024. General government investment fell by 2.4% and state-owned companies by 1.3%. Read more.
Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects quarterly, using published. In the first quarter of 2024, 20 projects were added to the Tracker. Only a handful of projects published investment values this quarter. This resulted in a substantial underestimate in the amount recorded for the quarter – R3.74 billion derived from five projects. Monitoring updated 15 pre-existing projects this quarter. Read more.
Briefing note: The structural crisis in steel - by Neva Makgetla. ArcelorMittal South Africa’s (AMSA) threatened closure of its Newcastle plant underscores the long-term structural crisis in the South African steel industry. For three decades, domestic demand for steel has been essentially stagnant as the steel-intensity of economic growth dropped steadily. Meanwhile, exports declined from 2006 while low-cost mini-mill producers and, to a lesser extent, imports took a growing market share. Read the Briefing Note online: The structural crisis in steel.
Briefing Note: The renewable energy value chain in South Africa - by Gaylor Montmasson-Clair. Renewable energy technologies, principally solar photovoltaic (PV) and wind energy along with battery storage, have had exponential growth over the last two decades. From virtually no solar and wind energy generation capacity worldwide in the 1990s, a total of 375GW of solar energy and 108GW of wind energy were installed in 2023, accounting for the vast majority of new generation capacity. As the cost of renewable energy further declines (and climate policy tightens), this trend is expected to continue for the foreseeable future. Read the Briefing Note online: The renewable emergy value chain in South Africa.Participants in the petroleum industry value chain, represented by the South African Petroleum Industry Association (SAPIA), are currently granted exemption from the Competition Act largely on the basis of ensuring security of supply of petroleum products. This exemption was invoked in 2002 for 18 months to ensure fuel supply security after the termination of the Main Supply Agreement whereby oil companies in South Africa were obliged to uplift and market a substantial proportion of Sasol’s fuel production from its plants at Sasolburg and Secunda. The Designation and Exemption was not renewed. However, after severe supply shortages were experienced in 2005, the Moerane Commission of Inquiry recommended its reinstatement. Following the 2010 World Cup, SAPIA applied for, and was granted, exemption between 3 October 2011 and 31 December 2015 with some conditions being attached after 2011. Since 2015, the exemption has since been extended some 21 times.
The continuous exemption of the fuel industry value chain over a period of more than two decades constitutes a risk to the integrity of Competition Policy. The Department of Trade, Industry and Competition (the dtic) and the Competition Commission are currently evaluating the merits of SAPIA’s 2020 application in this context.
This paper draws on a confidential report of an investigation commissioned by the dtic to assess the merits of SAPIA’s application for further Designation of the South African petroleum industry. It examines the technical and infrastructural root causes of supply security risks and identifies measures that would contribute to reducing such risks, thereby eliminating the need for a general exemption of the fuel industry from the Competition Act.
Import Tracker - Q4 2023
South Africa had a R21.7 billion trade surplus in the fourth quarter of 2023, up from R7.8 billion in the fourth quarter of 2022, but lower than the R41 billion registered in the third quarter of 2023. Imports declined by R17 billion to R498 billion in the year to the fourth quarter of 2023, while exports declined by 0.5% to R519 billion in same period. This was in part due to a R22 billion fall in coal exports in the fourth quarter of 2023.
Trade & Industrial Policy Strategies (TIPS) hybrid Development Dialogue on
Developing the Renewable Energy Industrial Value Chain
Thursday 30 May at 13:00 – 15:00 PM (SAST).
TIPS Dialogues bring together academics, policymakers, civil society organisations, workers, and practitioners
to discuss important issues and share ideas on industrial policy.
PRESENTATIONS
Saul Levin (TIPS) - Greenining Industrial Policy
Gaylor Montmasson-Clair - What would it take to localise the renewable energy value chain in South Africa?
Gerald Nienaber - Case study: Modetech Services
Fazel Ernest - Insights from Labour
MEDIA
Supply-side support will be required if South Africa aims to join green industrialisation race - Engineering News 30 May 2024
POLICY BRIEF
AGENDA
Dr Saul Levin (TIPS) – Presenting on Greening Industrial Policy
Gaylor Montmasson-Clair (TIPS) – What would it take to localise the renewable energy value chain in South Africa?
Gerald Nienaber (Modetech) – Case Study Modetech Services
Fazel Ernest (CEPPWAWU - Cosatu) – Insights from Labour
Background
This Development Dialogue will unpack the opportunities for South Africa in the development of renewable energy and battery storage value chains, in line with the framework of the South African Renewable Energy Masterplan (SAREM) and the country’s broader transition to green industrial policy. The fast-rising roll-out of renewable energy and storage technologies, both domestically and globally, presents an opportunity for South Africa to foster economic development, employment creation and social transformation.
The development of industrial value chains, leveraging South Africa’s existing manufacturing and service provision capabilities, is one such opportunity. Looking ahead, understanding the landscape of opportunities in the value chain and the necessary interventions required to realise the potential will be the focus of the dialogue.
TIPS Dialogues bring together academics, policymakers, civil society organisations, workers, and practitioners to discuss important issues and share ideas on industrial policy.
TIPS is partnering with the Department of Trade Industry and Competition (the dtic).
About the Speakers
Moderator
Muhammed Patel is a Senior Economist at TIPS. He works on TIPS's work on sustainability and just transition. Muhammed’s background spans work in industrial development, and competition and regulatory economics as well as the telecommunications and energy sectors.
Presenters
Saul Levin is Executive Director of TIPS since 2014. He has a PhD in Development Studies from the University of Johannesburg, with his thesis on industrial financing. Saul was previously a chief director in the Economic Development Department (EDD) with oversight of the Development Finance Institutions reporting to EDD. He also held several senior posts in the Department of Water Affairs and Forestry, Department of Minerals and Energy, and Department of Trade and Industry.
Gaylor Montmasson-Clair is a Senior Economist at Trade & Industrial Policy Strategies (TIPS). He leads TIPS's work on sustainability and just transition, and is the Facilitator for the South African Renewable Energy Masterplan (SAREM), the industrialisation plan for South Africa’s renewable energy value chain. He has been working on inclusive development and green economy issues for more than fifteen years and has carried extensive research on the transition to an inclusive green economy from a Global South perspective, with a focus on policy frameworks, industrial development, just transition and resource security.
Fazel Ernest is a South African trade-unionist at CEPPWAWU - Cosatu who organises, facilitates, evaluates, and reports on capacity building for members in his leadership role at the union. He supports operational and strategic leadership structures and represent the union in legislative and stakeholder structures. He is deeply rooted in social solidarity with the poor, destitute and vulnerable with a background in political and community activism. He has served on numerous SETA Boards/EXCOs and is the former CHIETA Chief Operations Officer.
Gerald Nienaber is a partner of Modetech Services which is a small but growing high-tech engineering and manufacturing business which is poised to move from servicing traditional markets, such as mining, to new emerging markets, such as the renewable energy sector. He has extensive experience in several key industries in South Africa, leading the development of EOM parts and dedicated to providing OEM parts solutions for the world's most critical markets.
TIPS is partnering with the Department of Trade Industry and Competition (the dtic).
FOR ENQUIRIES - Rozale@tips.org.za
Over its short history, the renewable energy and battery storage industrial value chain value chain has already gone through a boom and a bust. More recently, efforts have been underway to revive the value chain. This policy brief reviews the state of the renewable energy and battery storage value chain in South Africa, and looks at possible avenues to support increased localisation.