This policy brief’s main intention is to create awareness for the affected stakeholders of the UK CBAM. The brief also touches on the issues faced by firms under the EU CBAM, and shows the similarities of the two mechanisms.

After initial consultation in March 2023, the United Kingdom in December 2023 announced that it will introduce a Carbon Border Adjustment Mechanism (UK CBAM), to come into effect in January 2027. In March 2024, the UK announced consultations for the introduction of the UK CBAM, which will run for 12 weeks from 21 March to 13 June 2024. Consultations can be made online by completing six pages of a survey (found here), commenting on the content of Chapters 5–7 of the UK CBAM consultation text,  or can be submitted by email to cbampolicyteam@hmrc.gov.uk. Chapters 5–7 cover product coverage of the UK CBAM, including the issues of adding precursors, methods of calculating the CBAM charge, and the governance and administration components of UK CBAM. This is an opportunity for firms exporting to the UK to enact and elaborate on the issues they face to inform the policy development process of the UK CBAM.

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The Tracker added 23 projects in the fourth quarter of 2023 with a pledged investment value amounting to R478.7 billion recorded from 12 projects. The other 11 projects have not yet reported their respective project values. Monitoring updated 28 pre-existing projects to the Tracker this quarter.

The South African start-up sector has experienced significant growth over the past decade. However, the growth of start-ups in South Africa is still far from its potential. Growth elsewhere in Africa has, in recent years, been far more rapid. Once the leading country in Africa for investment in start-ups, South Africa has been overtaken by Nigeria while other African countries, such as Egypt and Kenya, have been growing more rapidly than South Africa. 

This policy brief identifies the key constraints that currently curtail the rate of growth of the South African start-up sector, and outlines the measures that could address these constraints. It follows a November 2023 TIPS workshop, Growing the Start-Up Economy: Accelerating Local and Foreign Investment. Inter alia, the policy brief draws on the presentations and discussion at the workshop.

PRESENTATIONS

Nishal Robb (TIPS) – SA economic trends pre- and post-COVID-19: Implications for industrial policy

Itumeleng Mokoena (DNA Economics) – Trends in the global economy since 2008 and Implications for South Africa's industrial policy

Nokwanda Maseko (TIPS) – Post-covid industrial policy in the context of the climate crisis

Neva Makgetla (TIPS) – The political economy of industrial policy in SA

AGENDA

Opening Remarks and Moderator: Saul Levin (TIPS)

Presentations and discussion

• Nishal Robb (TIPS) – Insights from Paper: SA economic trends pre-and post-COVID-19: Implications for industrial policy
• Itumeleng Mokoena (DNA Economics) - Insights from TIPS Paper: Trends in the global political economy and trade
• Nokwanda Maseko (TIPS) – Insights from Paper: The climate crisis
• Neva Makgetla (TIPS) – Overview and presenting Insights: The political economic context for industrial policy
• Tanya van Meelis (COSATU) - Discussant

BACKGROUND

The COVID-19 pandemic in 2020 initiated a series of crises, ranging from supply-chain disruptions to geo-political tensions that substantially affected global markets. In South Africa, these developments aggravated joblessness and inequality, contributed to stress on network infrastructure, complicated the response to the climate crisis, and slowed overall growth. The improvement in prices for mining exports in the early 2020s provided only temporary relief.

These issues have reshaped the landscape for industrial policy in South Africa, opening up new opportunities as well as raising threats and obstacles. The development dialogue aims to promote discussion about how industrial policy has to evolve to address these new realities. To support the debate, TIPS researchers will present research undertaken over the past year that aimed to define the challenges more clearly, with in-depth dives into trends since 2020 in economic growth and employment; the climate crisis and policy responses to it; global trade and power relationships; and the local political economic context.

ABOUT THE SPEAKERS

Moderator

Saul Levin is the Executive Director of TIPS. He previously worked as a Chief Director in the Economic Development Department (EDD) with oversight over the Development Finance Institutions reporting to EDD.

Presenters

Dr Neva Makgetla is a senior economist at TIPS. Makgetla has published widely on the South African economy and worked for many years in government.

Nokwanda Maseko is a senior economist at TIPS. Her work is at the intersection of industrial policy, gender and the just transition. She previously worked as a Budget Analyst at the National Treasury, and as an Assistant Director for Industrial Policy at the Economic Development Department.

Nishal Robb is an economist at TIPS. Nishal has worked on a range of topics, including the history of South Africa’s labour-intensive clothing industry; the impact of poor school safety on education; the financialisation of South African firms and implications for structural transformation; and illicit financial flows, tax havens and industrial development in South Africa.

Itumeleng Mokoena is an economist at DNA Economics. He has worked on several projects across different sectors including financial services, government and manufacturing.

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). 

eNCA 11 April 2024 - Interview with Neva Makgetla (TIPS Senior Economist)

Watch on YouTube

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 climate crisis; 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.

The capital goods industry plays a crucial cross-sectional role in the economy as the industry’s output of machinery and equipment is required for virtually all goods production processes. The industry accounted for 7.1% of South Africa’s total manufacturing value added in 2022. Income from the industry’s seven sub-industries rose from R56.4 billion in 2011 to R135 billion in 2021 (in constant 2021 Rand), with the five largest companies in each industry contributing an average of 42% of total income contribution. Exports of capital goods surged by 69% in 2022 from the previous year owing to a 347% increase in exports of other general purpose machinery to the European Union (EU). Employment within the industry is mainly dominated by engineering services, which accounted for 74% of total employment at the end of 2022. The share of general and special purpose machinery combined was 26%.   

Industry Studies

International Trade in South Africa's Automotive Industry 2024

International Trade in South Africa's Automotive Industry 2024

Capital goods in South Africa 2024

Plastics 2024

Clothing and textiles 2024

Auto manufacturing 2023

Electrical equipment 2023

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 climate crisis; 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 report provides a nuanced understanding of the intricate dynamics within the South African plastics industry. By scrutinising existing outcomes, policies and practices in the primary plastics and plastics goods subsectors, the aim is to paint a picture of the domestic industry, locating it in the broader global context, and subsequently identify opportunities and challenges within the industry.

Industry Studies

International Trends in the Capital Goods Industry 2024

IInternational Trade in South Africa's Automotive Industry 2024

Capital goods in South Africa 2024

Plastics 2024

Clothing and textiles 2024

Auto manufacturing 2023

Electrical equipment 2023

Additional studies for other industries will be added when finalised.

Business Day - 9 April 2024 by Neva Makgetla (TIPS Senior Economist)

Read online at Business Day

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 climate crisis; 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 report examines the clothing and textiles industries of the clothing, textile, footwear and leather (CTFL) in South Africa by briefly analysing the value chain, its contribution to gross domestic product (GDP), the trade patterns the subsector experienced from 2001 to 2022, employment, functional inequality in the subsector, and the main locations where clothing and textiles manufacturing is concentrated in the country. In addition, the structures and stakeholders that govern the industry are listed and discussed, as well as the the main constraints these industries face, along with an accompanying SWOT analysis.

Industry Studies

International Trends in the Capital Goods Industry 2024

International Trade in South Africa's Automotive Industry 2024

Capital goods in South Africa 2024

Plastics 2024

Clothing and textiles 2024

Auto manufacturing 2023

Electrical equipment 2023

Additional studies for other industries will be added when finalised.