the Department of Trade and Industry Technology Awards 2007
17 September 2007
Honourable Premier of the Eastern Cape Ms N Balindlela
MEC for Economic Development and Tourism Mr Mbulelo Sogoni
Executive Mayor of the Nelson Mandela Metropolitan Municipality, Ms Nondumiso
Maphazi
Heads of Departments and Council of Trade and Industry Institutions
(COTII)
Director-General and officials of the Department of Trade and Industry
Leaders of organised business and labour
Distinguished guests
Ladies and gentleman
South Africa is experiencing an era of unprecedented growth. Our economy has
grown for a record 90 consecutive months. We have seen our average Gross
Domestic Product (GDP) growth accelerate from 2,7% per annum between 1994 and
2000 to five percent for 2006. We have also seen the number of people employed
in our economy grow by over a million in the two years to September 2006.
We should celebrate this step change in economic growth. But when we look
deeper at the foundations of our economic growth, we find that approximately
85% of our economic growth between 2004 and 2006 can be attributed to household
consumption. Moreover, much of that consumer demand is being met by imported
goods.
Programme Director, if we look deeper into the structural foundations of the
economy, it is also clear that the dominance of commodity in the economy
persists, exposing the economy to potential external shocks. A diversified
economy such as ours is much more resilient and adaptive to external shocks and
imbalance. It is for this reason that our industrial policy response is swayed
more towards a diversified economy with a strong value adding productive
capacity to ensure that our economy will be a lot more able to sustain the
growth to evolve us to achieve our objective of lowering poverty and
unemployment by 2014.
There is evidence that manufacturing capacity utilisation is at a historic
high and giving way to strong fixed investment growth in several sectors and
showing an upward trend in competitiveness and production volume during the
past three years. However, there has also been contraction experienced in
manufacturing exports, a situation which is offset by sector export performance
linked to growth of government capital expenditure.
The challenge for Department of Trade and Industry is to respond in ways
that reinforce the emerging turnaround of manufacturing whilst at the same
time, assisting weak sectors to achieve the necessary structural adjustments.
In this regard, I am pleased to announce that Cabinet has approved the National
Industrial Policy Framework and the Industrial Policy Action Plan. Central to
the vision elaborated for industrial policy is a structural diversification of
the economy with greater emphasis on value addition, technology deepening,
knowledge assimilation and labour absorption.
A strong industrial policy is essential in driving this structural
diversification of the economy. However, industrial policy cannot succeed
without coherent and simultaneous supporting policies. The most critical of
these are: a competitive exchange rate, a skills development system aligned to
our industrial policy priorities; and traditional and modern infrastructure of
the necessary quantum, quality and pricing necessary for our industrialisation
needs, a supportive regulatory environment which encourages investment and
employment creation amongst firms of all sizes.
The Department of Trade and Industry is implementing a comprehensive suite
of interventions to resolve second economy challenges. Going forward, the
department will align the work on promoting economic inclusion with the more
coherent framework for supporting the second economy, which government is in
the course of elaborating. Our work in supporting growth, developing our
industries and enterprises, need to be complimented by our efforts at securing
a supportive global economic environment in order to stimulate exports and
investment.
Globalisation, a force that has been shaping the political and commercial
worlds for most of our working lives, is entering a new and more complex phase.
It is no longer a concept exported to the emerging world by the traditionally
dominant economies of the world. Emerging economies have grasped globalisation,
packaged it up and are every day, sending new versions of it back to the
West.
We are at a critical moment as a global economy. Move one way, toward
greater freedom of trade, the possibilities of new technologies, the promotion
of skills, the promotion of education and skills training on a vast scale â¦and
the opportunities seem endless. Step the other way, toward the retrenchment
into tariffs, a rejection of the newest things and a reluctance to change the
social and cultural patterns of generationsâ¦and those opportunities could be
lost.
The multi-polar world has been born out of and is thriving on competition on
an unprecedented scale; new markets are open not only to traditional players
but also to local and resourceful operations that understand them more closely.
In order to achieve high performance, businesses will need to continually
refine market focus and position, and develop distinctive capabilities that can
adapt to shifting sources of competitive advantage, as well as harness
innovation to create new markets.
At the same time, the challenge of ensuring a corporate culture that
embraces diversity will be more acute. Having processes and core values that
are universal will be essential as organisations operate across borders, within
different cultures and with more dispersed structures. I want to use this
opportunity tonight to look at what the key global forces are that are
impacting on society today taking into account the market assumptions regarding
workforce and technology development trends.
1. Key global market forces
Economic: Economic power is becoming more dispersed. This can be seen in the
following areas:
* growth of emerging market economies
* emerging economies contribute a growing share of the world's output with
trade and investment, accounting for 50% of global GDP
* China will become the world's biggest economy by 2025, followed by India in
third place with others such as Vietnam and Russia growing nearly as fast
* growth of emerging market multi-nationals
* emerging economy multi-nationals account for 61 of the Global Fortune
500
* BRIC (Brazil, Russia, India and China) stock markets produced the four best
performances with returns as high as 102% versus 14% for the United States of
America (USA)
* growth of multi-nationals in emerging markets
* of the world's 100 largest multi-nationals, 65% of their affiliates are
located outside their country
* a billion new customers will enter the global marketplace in the next
decade.
By 2025, global consumer demand will look different with China the biggest
consumer market.
Technological: Technological labour is no longer the preserve of developed
economies:
* The industrialised world is witnessing a shrinking pool of young skilled
employees, there are insufficient graduates with relevant technical skills and
this applies to South Africa (SA) as well.
* In the European Union (EU), the number of workers aged between 50 and 64 will
increase by 25% over the next two decades; the ageing workforce.
* Governments of emerging economies are nimble and are aggressively pursuing to
move up the value chain
* Emerging economies have 33 million university graduates, which is twice the
number of the developed world
* Technology leapfrogging is happening in which emerging economies skip less
efficient, more expensive and more polluting technologies and move to more
advanced ones. For example, straight to mobile phones skipping land lines e.g
Africa.
* Emergence of technology clusters and the global supply chain â innovation is
becoming much more geographically spread out with clusters of innovation
cropping up in many parts of the developing world.
* Growth in innovation, in particular the bio-economy by 2020 it is likely that
there will be global standards and legislation for energy consumption and
waste, forcing manufacturers to develop low energy production techniques and to
convert to products with renewable inputs. There will be new forms of renewable
energy that we have barely even dreamt of today, for example, the use of human
kinetic energy.
Programme Director, ladies and gentlemen, I am painting this picture to
demonstrate that as we celebrate the dti technology awards tonight, and pass on
words of encouragement and appreciation to those entrepreneurs, researchers and
students present here this evening, the challenges that lie ahead remain
immense.
2. Facing demographic challenges
Governments and organisations are facing dramatic shifts in the demographic
make-up of their workforce. An ageing workforce (and in SA a dying workforce)
and increasing female participation will be further complicated by the high
proportions of local employees spread across multi-nationals. In the developed
world, falling birth rates and increased life expectancy means that the
population is ageing rapidly with extensive implications for business,
government, social structures and individuals.
In South Africa, there are a number of companies where 48% of the workforce
is currently over 45 years with 12% over 55 years. Absent of intervention,
these proportions will increase to 57% for 45 years and over, and 20% for 55
years and over by 2010.
Increasing female participation: Number of women in the workforce has risen
dramatically as living standards demand higher net family incomes.
Skills crunch
An increased demand for skilled employees in the knowledge economies will be
difficult to meet due to a middle management gap. Organisations will rely on
importing a skilled workforce from emerging economies. Advanced industrial
economies are moving to a position whereby knowledge-based organisations will
soon generate more than half of total domestic product and employment. This
places new demands on employees who need to develop competence-based skills
(the ability to understand and use information), as well as technical skills
(training in particular fields of engineering).
Ladies and Gentleman, to conclude, we must invest heavily in skills
development and improve our technological capabilities to assist us in
achieving higher levels of growth. The awards today, confirm to all of us that
we are not tilting at windmills. I once again congratulate the winners here
today and all of those who have competed, for not only their achievements but
for showing leadership, for enhancing our material well being and for creating
a wealth of ideas upon which, together with the efforts of other South
Africans, our future prosperity relies.
I thank you.
Issued by: Department of Trade and Industry
17 September 2007
