launch of the Reboni furniture factory, Kabokweni
28 March 2007
Master of ceremonies
Members of the Executive Council present here today
Heads of Departments
Heads of our Parastatals
Directors of Reboni Furniture Group Mr Mike Nkuna and Ms Ria Ledwaba
All eminent dignitaries
Comrades and friends, compatriots
Ladies and gentlemen
We are here to join the Reboni group in celebrating the launch of a new
furniture factory in Mpumalanga. It is our understanding that the Reboni group
has become one of the largest manufacturers of economically designed
educational furniture, as well as affordable office furniture, including school
and office furniture such as stackable chairs, desks, teachers' tables,
upholstered chairs, computer tables and filing cabinets which are manufactured
from solid timber, board and steel. We would like to congratulate the directors
and management of the group for following the rays of the sun and making this
foray into Mpumalanga.
We meet a few weeks after the state of the province address where we took
stock of the performance of government over the 2006/07 financial year. We
remain seized with the need to ensure drastic reductions in poverty and the
creation of sustainable jobs for the people of Mpumalanga. Amongst the
imbalances Government identified to be confronting the goal of achieving shared
growth of our economy is the fact that about one-third of the population cannot
directly benefit from whatever stronger growth the country's economy achieves �
those in the second economy remains largely excluded from growth except through
remittances and social grants.
It is common knowledge that sustainable development is impossible without
expanding the economic pie through growth. On the other hand, a society which
achieves higher levels of development in the form of higher levels of education
and training, health and welfare and low levels of poverty and inequality is
better poised for further growth economically. The symbiosis between growth and
development is such that it is difficult to propose a sequence that growth
should precede development.
One of the fundamental reasons why poverty and inequality (i.e. a high
concentration of wealth in few hands) cannot coexist with economic growth
derives from the dual/enclave nature of the economy. This is because economic
growth requires markets for goods and services and markets rely on buying power
from widespread incomes and not simply on numbers. Poor people cannot drive
growth. This is one of the reasons why a dual (enclave) economy such as South
Africa is inimical to growth.
One of the serious areas of focus of government is the imperative for an
increase in the rate at which our provincial economy absorbs labour while
growing. In general, industries that tend to attract large amounts of
investment funds also tend to absorb the least labour, while those that attract
minimal investments tend to absorb the most labour, albeit in low skill and low
paying categories of employment.
Recently we were witnesses to an investment that cost R1,67 billion while
creating only four hundred and sixty eight (468) permanent jobs (The Lion
Chrome smelter project). This translates into a whooping R3,5 million per job.
We cannot however blame investors for such anomalies because on the one hand
the anomalies reflect the inherent nature of the specific industries in our
economy and investors on the other hand are in the business of pursuing the
highest possible returns on investment. We are therefore particularly pleased
that the furniture factory being launched today lies in the manufacturing
sector where more jobs can be created per rand invested.
Manufacturing is dynamic and remains without a doubt the engine of economic
growth. Manufacturing is generally regarded as the engine of growth due to its
backward and forward linkages to the other key sectors and due to its internal
symbiosis. Whilst primary sector outputs (mining and agriculture) get processed
and refined in manufacturing, manufacturing outputs easily become inputs in
other sub-sectors of manufacturing and in both primary and tertiary (services)
sectors of the economy.
Even in its most basic form manufacturing is characterised by innovation
through higher levels of productivity to transform inputs into better outputs.
The dynamic nature of competitive advantage embodied in manufacturing generates
higher value. The higher difference between input costs and the market value of
products in manufacturing results in greater wealth creation since such value
is in turn distributed to the factors of production (labour and capital).
Historically, an exponentially large amount of wealth was created in a short
period of industrialisation in the past.
A key feature of manufacturing is the fact that more value is added through
the transformation of raw materials into finished goods than in primary
economies that are dependent on natural endowments (mining and agriculture)
alone. We look forward to witnessing this factory sourcing raw timber from the
local forestry industry to transform it into higher value products. We hope
that you will not rely only on low input costs as a source of advantage but
that you will also train and skill your employees into a highly skilled and
productive workforce that gives you further advantages. Relatively, more skill
is required in manufacturing, than in agriculture and rudimentary mineral
extraction. The skill input of course is generally positively correlated to
value added.
In a small way, this factory will contribute to the further diversification
of our provincial economy helping us not to simply over-rely on one or two
sectors for employment and growth. One of the important reasons why it is
necessary to diversify the economy beyond primary extraction activities is the
fact that a diverse economy is better able to withstand macro-economic shocks
such as interest rate or exchange rate changes. When some sectors are affected
negatively, others respond positively, thus ensuring that the overall impact is
muted and balanced.
Once more I would like to congratulate the Directors and management of
Reboni and wish you all the best in your endeavour.
Thank you!
Issued by: Office of the Premier, Mpumalanga Provincial Government
28 March 2007
