By Eustace Mashimbye
With Youth Month having come and gone, as a nation we once again reflected on the plight of South Africa’s young people, from the 1976 uprisings through to the current cohort’s status quo.
The recent unemployment statistics have been ventilated across many media platforms and social settings. Fighting for equal rights and political freedom has been replaced with fighting for jobs and economic freedom.
The recently released Quarterly Labour Force Survey has put our country’s unemployment rate for the first quarter of 2023 at 32.9% with the rate for youth sitting at a bleak 46.5%. This means that half of our youth are either just sitting at home or wandering the streets, many of them with little to no skills at all, which does not bode well for them or us as a nation.
Ours is a dire economic outlook where many of our country’s young people are condemned to a lifetime of poverty. More so if you’re living with a disability and condemned to a lifetime of dependency.
Some pundits have argued against South Africa becoming a social state due to the high number of recipients of social grants. Included in our social grant recipients is this large number of unemployed people who could take a huge burden off the state if they were to acquire skills and access employment opportunities. I am unwavering in my belief that the solution to this challenge lies in the same strategy that Proudly South African advocates for, and that is localisation as a lever for economic growth.
Localisation refers to the process of producing and consuming goods and services within a specific geographic area or country. It involves promoting and supporting local businesses, industries, and products, rather than relying heavily on imports or foreign based companies. The impact of localisation and its connection to industrialisation can have significant effects on the economy. From job creation and economic growth to community development and entrepreneurship, the impact of supporting businesses that supply locally made products and services is simply undeniable. But localisation needs efforts from all sides of the ecosystem for it to work.
One good case study is Lesco (Light Electrical Switch Company), a Johannesburg-based manufacturer of adapters, sockets, light switches and surge protected multiplugs that I recently had the pleasure of visiting. The company recently relocated their facilities to a bigger factory, expanding their production lines and increasing their staff complement and outreach programmes to provide even more jobs for able and disabled young adults.
One of the main contributors to their growth was the Covid-19 lockdown restrictions. With importers of cheap low-quality alternatives unable to bring in their stock as well as the increase in the number of people undertaking home renovations and DIY activities during that time, the company saw a very significant increase in revenue. This also led to more retailers choosing a steadier and more secure local supply of the products that they require for their customers – this further entrenched the importance of security of supply and the need for the country to be able to fend for itself whenever there are global supply chain disruptions.
This alone is reason enough for all role-players to adopt localisation. It’s a clear example of job creation by the localisation ecosystem brought about by the consumers and buyers.
Retailers are also essential to the ecosystem by implementing import replacement programmes which ultimately lead to job creation and more people being able to afford their products.
Lesco also has a clear employment strategy and have partnered with Deaf SA, among others, to ensure that at least 40% of its staff are people living with disabilities. Furthermore, they have ensured that most of their staff complement are between the ages of 18 and 35, doing their bit to ensure that young people are absorbed into the country’s workforce.
As I walked through the factory floors, I witnessed first-hand a few people from these under-represented groups that have been given an opportunity to fend for themselves, to take care of their families and to regain and retain their dignity.
Most impressive for me was the fact that the manufacturer has made a deliberate patriotic decision to not opt for the easier route of complete mechanisation and importing fully assembled products, which would mean working with only 10 staff members at most.
The role of manufacturers in the localisation ecosystem, therefore, is to play their part in creating job opportunities for the local community which not only will help grow their own consumer market but will also make a positive impact on the socio-economic situation within the communities in which they operate.
Opportunities for further growth and expansion by this local employer have been lost to imported products which are being sold at less than the cost of making the product locally, a clear case of under-invoicing at ports of entry.
Many companies from Eastern countries charge below production cost for their exports because in doing so, they unlock attractive and hefty subsidies, funds, and grants from their respective governments.
We, therefore, call on the entities who are part of the ecosystem, including policymakers and those responsible for accrediting products and ensuring that illicit and low-quality dumped products are confiscated, and offenders are called to account, to exercise their mandates effectively.
This in lieu of the fact that while local manufacturers are audited for quality and standards from production phase right through to the finished product, the barrier for their international counterparts is only at the points of entry.
The aggregated efforts of the localisation ecosystem have allowed Lesco to launch a new low-cost line of products aimed at rivalling the influx of imported high-performing products, switches, and sockets, in order for them to regain a share of the market that was previously largely in the hands of the East.
We commend retailers who have opted to replace competing products from the East with this locally made option on their shelves, with some introducing their products as their house brands, thereby contributing to creation of these new jobs. And as Lesco regains the share of markets previously lost to imports because of an increase in purchase orders placed by retailers and construction companies, such as Balwin Properties, they are now looking at creating additional job opportunities.
I agree that competitiveness remains a critical factor to be considered when driving industrialisation, and this case study is an example of an entity which has been placed in a position where they can be competitive because of aggregated demand in the country.
This case is an example of what has led us to believe that it’s important to spearhead engagements between the demand side for the construction, cement, and related industries (which sit with both public and private sector) as well as the supply side. To this end we will be hosting such an engagement during the current financial year, details of which will be made public once finalised.
For the young people that are benefiting from the collective efforts demonstrated in my Lesco example, and their families, it is indeed a “brand new day, and the sun is shining bright” like the late songstress Lebo Mathosa said.
Eustace Mashimbye is the CEO of Proudly South African.
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