Electronics manufacturing in South Africa is a sector of industry characterised by both significant challenges, and yet, promising opportunities. As the country continues to diversify, reducing its dependency on traditional industries like mining and agriculture, the electronics manufacturing sector comes into view. This sector plays a crucial role in fostering innovation, creating jobs, and integrating into the global technology supply chain.
However, despite its vast potential to boost the local economy, the South African electronics manufacturing industry faces numerous hurdles. We are all aware of the current unstable power supply issues that have dogged the country for the past 15 years. The country’s energy supply company has finally had its longest run without loadshedding in the last decade, but at what cost? An enormous number of solar installations have taken place over the last few years in the residential and industrial sectors, alleviating some pressure on the national grid. For the industrial sector especially, although the addition of solar-generated power has improved production schedules, it has come with an increase in operational costs. The investment in solar power is costly, mainly due to the large-scale battery energy storage systems needed, and this is proving to be quite a financial burden on many businesses.
Another challenge is the high cost of imported raw materials and components. South Africa’s electronics manufacturing sector relies heavily on imported components and materials, which are subject to fluctuating exchange rates and international market dynamics. And of course, with the poor exchange rate being what it is, this has a direct impact on the bottom line of businesses.
The third obstacle is the skills gap that the country has, and talking to professional engineers, something that seems to be getting worse instead of improving. There is a shortage of adequately trained and skilled labour in the electronics manufacturing sector. While South Africa boasts several excellent universities and technical colleges, there is often a disconnect between the skills they produce and the needs of the industry. Universities of technology, especially, made the decision to increase the theoretical component of the engineering courses to the detriment of the practical component. This has had a disastrous effect on the ability of graduates, and companies looking to employ these graduates frequently have to invest in in-house training programmes to bridge this gap. With the insurgence of AI into all spheres of society, I believe that tertiary education needs to revert back to a curriculum that is more practical than theoretical.
I do acknowledge that the South African government has implemented several initiatives to support growth in electronics manufacturing. These include incentives for research and development, certain tax breaks for manufacturers, and funding for skills development programmes. The Department of Trade, Industry, and Competition has been particularly active in promoting local manufacturing through policies aimed at increasing the local content of manufactured goods.
When it comes to digital transformation, however, it seems that the person or department that has been driving this initiative is very much like a large portion of the general population on our roads in not having a valid driver’s licence. Decisions are made with little input from major players in industry, policies are put into writing, and then many of these decisions are subsequently shelved. This is a costly exercise and one that taxpayers should not have to foot the bill for.
The global shift towards renewable energy and smart technologies presents a significant opportunity. South African companies can tap into the growing demand for solar panels and components for wind energy generators. The country’s abundant natural resources and favourable climate make it an ideal location for the production and installation of renewable energy technologies. This has to be supported, however, by government policies so that local players can compete on an equal footing with larger overseas manufacturers.
The articles in this Dataweek issue make it abundantly clear that local electronics manufacturing is at the cutting edge, but for this to be maintained, it needs to be supported so that it can grow. Any reduction in this industry will be catastrophic to South Africa’s economy.
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