Amith Singh, Head of Energy at Nedbank, unpacks the turmoil and the potential in the manufacturing sector
The manufacturing landscape in South Africa has undergone a fundamental shift over the past two years thanks to several complexities that have had an impact, both locally and globally. In the country, the power supply remains a significant obstacle, while global instability, port complexities and rising fuel prices add their own challenges to the mix.
However, in spite of these issues, the manufacturing sector has shown impressive resilience and an optimism that is set to promote growth.
In the first quarter of 2022, the South African economy grew by 1,9% at the back of a 1,2% growth in the last quarter of 2021, returning the country to its pre-Covid-19 pandemic levels. The manufacturing sector showed an increase of 4,9% in the first quarter, making it a solid contributor to the overall economic performance of the country. That said, it is unlikely that this growth will be reflected in the second quarter of 2022 due to the floods in Kwa-Zulu Natal, the ongoing conflict between Ukraine and Russia, China’s zero-Covid measures and the strain on the electricity supply. The latter has hindered the sector as many of the specialised machinery and equipment required to keep manufacturing plants fully operational need start-up times. Plus, with a period of two hours without electricity, machinery is not optimised or fully used for up to eight hours.
That said, the country has come a long way in adapting to this volatility and it is likely to continue with this level of strength and resilience into the rest of the year. Some of the successes that have stood out over the past two years have come from companies that have streamlined their operations and diversified their offerings, both vertically and horizontally. This has meant they have been able to implement more stringent measures around cash flow and resources and this has kept the companies operating and measurably improving. There’s also been a visible increase in the adoption of e-commerce channels and companies embracing technological advancements to further optimise processes and drive performance.
Nedbank has developed a cohesive and holistic offering tailored to meet the rigorous and complex expectations of the manufacturing sector. Centred around a proactive partnering approach, the platform offers guidance and advice around growth and expansion strategies while introducing digital efficiencies that streamline admin and provide easy-to-use banking functionality. Our manufacturing solution is also designed to ensure that the sector remains agile with the tools it needs to execute at speed. We do this through a seamless end-to-end funding process that has reduced paperwork and enhanced disbursement capabilities for supplier payments.
We recognise that it is important for the sector to not just navigate local challenges with ease, but international ones as well. This is why we’ve made it simple to navigate international markets with a suite of international banking solutions and providing access to global networking opportunities that connect clients with international trade opportunities.
Our value proposition rests not just in our capabilities and customised solutions, but in our partnership approach. Our clients in the manufacturing sector benefit from a partner that’s committed and brings industry expertise that will support them as they grow and invest and provide sound financial strategies based on deep insight.
For more information about our specialist manufacturing services, email us at manufacturing@nedbank.co.za.
