Opportunity Issue 97

BUSINESS UPDATE
News & snippets
Industry insights from
the past quarter
Two captains of industry form innovative alliance
Lenoma Legal and S&A Chartered Accountants have formed a ground-breaking innovative alliance. A
first of its kind that will see two of the industry-leading tech businesses join forces to deliver value in this
ever-changing world, a legal tech company and a chartered accountancy firm. As S&A Chartered, we are
looking forward to a bright future, more value to our customers and stakeholders through a combined
approach to SMME development and a true testament to African excellence. Business owners now have
the opportunity to work with world-class chartered accountants and legal practitioners all under one
partnership. Both directors are really excited about this collaboration as it’s a game-changer.
• More on websites www.seriteca.co.za or www.lenomadocs.com #LenomaLegal #SeriteCA #LenomaxSerite
Peter Serite CA(SA), Founder and
MD of S&A Chartered Accountants
Low-capacity utilisation in manufacturing sector a concern
Persistent low levels of capacity utilisation in the manufacturing sector
and low demand for locally manufactured goods are worrying as Covid-19
alert restrictions continue to limit operations at industrial plants, says the
Steel and Engineering Industries Federation of Southern Africa (SEIFSA).
Data released recently by Statistics South Africa (StatsSA) shows that
total capacity utilisation was 74% in first quarter of 2021 compared with
77.5% in first quarter of 2020, representing a decrease of 3.5%.
Within the metals and engineering (M&E) sector, capacity utilisation
was marginally down to 76.1% in the first quarter of 2021 from 76.8% in
first quarter of 2020. This was mainly because of insufficient demand, with
maintenance and shortages of raw material such as oxygen and steel also
Diverse development
The University of Venda, situated in Thohoyandou in the
scenic Vhembe district of the Limpopo Province of South
Africa, was established in 1982. From its early years, staff
members were drawn from various backgrounds in South
Africa but by 1994 staff members were increasingly
recruited from other African countries and overseas. The
presence on campus of staff from diverse backgrounds
created a unique atmosphere and a fertile environment for
new ideas and a capacity for change.
The university has established itself as a national asset
through its niche on its problem-oriented, project-based
curriculum with a strength in nurturing under-prepared
students into nationally competitive graduates. The
university has therefore become an important player in the
South African higher education landscape, contributing
significantly to the human resources and development
needs of the country and region.
6 | www.opportunityonline.co.za
contributing to the under-utilisation of production capacity. Overall, the
manufacturing sector remains weak in terms of production patterns, with
a year-to-date production decline of 3.1% in February 2021.
Manufacturing has remained under pressure for some time, with data
depicting a low annual average production growth rate of 0.1% in the last
four years to 2019, coupled with a massive decline of 13.7% in 2020. In
the last five years to 2020, total capacity utilisation in the manufacturing
sector has averaged 79.8%, with that of the M&E sector at 77.5%.
While total manufacturing capacity utilisation dipped to 59.8% and
to 52.8% the second quarter of 2020 amid level 5 lockdown restrictions,
it improved in the latter quarters of 2020 as the restrictions were eased,
reaching 79.3% and 74.6% respectively in the fourth
quarter of 2020. In 2020, capacity utilisation for the
manufacturing sector and M&E sector totalled 72.3%
and 67.6% respectively.
According to SEIFSA Chief Economist, Chifipa
Mhango, weak manufacturing production amid the
lockdown regulations contributed to the economy
contracting by 7% in 2020. “Covid-19 significantly
hampered production last year. However, there are
encouraging signs of a slight recovery as evidenced
by Absa’s Manufacturing PMI, which is in an
expansionary trajectory of above 50, even though
there was marginal decline from 57.4 in March to 56.2
in April,” he said. “We do, however, reiterate that any
recovery in manufacturing production will be driven
by the government’s efforts to revive the economy.
It is therefore critical that the government speeds up
the implementation of its economic recovery plan,”
Mhango said.
“This is particularly critical for the recovery of
the M&E sector, which has experienced a worrying
decline in levels of employment and investment,”
he said. An increased level of industrial domestic
demand is required for manufacturers to reboot
capacity utilisation levels to above 80%. Mhango
added that it is imperative that the South African
government efficiently rolls out its Covid-19
vaccination programme to enable the economy to
open up further and restore industrial production.