The coronavirus pandemic has altered the way we live and move. It is now up to cities globally to decide whether that is an existential threat or an opportunity to reshape urban mobility. Likewise, now is also the time for SA policymakers to seize the opportunity and rework industrial and trade policy reforms to mitigate the negative effects of the pandemic in a struggling economy underpinned by increasing deindustrialisation, galloping unemployment, persistent poverty and high inequality.
The pandemic has had a major impact on the whole business value chain, including in the metals and engineering sector. Disconcertingly, the sector’s export performance for April 2020 reflects the start of what will become a worrisome trend for the second quarter of 2020 as global exports significantly declined by 73.58% year on year, while exports to all the other regions also dipped considerably.
As economies open up, efficient producers are tinkering with industrial policies to complement health policies by intervening and subsidising their indigenous businesses’ production costs. The news by the National Bureau of Statistics that China recently churned out more steel in May 2020 than in any month since records began in 1986 is not surprising.
The temporary dip in the importation of designated products due to Covid-19 presents an opportunity to reduce their importation significantly. Proposals aimed at ensuring the effectiveness of the preferential procurement policy, including the creation of an enforcement committee or the imposition of import duties, have been discussed ad nauseam in various forums involving the government, labour and business.
An increase in the volume of domestic output can reduce the unit cost of the product locally, thereby alleviating cost pressures faced by local businesses. This is especially the case in highly capital-intensive industries such as steel. Moreover, higher productivity by exporting companies will further bring down costs and make the product more competitive not only in the domestic market but also in regional and overseas markets.
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