Although the South African electronics manufacturing industry suffers from the same obstacles – strikes by union workers, macroeconomic challenges, etc. – as the rest of the country’s engineering/manufacturing sector as a whole, its plight often fails to garner the same headlines.
Of course, its small workforce (relative to the likes of the mining and metalworking sectors, for example) is one reason for this. Also, its troubles don’t tend to stir up the levels of public outrage to the extent that issues like energy supply disruptions do.
There have long been strong feelings amongst those who make their living running electronics manufacturing concerns that government intervention is also often an obstacle to doing business and growing the sector. Of course, complaints and finger pointing are to be expected in a market that’s struggling, but that’s not to dismiss the legitimacy of these concerns – chief among which are government over-involvement in some instances, creating excessive red tape, and under-involvement in issues such as protecting the local market from cheap foreign imports.
The Department of Trade and Industry (DTI) appears to be making an earnest effort to intervene in this sector, for example through active engagement with industry body AREI (Association of Representatives for the Electronics Industry) to deepen its understanding of the challenges and opportunities. The man tasked with spearheading this effort is Yusuf Timol, electrotechnical director at the DTI’s Industrial Development Division. Dataweek had the opportunity to interview him for an exclusive Q&A session.
Q: How did your job at the DTI come about?
“I initially worked at Kaiser Associates, a global strategic management consultancy, and we were at the time doing a number of economic development studies and strategies for the DTI. Amongst the various sectors we were working on, I had specifically worked on a sector study and crafted a strategy for the domestic ICT and Electronics sector.
This put me in good stead to understand the dynamics and requirements for the sector’s development in the near future. I then joined the department in late 2003 to head up the newly formed Electrotechnical Unit within the Trade and Investment Division of the DTI.”
Q: What are some of the milestones of your career at the DTI?
“Between 2003 and 2009, my aforementioned role saw me involved in a host of initiatives. Some of my proudest achievements during this time include co-authoring the National Investment Promotion and Facilitation strategy for the South African government, and drafting strategy, implementing and overseeing six developmental projects in an ICT and Electronics Customised Sector programme.
I also led promotional events, including international trade missions and trade shows, and facilitated a youth internship programme resulting in employment to over 600 graduates. I managed the SAVANT marketing programme for the SA electrotechnical sector, and sat on myriad task teams and boards, including ICT Divestiture Strategy, the Electrotechnical Export Council, ISETT SETA and Digital Migration Strategy.
In 2009 I embarked on a challenging mission to Iran, where I served as Economic Councillor at South Africa’s embassy in Tehran. My main task was to establish a DTI office in an area with no such prior facility. This role saw me leading high-calibre output and target achievement in an extremely difficult market operating under international restrictions, with a key focus on oil and gas, tourism, financial services and fresh produce. I also led trade delegations, coordinating international visits across sectors and nearly doubling tourism within two years from Iran to South Africa.
In 2011 I migrated again, this time to the South African High Commission in London, where I served as the permanent representative for the DTI in the United Kingdom. During this time I created strategic partnerships with chief executives and chairpersons and developed networks across key sectors, with emphasis on oil and gas and the business process outsourcing (BPO) industry but also including companies like Nedbank, Old Mutual, Deloitte and Standard Chartered. My work also included facilitating joint ventures, acquisitions, associations and greenfield investments between UK and South African companies.
The BPO industry was a standout success story, with projects resulting in nearly R1,5 billion in investments in 2012 alone from FTSE100 companies Serco and Capita, and South Africa’s BPO sector being awarded the UK’s ‘Best Offshore Destination’ in 2012, and the EU’s ‘Top Destination for 2013’ at the European Offshore Awards.
Whilst in office, the highest ever FDI inflows were recorded from the UK to SA – £5,2 billion in 2012 (compared to just £1,8 billion in 2011). I also served as the UK Chair of the University of Stellenbosch Business School, and had strong links with the London School of Economics.
My return to South Africa came in June 2014 in my current role, where I am overseeing the implementation of a suite of interventions in the electrotechnical industry, with specific emphasis on white goods, product designation and sector strategies.”
Q: Does your time spent in foreign countries give you a perspective that helps in your current duties?
“Working in international markets has been of immense value. My exposure to the scale and pace of business in a highly developed economy is second to none, and has really expanded my world view in terms of both my work and social paradigms.
The greatest opportunity was to study how these economies have evolved and how they prioritise the areas of importance. For example, since the UK market has lost much of its manufacturing capacity, it places high priority on research and development and intellectual property, and its service oriented industries.
In addition, the opportunity to interact and network with executive management of global companies has been extremely valuable. Often, as the permanent representative of the DTI in these markets, it’s crucial to project a highly professional manner as first impressions last. Much of my time was spent in business development and promoting South Africa through talking at conferences, seminars and briefings, as this is key to positioning the country as a serious player that is dominant on the continent and ‘open for business’.”
Q: What exactly do your current duties entail?
“Having returned to the same position I vacated in 2009 to work within the foreign corps, my main areas of focus are facilitation, advisory and research.
Often companies within the sector have serious issues which are affecting their business. Through the relationships we enjoy with other institutions such as SARS, ITAC and SOEs (state-owned enterprises) we bring the parties together to find solutions. The key is to creating an enabling environment to allow companies to do business with minimal obstacles.
Regularly the DTI receives request for advice and information from potential foreign investors. We assist these foreign companies with valuable information to assist them in making the decision to invest. The objective is to ensure potential investors have a ‘trouble-free’ experience when setting up a business in South Africa. I also provide guidance to domestic companies to assist them in penetrating foreign markets through exporting.
In the pursuit of designating locally made products, the team is constantly involved in research at product group level. The designation process prescribes a minimum local content threshold that applies to products procured by public sector entities. Designated products that fall within the ICT and electronics sector include set-top boxes for digital migration set at 30%, power and telecom cables at 90%, pre-payment meters at 70% and smart meters at 50%.”
Q: How does the Industrial Policy influence your work and what is IPAP?
“The DTI is the custodian of the government’s Industrial Policy, which provides the strategic overview of fast tracking the evolution of the economy. It aims to identify and utilise cross-cutting/transversal interventions that will have a major impact on growing priority sectors that will yield the maximum benefit to the economy in the form of job creation, growth and broadening participation.
The Industrial Policy Action Plan, or IPAP, is the implementation plan – updated annually – outlining projects and quarterly milestones for all the priority sectors. The DTI is accountable for these deliverables and the programmes within IPAP have a three-year rollover period. A copy of IPAP is available on the DTI website – www.thedti.gov.za – for review.
Some of the instruments available to achieve the objectives of the Industrial Policy include industrial financing, public procurement, competition policy, tariff management, regional industrialisation, industrial and export marketing incentives, etc.”
Q: What projects are you working on at the moment?
“I am involved in developing a strategy to assist and develop local electronic contract manufacturers, and a white goods export strategy to grow the manufacturing base.
The bulk of my work, though, is the drafting of an electrotechnical sector strategy. The last in-depth research was completed in 2007 and since this is a dynamic sector and there has been much change, it is necessary to re-orientate our strategic intent within the sector. We aim to re-prioritise the importance of the different sub-sectors and use the research to proactively identify new projects and programmes.”
Q: Are you satisfied with the level of cooperation between industry and the DTI?
“In all fairness there is quite a lot of cooperation between the two, however it is inconsistent and when we look at the nature of the interaction, it is often in reaction to policy issues rather than in a planned and structured manner.
We are aware of the relatively large number of associations that reside within the sector: in 2010 the DTI attempted to gather the dominant companies across the sector and established the South African Electronics Industry Federation, however it failed to develop any traction.
My personal view is that for any association or federation to succeed, the will must originate from within industry in order for it to be sustainable. As government we prefer to speak to a single entity that represents all the companies (small, medium and large) rather than individuals, and urge companies to organise themselves in such a manner. However, we do accept that the industry is extremely diverse and to represent the entire sector in a single entity will be extremely difficult to package.
A successful association should on the one hand be able to assist its members in growing export markets, while also providing robust and relevant positions on policy. Examples of successes in this regard are BITKOM in Germany and INTELLECT in the UK.”
Q: Are you concerned that the educational ‘conveyor belt’ producing new engineers is malfunctioning?
“The solution should be implemented. Firstly, we don’t have enough engineering faculties rolling out tens of thousands of graduates every year. There are certain sectors within the economy where engineers are thriving, such as automotive, resource-based industries (especially within the relatively infantile oil and gas sector) and green industries.
However, when counselling scholars, they are often not clearly informed of all the current options, and especially not where the opportunities will exist in the next five to 15 years which could result in developing a new breed of engineers for attractive and advanced industries to ply their trade in the near future. Examples include the highly probable development of a nuclear and oil and gas industry which would employ tens of thousands of graduates when the nuclear build takes place and shale gas reserves are commercialised.
The youth need to know where the future growth in the economy is going to take place so they can make calculated and informed decisions on their future. If the options exist and the enabling environment is in place at a tertiary level, as a country we should have more engineers in the next 20 years.”
Thank you Mr Timol for your time.
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