South Africa launches drive to boost manufacturing

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South Africa launched a multi-billion rand incentive programme aimed at boosting the competitiveness of its manufacturing sector, where a global economic downturn and a volatile exchange rate have hurt exports.

Manufacturing contributes about 15 percent to GDP but contracted during a recession in 2008/09 that slashed one million jobs, a fifth of them in the sector.

The three-year Manufacturing Competitiveness Enhancement Programme (MCEP) will offer grants worth 5.8 billion rand to companies that replace obsolete equipment, retain jobs and comply with a black economic empowerment drive among other criteria, Reuters reports.

Economists doubt the effectiveness of such programmes especially after ruling African National Congress governments have spent billions of dollars to train workers and improve competitiveness, only to see large sums laid to waste by corruption and as the ranks of unemployed swell.

South Africa has lost ground in several manufacturing sectors because of the high cost and low productivity of its workforce. The average South African factory worker makes about six times more than a Chinese factory worker and is less efficient, according to data from both governments.