13. Conclusion

The SWOT analysis presented below is the current landscape of the M&E sector in South Africa in relation to the broader dynamics facing the economy in the first half of 2021.

Table 18: SWOT analysis of the South African economy in relation to M&E sector

The recovery of the M&E sector in South Africa, as depicted by the current landscape, will also require implementation of targeted policy interventions, especially in an economy with a 32.6% unemployment rate. Production levels have to continue improving coupled with capacity utilisation to levels above 80%. The monetary policy (low interest rates and inflation rate) environment, is also conducive to supporting consumption growth.

The M&E sector’s competitiveness has been eroded due to rising costs of electricity and unreliable electricity supply in recent years, coupled with rising logistical costs. The recent electricity tariffs hikes of 15% implemented by Eskom on the 1st of April 2021 are a setback for the industry survival. Prices of locally-produced products in the M&E sector have not increased to levels that are sustainable for local producers, with input costs rising more as demonstrated also in the recent data of the first six months of 2021.

While on the above issues, there seem to be some opportunities for the sector to explore. The Government’s infrastructure spending of R791.2 billion in the next three years, offers growth opportunities for the M&E sector in South Africa. It is, therefore, important that local producers that are able to supply the required construction and building material-related products and take advantage of the local procurement policy.

The M&E sector also welcomes the recently launched Steel Master Plan. It is hoped that all policy interventions will be prioritised for implementation.