South Africa has had a chequered history; centuries of underdevelopment, followed by massive economic changes and religious division in the mid-19th century, a gold rush, a civil war and years of isolation due to apartheid.
It has not been an easy journey for the nation, and this has had an impact on economic development there.
With regards to the chemicals industry, it is interesting to note that its diamond and gold industry became a driving force in chemical production speciality. As Prof. Thokozani Majozi of the University of Witwatersrand, Johannesburg notes, “South Africa’s desire to exploit opportunities provided by the mining of diamonds and gold necessitated the emergence of a strong and highly diversified industrial sector. Sustained access to those minerals demanded the establishment of an explosives industry, which was soon followed by a chlor-alkali industry and industrial specialty in fine chemicals sectors.”
Even the government’s own Ministry of Trade and Industry reports on the impact that the country’s history has had on the industry, commenting on how trade embargoes caused by apartheid led the chemicals industry to develop with only domestic markets in mind. In a recent report the Ministry states that, “The chemicals industry has been shaped by the political and regulatory environment that created a philosophy of isolationism and protectionism during the apartheid years. This tended to foster an inward approach and a focus on import replacement in the local market. It also encouraged the building of small-scale plants with capacities geared to local demand, which tended to be uneconomic.”
However, this is not to undermine the importance of the chemicals industry to the country and to the continental economy as a whole. As the Chemical and Allied Industries’ Association says, “The chemicals industry is a key sector of the South African economy. It accounts for about 25% of the nation’s manufacturing sales and is the most developed of its kind in Africa.”
However, despite the clear importance of the chemicals industry to the nation’s economy and its dominance on the continent, South African chemical production is still relatively underdeveloped. As a recent report by Dilshaad Booley at global consultants Frost & Sullivan confirms, “Despite South Africa having the largest and most sophisticated chemicals industry in Africa, estimated at $30 billion, it only contributes about 1% to the global market.”
With such a small impact on global chemical production, and such a challenging history, can South Africa ever become a major player?