South Africa’s consumer, industrial and export-led sectors are expected to recover as global and local demand returns, writes Dominik Anderhofstadt, CFO for Henkel South Africa, which recently celebrating 70 years in the country.
WE are witnessing signs of recovery and future growth, following a difficult year for economies around the world.
I believe that there is a great deal of potential for the South African economy as the country has a lot of sectors with growth potential, but those that stand out are the consumer and industrial sectors, technology and innovation, and export-oriented areas like automotive.
Popular brands like Pritt, Pattex, Loctite and Schwarzkopf are now part of everyday life for millions of people in SA, and what we have noticed is that demand for essential products has proven resilient during the COVID-19 pandemic. However, to embrace a future that will no doubt be full of possibility and risk, we need to ensure we continue to innovate to stay a step ahead.
In its 13th South Africa Economic Update, the World Bank says the current global outlook is looking better after the 2020 collapse and South Africa is positioned to grow at the fastest pace in over a decade, bouncing back from 2020’s 7% growth contraction. While there is still “considerable uncertainty,” economic growth could rebound to 4% in 2021. More recently, other sources such as the South African Reserve Bank have even increased their GDP growth projections to above 5% for last year (2021).
Although South Africa has battled a third and fourth wave of COVID-19 infections, and a close watch is needed moving into the new year, talk of a recovery is extremely positive. Henkel is also noticing signs of stronger demand returning, as it trends ahead of the recovery in other regions.
The automotive sector, in particular, was driving growth for most part of last year as new locally produced models came on stream, together with general manufacturing on the back of infrastructure demand. Other industries doing well include beverages and packaging.
As a result, our commitment in South Africa remains strong and we are constantly seeking ways in which to invest further in the country, albeit through innovation, technology, skills development, or corporate social investment – our commitment is to keep growing.
Business risks include rising costs, driven primarily by raw materials, electricity and logistics, but also global supply chain shortages. To achieve purposeful growth, we therefore need to intensify our efforts to step up customer and consumer proximity with faster decision-making mechanisms and to increase efficiency by constantly reshaping our operating models to be lean, fast and simple.
Furthermore, Henkel worldwide aims to strengthen sustainability as a competitive differentiator. Our aim is to reduce the carbon footprint of our production by 65% by continuously improving energy efficiency and by using electricity from renewable sources. In addition, we want to leverage our brands and technologies to save 100 million tons CO2 together with our consumers, customers and suppliers by 2025. We are working towards a circular economy and zero plastic waste in the environment.
We also realise the critical role we must play in our communities, and we want to enhance our positive social impact on communities through responsible sourcing. We continue to maintain an intense dialog with our suppliers to promote sustainable practices and the respect for human rights along our value chain.
We supply a very wide array of consumer and industrial needs, and while we often fly below the radar from a marketing perspective, our technology solutions are holding many products together.
A key focus for the future will be on introducing sustainable solutions, both in our products and also towards socially driven initiatives. We will continue to contribute towards building a better world and society.
With both business and consumer confidence returning, Henkel’s diverse array of products – from household and industrial-grade adhesives to hair care – ensures we are well positioned for the next 70 years in SA.