The South African government should focus on implementing a set of policy objectives that make the operating environment in the metals and engineering sector more business-friendly and ensure that the cost of production is lower, industry organisation the Steel and Engineering Industries Federation of Southern Africa's (Seifsa's) new COO Tafadzwa Chibanguza suggests.

“The steel and engineering sector is important in any economy and will play an important role in the current South Africa and into the country's future. The environment must be more conducive to business,” he emphasises.

“The future is filled with uncertainty as the world digests Russia's invasion of Ukraine. Any war is terrible, but, from an economic perspective, war always breeds uncertainty across the board.”

Some of the issues South Africa may have to face include the disruption of supply chains owing to no-fly zones and other war-related obstructions, which could result in shortages of various products.

“The rising fuel price, in particular, has a blanket inflationary effect, and its effect is felt widely, such as when we fill up our cars with fuel and when we buy food that is more expensive owing to the increased fuel price, as well as in numerous other ways,” adds Chibanguza.

While there may be some silver linings in the form of the uncertainty around the supply of commodities, such as coal, which South Africa produces, the higher price may be good news for producers, but also adds to inflationary pressures.

Gold miners may also benefit as they reap the rewards of a higher gold price due to the war-charged demand for the safe-haven asset, he notes.

“The countries involved in the war and their dominance in the commodities complex will threaten supply, which will then feed into inflationary pressures, and that is how it will translate for us, domestically.

“At this point, with the recovery from the Covid-19 pandemic, we have already seen inflation accelerate again, and we are likely to see quite a spike in the inflation rate. The Reserve Bank will then be under pressure to hike rates ahead of the cycle. This will increase borrowing costs and, with that, [result in] a decrease in investment.

"The war has come at the worst time as the economy is already under pressure, and this will choke the recovery,” Chibanguza says.

Chibanguza returns to Seifsa as COO after serving as an economist at mining industry organisation Minerals Council South Africa. Some of his duties as Seifsa COO include calling on government to develop a coherent policy that creates stability for the industry.

He holds a BCom in economics and econometrics from the University of Johannesburg, a BCom with honours in economic policy from the University of the Witwatersrand (Wits), and an MComm in economic policy from Wits. He is scheduled to complete an MSc in mining engineering with Wits in 2022, Seifsa points out.

Nicknamed Taffie by his colleagues, Chibanguza returns to Seifsa and joins Seifsa CEO Lucio Trentini to help lead the federation that represents and supports 18 independent employer associations in the metals and engineering industries, while lobbying the government for policies to improve South Africa’s business environment.