New ministers write new songs for Davies and Patel

As three former ANC ministers resigned from Parliament, the fate and future of two key ministers comes to mind — Trade and Industry Minister Rob Davies and Economic Development Minster Ebrahim Patel. Since President Jacob Zuma came to power, the two have driven the state’s transformation agenda harder than anyone else.

But with the ANC’s allies in labour federation Cosatu and the South African Communist Party now ostensibly looking to get rid of Zuma, things are up in the air for the two.

Both ministers have strong struggle credentials. But now it appears that a gaggle of new and younger ministers will be writing their own songbooks on “radical economic transformation”, despite vowing to stick to the original rules of macroeconomic engagement.

They have, however, begun their tenure under the greying oversight of Davies and Patel, who have effectively been the architects in making black economic empowerment statutory and implementing it with zeal. Patel was parachuted in by Zuma early in his administration to be in charge of micro- and macroeconomic planning. This effectively pitted him against former finance minister and minister of the National Planning Commission Trevor Manuel — responsible for implementing the National Development Plan (NDP) — and his successor as finance minister, Pravin Gordhan.

It will be interesting to see how Patel and Davies dovetail with Gordhan’s successor, Malusi Gigaba, in the context of the new zeal for radical economic transformation. It is fair to say that since Patel came on the economic scene, the almost forgotten New Growth Path has superseded the more market-friendly, but equally forgotten, NDP. Instead, Patel and Davies’ efforts have been directed at achieving radical economic transformation at SA’s biggest steel maker, ArcelorMittal SA, and the related construction and engineering and construction materials industries.

Davies has devised new codes around empowerment and stiffened legislation relating to this policy. Meanwhile, Patel has used the Competition Commission as a battering ram against apartheid-era cartels, especially in the cement, steel and construction industries. The upshot is that big business in critical economic sectors in SA has effectively been weaned from its monopolistic and collusive past. But so severe have these strictures and penalties been that this has badly affected construction markets, which use nearly half of all steel produced domestically.

The way ArcelorMittal SA and the construction industry in SA describe it, they have all seen the light. Transformation is an imperative, even a moral obligation, for the benefit of all South Africans. To this end, ArcelorMittal SA has succumbed to price controls amid unrelenting pressure over empowerment.

It is a pity then that during these necessary processes, there has been such a huge and deep value destruction. Since the end of the soccer World Cup in 2010, promised government spending on infrastructure should have been a substantial counterbalance to the global financial crisis.

Zuma’s new ministerial fledglings will have their work cut out for them.