Rad­i­cal change needs rad­i­cal pol­icy

Floyd Shivambu

CityPress - - Voices - Shivambu is EFF chief whip and a mem­ber of the trade and in­dus­try port­fo­lio com­mit­tee

For some time, in­dus­trial pol­icy dis­cus­sions have been the pre­serve of elite round-ta­ble dis­cus­sions where se­nior gov­ern­ment bu­reau­crats and less com­pre­hend­ing politi­cians in the trade and in­dus­try depart­ment en­gage in in­dus­trial pol­icy, yet fail to take so­ci­ety along in th­ese dis­cus­sions.

Wel­com­ing Her­man Mashaba’s con­tri­bu­tion (“You can’t cre­ate black in­dus­tri­al­ists like magic” – City Press, Septem­ber 28 2014) does not mean that we agree with his no­tion of what should con­sti­tute black in­dus­tri­al­ists and in­dus­trial pol­icy, mainly be­cause his ar­gu­ment is premised on some quasi-re­li­gious recitals of a per­son who has not paid at­ten­tion to prac­ti­cal in­dus­trial ex­pan­sion. While im­por­tant, the ef­forts and en­tre­pre­neur­ial spirit of in­di­vid­u­als are in­signif­i­cant un­less there are ac­com­pa­ny­ing in­sti­tu­tional and pol­icy support mech­a­nisms and sys­tems, which can only be pro­vided by the state.

Us­ing Mau­ri­tius as an ex­am­ple does not help be­cause de­spite be­ing a tax haven for many multi­na­tional cor­po­ra­tions ex­tract­ing nat­u­ral re­sources in other parts of the world, Mau­ri­tius is not in­dus­tri­ally su­pe­rior to the ex­tent that South Africa can learn much from it.

The most re­li­able ap­proach to cre­at­ing black in­dus­tri­al­ists in South Africa is to ag­gres­sively pur­sue a rad­i­cal in­dus­trial ex­pan­sion pro­gramme be­cause the in­dus­trial pol­icy ac­tion plans pur­sued by the trade and in­dus­try depart­ment are very weak. The gov­ern­ment should de­velop pro­duc­tive forces, de­riv­ing use­ful lessons from the late in­dus­tri­alis­ers in east Asia that re­alised mas­sive in­dus­trial ex­pan­sion after World War 2.

One of the world’s great po­lit­i­cal econ­o­mists, Robert Wade, said as early as 1990 that “mar­ket guid­ance” in east Asia in essence hap­pened by:

Re­dis­tribut­ing agri­cul­tural land in the early post­war pe­riod.

Con­trol­ling the fi­nan­cial sys­tem and mak­ing pri­vate fi­nan­cial cap­i­tal sub­or­di­nate to in­dus­trial cap­i­tal.

Main­tain­ing sta­bil­ity in some of the main eco­nomic pa­ram­e­ters that af­fected the vi­a­bil­ity of long-term in­vest­ment.

Mod­u­lat­ing the im­pact of for­eign com­pe­ti­tion in the do­mes­tic econ­omy and pri­ori­tis­ing the use of scarce for­eign ex­change. Pro­mot­ing ex­ports. Pro­mot­ing tech­no­log­i­cal ac­qui­si­tion from multi­na­tional com­pa­nies and build­ing a na­tional tech­nol­ogy sys­tem.

As­sist­ing par­tic­u­lar in­dus­tries and in­tro­duc­ing in­dus­try-spe­cific poli­cies to pre­vent in­dus­trial de­cline.

None of th­ese crit­i­cal com­po­nents ex­ist in South Africa’s in­dus­trial pol­icy frame­work and at­tempts in this re­gard are un­co­or­di­nated. De­spite calls we made as youth ac­tivists and now in the Eco­nomic Free­dom Fight­ers (EFF), there are no de­lib­er­ate schol­ar­ships or bur­saries to send young peo­ple to other parts of the world to at­tain skills and tech­nol­ogy to be in­no­va­tors.

Another im­por­tant as­pect to mas­sive in­dus­trial ex­pan­sion is lo­cal­i­sa­tion. As a crit­i­cal com­po­nent of this, the state should pass leg­is­la­tion that com­pels gov­ern­ment de­part­ments and en­ti­ties to pro­cure a min­i­mum of 75% of their goods and ser­vices lo­cally. This will cre­ate jobs and ad­dress South Africa’s peren­nial trade deficit that will crip­ple its ca­pac­ity to ex­pand now and in the fu­ture.

The last and per­haps the most im­por­tant com­po­nent to in­dus­trial ex­pan­sion is a co­her­ent and dy­namic trade pol­icy where the state can im­pose tar­iffs on im­ports and ex­ports.

To foster lo­cal ben­e­fi­ci­a­tion and in­dus­tri­al­i­sa­tion, the trade pol­icy should im­pose higher du­ties and taxes on ex­ported raw and semipro­cessed goods and ser­vices, and im­pose higher taxes on im­ported fin­ished goods and ser­vices. The call for state strate­gic own­er­ship of crit­i­cal sec­tors that pro­vide in­dus­trial in­puts such as plat­inum mines, steel pro­duc­tion and other sec­tors is pri­mar­ily aimed at en­sur­ing there are avail­able re­sources for in­dus­trial ex­pan­sion in the coun­try. Un­der the con­trol of multi­na­tion­als, min­er­als and steel are as good as not be­ing South African be­cause they are sold to lo­cal in­dus­tri­al­ists at im­port par­ity prices.

Black in­dus­tri­al­ists need money to en­gage in in­dus­tries and this calls for a co­gent de­vel­op­ment fi­nance in­sti­tu­tion big­ger than the ex­ist­ing ones com­bined. This means the state should es­tab­lish a state bank whose man­date should in­clude mas­sive in­dus­trial fi­nance.

In­stead of fi­nanc­ing BEE deals, the Pub­lic In­vest­ment Cor­po­ra­tion, Gov­ern­ment Em­ploy­ees’ Pen­sion Fund and other en­ti­ties should re­di­rect their in­vest­ments in pro­duc­tive green­field in­dus­tries so South Africa can stand proud in the next 20 years as a de­vel­oped na­tion with ca­pa­ble in­dus­tries that can com­pete glob­ally.

Black in­dus­tri­al­ists need money to en­gage in in­dus­tries and this calls for a co­gent de­vel­op­ment fi­nance in­sti­tu­tion big­ger than the ex­ist­ing ones com­bined

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