Davies endures tough year as trade partners cry foul
TRADE and Industry Minister Rob Davies has had a bumpy ride this year and came under intense pressure from SA’s major trade and investment partners on a number of fronts.
There was the nail-biting runup to the passage of the African Growth and Opportunity Act (Agoa) through the US Congress, and then the tension associated with the declaration by President Barack Obama that SA’s agriculture products would lose their duty-free access to the US if SA did not open its markets to the country’s beef, chicken and pork.
The outcry by the investment community over the Protection of Investment Bill — which is now awaiting President Jacob Zuma’s signature before it is promulgated — also placed in question the country’s willingness to do what is necessary to attract investments.
Mr Davies has, however, defended the bill strongly and does not believe it will have any effect on investor confidence.
Other low points for the department were the minister’s conflict with Astrid Ludin, the former head of the Companies and Intellectual Property Commission, who took off amid a storm.
Then there was the embarrassing about-turn that Mr Davies had to make in May on proposed amendments to the broad-based black economic empowerment codes of good practice.
He had to reverse a shocking departmental announcement that broad-based empowerment and employee share ownership schemes would no longer count as much as individual share ownership on the BEE scorecard.
On Agoa, SA ended up being part of the scheme for another 10 years. Compliance with the Obama administration’s demands has involved tortuous negotiations among veterinarians in both countries. An outcome is days away.
The department has also gone on an aggressive drive to curb unsecured lending and has placed maximum limits on the fees and interest charged for credit.
It has also published proposals on regulating credit life insurance.
The black industrialists programme has been established and is good to go, while the rollout of special economic zones has gained momentum this year.
The minister has said that his department has contributed to the growth of manufacturing through various support programmes for the automotive, clothing, textile, footwear and other sectors.
Total investments of nearly R23bn by BMW (R6bn), Volkswagen (R4.5bn) and Beijing Automotive Works (R12bn) have been announced this year.
Department director-general Lionel October said the motor industry had reached a tipping point of accelerated output and export growth through state support.
Industrial promotion will be a major focus in the coming year as the economy stutters along, the resources available to the fiscus shrivel and the manufacturing sector suffers.
Driving the government’s black industrialist programme, underpinned by R100bn in funding through the Industrial Development Corporation, would also be high on the department’s agenda, Mr October said.
It aimed to “inject new entrepreneurial dynamism into the economy” and expand the country’s industrial base through promoting the growth and competitiveness of black enterprises.
“Industrial transformation and growth will be our top priorities,” Mr October said.
The rand was trading at low levels and presented a lot of opportunities for export growth and import replacement.
Legislatively, it will be a much quieter year, with the two main bills on the agenda being those dealing with gambling and liquor.
The Liquor Amendment Bill contains the controversial proposal to increase the legal age of drinking to 21 and the penalties for illegal trading. The Gambling Amendment Bill aims to cap the number of casino licences at 41, ban online gambling and limit the number of limited payout machines.
The establishment of two new special economic zones is also envisaged, one focused on platinum beneficiation in Rustenburg and the other dedicated to mining and metallurgy in Musina, Limpopo, with a heavy concentration of Chinese investors.
The department’s achievements, however, left the opposition Democratic Alliance unmoved and it assigned Mr Davies an unfavourable “D” mark in its annual Cabinet report card.
“Overall, Davies’s broad policy direction, and his decisions over the last 12 months, are damaging to the South African economy, deterring to investment and, ultimately, are costing jobs. Increasingly, the minister’s policy disposition is towards greater state control, greater punitive measures, wider ministerial powers, and heightened mistrust and antagonism of the business community. For those reasons, he deserves a D,” the party said.