Mediterranean grub and issues in SA’s industry
John Fraser dines with the IDC’s head of special economic zones at Tashas in Menlyn Maine
Tashas was quite crowded and noisy inside, so we took an outside table with a delightful view of the escalator. I have been to many branches of this chain and have had some very good and some very bad meals. This occasion fell into the latter category.
I was intrigued by the separate Levant menu, as I adore simple Mediterraneanstyle grub. However, I wasn’t too sure about the Levantishness of the rib-eye steak with biltong masala or the chicken chops for two.
Instead, I went for fried halloumi cheese and two dips — the whipped feta and the radish tzatziki — served with za’atar flatbreads, while my public servant chum opted for the line fish. It was sea bass and he loved it.
My halloumi, which was cubed, had a nice texture, but an unpleasantly greasy crust; the feta dip was far too salty (I know feta can be a very salty cheese but surely a caring chef could have blended it with something — anything? — that tasted less like a salt lick?); and the radish dip tasted of almost nothing.
I finished none of my dishes, but the waiter showed no curiosity about my decision.
I had an excellent glass of Eikendal’s Charisma red blend, and we shared a bottle of sparkling water (R69). The wine was too warm, and I had to ask more than once for some ice cubes.
Many disapprove of my crude method of chilling my vino, but if I (Business Day) am paying, I shall do as I please. If you can’t stand the heat, get out the ice bucket.
On to Lionel October, who bravely served as directorgeneral (DG) under two most challenging ministers: Rob Davies and Ebrahim Patel. He left this post a year ago and has yet to be permanently replaced. I wondered why not? He would not speculate.
October studied law and then economics and is still at it, aiming for a PhD.
He joined what was then the department of trade & industry in 2001, and was later sent off to deal with the Eurocrats as the department’s envoy in Brussels, before being called back by Davies to run the department as its DG. He oversaw its expansion into the department of trade, industry & competition — which gives it domineering control of SA’s industrial policy.
I was encouraged by his frank analysis of what has gone wrong with industry.
“We made a classic mistake in 1994 with neoliberalism, withdrawing support from industry and agriculture,” October admits. “Industry has declined from 25% of GDP to 13%-15%. We had monetary and fiscal policies, but not enough attention was paid to industrial policy.
“You must not withdraw support from agriculture and industry — such support is what they do [offer] in the EU, with massive grants to industry and subsidies to the agricultural sector.”
‘CLASSIC ERROR’
SA uncritically followed global conventional economic policies. “You see, ‘industrial policy’ was a swear word for the IMF and the World Bank. For 20 years, they preached the withdrawal of industrial policy,” October says. “We made a classic error, but it was an error that was prescribed to us. The so-called Washington Consensus was followed — and it was antiindustrial.
“About 30 countries have moved from the third world to the first world — and all of them adopted a robust industrial policy, making macroeconomic policy subservient to industrial policy.”
Ironically, it was the Afrikaners who laid the foundations for saving SA from the economic misdirection of our early ANC rulers. They started the Industrial Development Corporation (IDC), the coal and steel conglomerate Iscor and the synfuels and petrochemicals giant Sasol. These helped to preserve an industrial base for the country while the neoliberals did their damage.
“Deindustrialisation is the root cause of our problems. You need a real economy, and we didn’t give sufficient protection to it. Industrial policy was conflated with protection, and it was seen as [an extension of] apartheid tariff barriers,” October says.
The one sector that has bucked the trend is the automotive industry, thanks to a targeted subsidy scheme.
One of the department’s major recent challenges was coping with a shrinking budget, as year after year the National Treasury pruned it — meaning less cash available for industrial incentives and other support.
“The [departmental] budget should be higher, but you have some very conservative elements in the National Treasury, holding on to the old IMF position. For instance, they have never funded the IDC — but Europe has funded its development bank, the European Investment Bank. When there is a downturn, Europe invests in its banks. We, however, see these things as bailouts,” October insists.
“After 28 years, we have earned our reputation for fiscal probity and now we have to be more bold in supporting infrastructure, industry, agriculture.”
October is hopeful for better times as our president champions industrial policy.
“Cyril Ramaphosa is our first probusiness president, trying to change the narrative, being seen on stage with business as he was at the recent investment conference,” he says. “More people should be supporting a probusiness president — there is not enough patriotism for our own industry.”
Having left his DG post at the department, October now works inside the IDC as the executive director of its special economic zones (SEZs). “I am doing special projects and SEZs. This is one area in which we can help the poorer regions.”
While performance from the SEZs has been mixed, some are flying. “If you look at Coega [near Gqeberha] there are over 50 investors; in East London there are over 40; and Dube [by the airport in Durban] has over 50. Richards Bay has 10 really big investments. They are roaring successes,” he boasts.
Meanwhile, the Tshwane Auto SEZ, next to the Ford plant, has successfully attracted several component suppliers and is continuing to grow.
“We are working on new ones such as an SEZ in Mpumalanga near the Mozambique border. Dubai Ports will be the anchor investor, and it will be a logistics hub,” October says. “There will be lots of agro-processing, exports of citrus and other agricultural products.
RAIL LINK
“There will be a similar one in Musina, next to Beitbridge, also for trade facilitation, with agroprocessing. We are talking to ZZ2, a big agro-processor.”
The less successful SEZs, however, include the ones at Saldanha, Atlantis and OR Tambo airport. “These are lagging. But we are providing technical support for construction,” October says.
As well as working on SEZs, October is leading a project to upgrade the rail link from Tshwane to Gqeberha, to support the movement of Ford vehicles for export.
“Of the Ford Rangers assembled in Tshwane, 60% of the exports go by road by Durban, with 40% by train. At Durban, congestion is unbelievable, and it is very expensive. We lose a lot of comparative advantage.
“We hope to get the new line running by 2025, and the budget is currently about R7bn, for rolling stock and physical refurbishment.”
I could not let October rush away without asking about SA’s new flagship industrial strategy, focused on master plans.
“We conceptualised this with auto, with tripartite consultation — government, the private sector and the unions,” he says. “We have the auto master plan’s support to 2030, and that set the template. Then we developed clothing and textiles.”
When Ramaphosa became president, he asked why SA had been so successful in carmaking and was told this was due to the state’s support strategy. “He said: repeat that model in other sectors’.”
And what of October’s own future? Once he has completed his PhD, he is likely to gravitate to academia.
In an hour-and- a-half, I had obtained a much better understanding of SA’s postapartheid industrial record — from someone who has been at the heart of it all.
It made the price to pay for an awful meal much smaller.