Radical Economic Transformation and our Industrial Policy: Locating the ‘Black Industrialists’ programme in context
The South African transition to democracy was an outcome of various factors that, put together, constrained the absolute ambitions of the liberation movement. From this came the reality that the movement would have to pursue its objectives within a post-apartheid environment that was born out of a negotiated settlement as opposed to a complete seizure of power. This reality came with its unique long term permutations.
Crucial amongst these was the reality that, and despite the wishes of anyone in the movement, the emerging democratic state would immediately be formed within a capitalist framework. What this meant was that the developmental agenda of the ANC would have to be negotiated in the wake of private capital and its economic domination. Thus, the set of social forces that would have to be harnessed in pursuit of the development objectives of the ANC would have to include substantial cooperation with private capital. Attached to this was the question of ‘the color’ of capital and its probable allegiance to the cause being a crucial consideration.
It is in this context that in imagining the ‘developmental state’ the creation of a black owning-class, as a strategic social partner, was essential. This arose in the context of an objectively expected reluctance of established white capital, particularly the monopolistic elements, to voluntarily exercise progressive agency in the transformation discourse that was to ensue. Thus, a black capitalist class would wrestle some critical resources from their white (monopolistic) capitalist forces and avail them in the developmental agenda whilst pursuing profit.
20 years later, the extent to which the state has successfully fostered this partnership has come under critical review both in public and in government. Has the black owning-class wrestled enough resources from the control of white monopolies? Posed differently; we had to ask whether the balance of economic power has been sufficiently transformed in a manner that avails sufficient resources for the advancement of the total transformation of the lives of the masses of our people.
The 53rd National Congress affirmed the negative and relationally brought forth the need for us to up the ante and embark on a second radical phase of our transition, systematically pursuing socio-economic freedom for the broad population of South Africa.
his means we have to go beyond the predominantly equity-based black economic empowerment that has not fundamentally restructured industrial asset ownership and has also not succeeded in the expansion of our industrial assets beyond what the democratic state inherited.
The primary feature of this radical transformation is the achievement of a strategic break with the ownership patterns and trajectory of economic development of the past. Its central objective is the creation of social and economic relations that substantively assert that South Africa belongs to all who live in it.
Our industrial Policy interventions and the Black Industrialists program
From the perspective of government, our capacity to successfully transform the nature of our economic relations in line with the ANC’s objectives is reliant on a strong and radical industrial policy framework. Its strategic framework must have as its central thrust the creation of a wide base of industrial assets whose development systematically builds a base for high employment, redress and equity in ownership especially in the manufacturing sector.
Within that strategic framework, thus, we have undertaken to put together a policy framework that will achieve an integrated industrial growth strategy that is underscored by a deliberate move to build a broad asset-base that crowd in new industrial players, specifically targeting the historically marginalized sections of society.
Central to this is our Black Industrialists program whose intended output is the building of a broad, dynamic and competitive class of black industrial players; advertently accumulating and disposing of industrial capital in line with the social objectives of breaking the racial domination of South Africa’s economic assets.
By Black Industrialists, we refer to black people directly involved in the origination, creation, significant ownership, management and operation of industrial enterprises that derive value from the manufacturing of goods and services at a large scale; acting to unlock the productive potential of our country’s capital-assets for massive employment locally.
Our Industrial Policy Action Plan articulates our intension to promote a labour-absorbing industrialization path. Our emphasis is on the development of tradable, labour-absorbing goods and services and the systematic building of economic linkages that create employment.
This requires a robust manufacturing sector with a strong appeal to both the domestic and foreign markets. Central to this robustness will be our ability to creatively utilize our mineral resources as industrial inputs that will boost manufacturing.
In line with the policy framework articulated in IPAP, we have organized the Black Industrialists program around 7 manufacturing-related sectors in Manufacturing, Advanced Manufacturing, Energy Oil and Gas, Telecommunications, Agro-processing, Automotive products and Creative Industries. These sectors disaggregate into 20 subsectors that include heavy industry subsectors like Locomotives (building, assembling, repairs and maintenance of trains and ships), energy co-generation, steel industry and minerals beneficiation among others.
We have established a Black Industrialists Program Advisory Panel to assist government in articulating a policy package that will best feed-off the existing industrial policy narrative evolved by government over the past years. Similarly, we have sought to creatively imagine the industrial linkages that could be forged with other players in a manner that optimizes our intended outcomes. Much headway has been made with regards to these matters.
Throughout this exercise we have had to pose a few questions to ourselves. Firstly, we had to ask questions regarding the funding modalities of the Black Industrialists initiative, partly taking into account our fiscal climate and the need for prudence. Secondly, we’ve had to pose the question of what implications this initiative has on existing industrial finance schemes, particularly those targeting emerging black business. This has led us to work on a funding framework that systematically ties together the resources of
Development Finance Institutions such as NEF, DBSA, IDC and the PIC together with other incentive schemes under the Department of Trade and Industry.
Presently we have already received and are processing over 40 applications seeking interventions within the framework of the Black Industrialists program.
The department of Trade and Industry will host a Black Industrialists Indaba on the 25-26 March 2015, deliberately to engage with industry on all strategic matters related to this initiative. This Indaba will play the critical role of harnessing the thoughts of both government and industry towards a common policy direction on this crucial matter of industrial transformation.
The developmental states that emerged in South East Asia during the second half of the 20th century remain a crucial case study that all of us must consider as we imagine the reindustrialization of our economy. Even though the democratic political framework we have is radically different from what they had, the resourcefulness of their example is the social compact they forged between business, labor, government and other social actors.
They managed to initiate a radical restructuring of their economies with manufacturing playing the lead role. They managed to build economies that were self-reliant, with a great deal of their consumer goods being produced internally. As a result, they systematically diminished their unemployment rate and improved the standards of living of their people. This allowed them to engage with the global market from an improved position as exporters of a wide range of goods.
The major political springboard for their development was the capacity of the state to forge such social compacts as were necessary to forge united action amongst all social actors. The state successfully leveraged on these social compacts to drive long-term industrial development.
In strategic terms, the Black Industrialists program provides us with an opportunity to develop an industrial owning class with which we can drive progressive economic transformation. We have to leverage on the state resources utilized to develop them as bargain to influence the nature and patterns of their investment. Unlike established capital, these emerging black industrialists would easily cooperate with government within a clearly articulated industrial investment framework in the long-term.