THE MANUFACTURING sector in South Africa is in decline. So the jury is out on whether President Jacob Zuma’s plan to foster the creation of 100 black industrialists will help turn around the fortunes of the sector and boost economic growth and job creation. What role should this new wave of black industrialists play in boosting manufacturing? Can it make a difference to the well-being of everybody? It would be a pity if it just brings a change of faces, with not much impact on the living conditions of the majority of South Africans.
The recent Black Industrialists’ Indaba in Midrand, which was hosted by the Department of Trade and Industry (dti) and addressed by the president himself, was well attended and left no doubt of the government’s determination to change the face of industry. Literally.
Doubts
However, while the political rhetoric is unwavering, a few niggling doubts remain about the government’s ability to turn great ideas into successful outcomes.
As I stated at the start, manufacturing is a sector in decline, having shrunk since the advent of democracy from around 20 percent of gross domestic product to around 10 percent. Unless we can reverse that trend, the creation of a new cohort of black industrialists will give black business a larger slice of a shrinking pie.
Surely we need a coherent, two-pronged approach? The decline in manufacturing is partly as a result of government policy, and a lack of policy co-ordination.
So first, we will need an agreement that manufacturing is important – and I don’t think there is a consensus yet about the importance of the sector to national well-being. Nor do I think there is an agreement on the things that need to be done to get this sector growing.
A lot of the crucial policy decisions and directions that affect manufacturing are not within the control of the dti – such as the exchange rate policy, interest rates and investment decisions of key parastatals like Telkom, Transnet, and Eskom. Of course, there is discussion and debate within the ANC and the cabinet, but the dti is not always in the driving seat, and that can lead to policies and decisions which do not help manufacturing.
Take the example of East London, in which the dti has declared a special economic zone (SEZ). One thing we need to do to get it going is more investment in the port, as major shipping lines are not docking at East London. But the people handling the planning for the port are not in the dti. So the decisions that are needed to make the SEZ a success are not happening.
Lobbying
Then take the example of labour market policy and scrutiny, which is also out of the dti’s direct control. The manufacturing sector took a battering last year with all the strikes – and small firms in the metal industry, which are export and employment intensive, were especially hard hit. First they were hit for months by the mining strikes, which affected their sales, and then they were targeted directly by labour action that affected their ability to operate.
But manufacturers must play a bigger role. My sense is that the sector is weak in terms of lobbying the government, and this applies especially to small and medium-sized enterprises (SMEs), which are not well organised. As such they don’t have as much weight as the automotive industry, which is receiving R15 billion of the R21bn a year that the government offers in direct and indirect support to manufacturing.
Automotive manufacturers are well organised, vocal, in close contact with the government, and they are reaping the rewards. They have managed to avoid pressure to diminish the support they receive from the government from departments such as the Treasury, and have secured special treatment because of their lobbying strength.
Empowerment
Meanwhile, the rest of the manufacturing sector, and especially SMEs, have not been able to make a similar impact on policy. Most are white, private, family-owned businesses and their response to the bewildering experimentation with transformative policies since 1994 is one of alienation rather than engagement.
One way to improve the broader dialogue between manufacturers and the government, to the advantage of stakeholders in the sector as a whole, would be through the dti’s plans to change the ownership of business by boosting the stakeholder base of black entrepreneurs in the sector.
Can the new black captains of industry be an effective lobbying force, able to influence policy dialogue so there is more focus on the manufacturing sector as a whole, and better co-ordination of government policy?
This is already happening to a limited extent through bodies such as the Black Business Council, and it is surely to be expected that when we have more black industrialists, they will have a collective voice that is a lot louder.
So the discussion now must not only be about how to get more black entrepreneurs into industry, but how do we make this sector succeed and grow? If there are just a lot more black faces inhabiting a sector in decline, then what’s the point?
So we must see if these 100 black would-be captains of industry can step up to the mark, and make their voices heard across the government. That will empower us all.
Tumelo Chipfupa is a partner at Cova Advisory