SA’s Industrial Policy gets a shoeshine in financial inclusion
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JOHANNESBURG - The government has proposed radical legislative amendments for South Africa’s industrial policy, which could boost productivity, increase investment and achieve inclusive growth as part of speeding-up economic recovery.
Trade and Industry Minister Ebrahim Patel yesterday announced his department’s future strategic focus to galvanise inclusive growth and build local industrial capacity.
Patel said the measures would include a further amendment to company law to tackle the gross injustice of excessive pay and give representation at board level to workers.
He said a new bill would be finalised within 60 days requiring disclosure of wage differentials in companies, stronger governance on excessive director pay, and enhanced transparency on ownership and financial records. Patel said another legislation to amend the 2008 Companies Act would also be finalised within the next three months to set out the modalities for improved representation of worker interests in company decision-making and boards.
He said the government would also appoint an expert panel to review the current BEE Framework in order to address public concerns on the extent of transformation and reporting by firms, adding that research had shown that more needed to be done as just over 230 000 workers currently owned shares in about 50 companies.
Patel said the government needed to step up policies that actively promote worker ownership of shares in firms and representation of workers on corporate boards, as well as support for broad-based ownership vehicles in the economy.
“This is an important way in which we can create meaningful economic inclusion. This can be the new frontier of economic empowerment,” Patel said. “First, we must build a new model of growth and economic inclusion that unites South Africans in the economy and promote transformation.”
These bold sets of actions, which include the development of a roadmap for electric vehicles in South Africa, are aimed at boosting investor confidence, increasing investment and creating jobs.
Patel said that a policy statement on competition policy for jobs would be released today, complemented by integrated efforts to drive local vaccines development while a Green Paper on the Social and Solidarity Economy would be released for public comment within 60 days.
He said another pillar of this industrial policy was to build local industrial capability, both for the domestic and export markets to reduce reliance on imports.
South Africa imports goods worth at least 25 percent of gross domestic product while its BRICS peers import less than 16 percent.
“South Africa’s import to GDP ratio is too high for an economy that desperately needs more jobs. Our localisation strategy has the support of major corporate players,” Patel said.
“They, as much as the government, are committed to achieving far greater localisation, recognising its wider benefit for the economy and society.”
Meanwhile, Moody’s warned that South Africa’s low economic growth and rising debt burden could see socio-economic tension intensify and impede policy reforms.
Moody’s warning comes as South Africa sees a country review from S&P Global on Friday night, the only ratings agency without a negative outlook on the country’s sovereign debt. Moody’s vice-president and senior credit officer Lucie Villa said credit challenges include structurally very weak growth and a high government debt burden that would continue to rise without comprehensive economic and fiscal reforms.
“Socioeconomic inequalities also intensify tensions that drive political risk and complicate policy efforts," Villa said. The coronavirus pandemic’s fallout will continue to weigh on South Africa’s economic growth.”