Since the installation of President Jacob Zuma’s new Cabinet in May, the theme of ‘continuity’ appears to have been as much in evidence as (sometimes even more in evidence than) that of its so-called twin, ‘change’.

This confidence-building scaffolding appears also to have been set up around the highly contested policy making arena of industrial and trade strategy and policy.

While South Africa’s newly installed Trade and Industry Minister, Dr Rob Davies, is promising a “higher-impact” Industrial Policy Action Plan (Ipap) by January, he has also stressed that the review of the plan, which is currently under way, will not seek to overhaul the framework provided by the National Industrial Policy Framework (NIPF), despite some underlying weaknesses with the current architecture.

The NIPF and the first Ipap, which were released together in 2007, selected four ‘lead’ sectors for specific support, including the automotive and components industries; the metals, capital- and transport-goods sector; the forest-products industry; and the chemicals industry.

“It is not my intention that we should go back into further debate on the general strate-gic framework,” Davies asserted, following a recent engagement with business. “Even though, personally, I think that document could be improved, I don’t think it is worth the effort,” the Minister added quite bluntly.

Instead, the revised Ipap would deal with the more “difficult” sector-specific and cost-cutting issues not entertained under the first version, which Davies acknowledges targeted “the low-hanging fruit”.

But the Minister, who had been Deputy Minister previously, also stresses that the successes of the previous Ipap should not be discounted entirely.

On crosscutting issues, he counts the completion of the Companies Act and the beefing up of competition legislation, with the amended Act now only awaiting Zuma’s signature, as key milestones.

At sector level, Davies says the finalisation of the Automotive Production and Development Programme (APDP), which will replace the Motor Industry Development Programme from 2012, was the high point of the first three-year round.

He also confirms that the APDP will be expanded to embrace both the autocatalysis industry and heavy commercial vehicles, which have hitherto been excluded from the revamped support scheme.

This confirmation is in line with a recent message from the new chairperson of the Catalytic Converter Industry Group (CCIG), Paul Thompson, who indicates that there is a growing expectation that large-scale catalytic-converter manufacturing will continue to receive support.

The country currently supplies about 11% of the world’s automotive catalytic converters, but the CCIG has been signalling for some time that, in the absence of incentives, the industry could be lost.

But Davies also stresses the need for reciprocity from sectors and companies that are being supported, indicating that job retention and skills development commit-ments will be sought.

Reciprocity
Many of the companies operating in the so-called lead sectors are currently in distress, owing to the second-round effects of the global financial crisis and could well need immediate and scaled-up assistance.

Davies indicates that such support, with the conditions outlined, will be forthcoming, while the Industrial Development Corporation has confirmed that some R6-billion could be set aside over the coming two years to help firms made vulnerable by the crisis.

At this stage, government is not contem-plating having any direct say over executive bonuses and remuneration, or dividend policies, but Davies indicates that such criteria might have to be contemplated in future, particularly where government money has been used to bail out a specific enterprise.

Likely to receive renewed emphasis in Ipap II will be attempts to rebuild South Africa’s industrial base around the provision of inputs into the R787-bilion infrastructure drive.

In fact, Davies has again indicated that more effort is required to meet the stated localisation goal of reducing “import leakage” around the infrastructure programme from 40% to 30%.

He adds that, given South Africa’s chronic current account deficit on its balance of payments, the programme itself could be brought into jeopardy if that target is not met.

For its part, business has welcomed the emphasis being given to firms in distress, as well as the commitment to greater localisation, with Confederation of Black Business Organisations president Jimmy Manyi indicating that black business is particularly keen to support efforts to boost local content.

Business Unity South Africa (Busa) president Brian Molefe has also welcomed progress on the bail-outs and the new industrial-policy trajectory.

But Molefe has also cautioned government to ensure that it packages the bail-outs in such a way as to ensure that South Africa is not accused of being protectionist.

Busa indicates that it is looking forward to the review of Ipap, particularly given its misgivings about the implementation progress thus far.

Specifically, business wants further clarity on the incentive regime, the implementation of the industrial-upgrading plan for manufacturing and the role of development finance institutions in the roll-out of the industrial strategy.

All indications to date are that Davies is unlikely to miss a trick in providing such clarity, with both he and Economic Develop-ment Minister Ebrahim Patel bringing an entirely new level of energy and seriousness to the issues surrounding industrial policy and the State’s role.