If South Africa is going to attain the twin goals of reindustrialising while transforming the racially skewed composition of its economy, it is common cause that black economic-empowerment policy will need to be more closely aligned with industrial policy.

This means that empowerment will increasingly have to be about enterprise development, while a growing number of those new operating entities will need to be located within the manufacturing sector.

In other words, the success or otherwise of both empowerment and reindustrialisation is likely to be predicated on the emergence of new black-owned industrial companies.

Trade and Industry Minister Dr Rob Davies, who is custodian of both policy areas, is naturally giving much thought to how to stimulate the emergence of black industrialists and, in a recent address to the second Japan seminar in Johannesburg, he indicated that he was ‘looking East’ for some inspiration.

Davies indicated, for instance, that there could be value in mimicking the Japanese model of developing small manufacturing enterprises in close geographical proximity to large industries. Such an approach would enable industrial entrepreneurs to supply inputs directly into the production networks of the larger entities and, ultimately, into their global supply chains.

Professor of Economics at the Graduate School of Asia-Pacific Studies at Waseda University, Shujiro Urata, argued that strong linkages in Japan between large and small manufacturing enterprises had been important to the country’s industrialisation. He also urged South Africa to focus on the development of small and medium-sized manufacturing enterprises, or SMEs.

“The importance of SMEs can not be overemphasised,” Urata stressed, while adding that, for industrialisation, it was important to integrate SMEs with established industrial firms.

Davies saw particular potential for deploying the model at the proposed platinum group metals (PGM) special economic zone (SEZ), which is being planned for the Rustenburg area, in the North West province.

The PGM SEZ – the creation of which would be facilitated by emerging legislation that would make it possible for government to offer tailor-made incentives for investors willing to pursue the creation of specific industrial value chains in specific areas – was among a number of SEZ concepts currently under consideration nationally.

Urata, who has studied the industrialisation models across East Asia, highlighted that foreign direct investment (FDI) and trade had also been key drivers for the development of manufacturing in the region over the past few decades. He argued, therefore, that FDI could also become an important engine of industrialisation in other developing regions, including Africa.

All these lessons should surely be taken into considera- tion as South Africa moves to implement the incentives that have been designed to principally shift the economic emphasis from consumption to a production-led growth path.