While proclaiming industrial policy to be the “centre piece” of the government of national unity’s economic development strategy, new Trade, Industry and Competition Minister Parks Tau indicated he would be leaning on local procurement to create early-stage demand in targeted sectors.

In his maiden Budget Vote address to Parliament, attended by his predecessor Ebrahim Patel, Tau said industrial policy was the anchor around which the Department of Trade, Industry and Competition (dtic) would deploy trade instruments, incentives, tools and regulation, including any support for new energy vehicle production and green industrialisation.

Over the coming three years, R30.1-billion had been allocated to the dtic, of which 48.7% had been allocated to its incentive schemes.

The department would also seek to build on the sector partnerships in already identified prioritised sectors, including those eight sectors where masterplans had been negotiated.

“These masterplans have supported localisation, increased investment, exports and job retention. This administration will focus on integrated implementation mechanisms, deploying a government-wide set of tools,” he said.

This, despite African National Congress Member of Parliament Mzwandile Masina, himself a former Trade, Industry and Competition Deputy Minister, appealing in his response to the Budget Vote that it no longer be business as usual at the dtic, given ongoing deindustrialisation.

For his part, Tau underlined the importance of manufacturing-led growth, arguing that jobs were created both upstream and downstream of such sectors and that manufacturing-linked jobs were also more resilient and higher paying than those in other sectors.

He also linked localisation directly to employment, stating: “We have industrial capabilities as a country. We must stop exporting jobs.”

To leverage local procurement, however, the dtic would need to play a more active role in “identifying procurement opportunities, advocating for local-content requirements, monitoring implementation and evaluating impact”.

“In identified industries, including infrastructure build programmes, we will work with relevant State-owned enterprises and industry to support local manufacturing of our key products and create jobs,” Tau added.

That said, he also underlined the importance of growing exports in a context where the domestic market was too small and growing too slowly to sustain manufacturing-led growth and where a weak fiscal outlook was limiting infrastructure investment.

The weak fiscal position of government was underlined by Deputy Minister Zuko Godlimpi, who said that industrial financing should not be limited to public financing alone.

Godlimpi also argued that greater coordination of macroeconomic policy, where industrial policy was prioritised, could also go a long way to supporting a manufacturing-led growth strategy.

Meanwhile, Tau stated that, in order to reduce South Africa's dependence on its small domestic market, the dtic would implement new export measures that would be coupled with an expansion of current measures and improve their effectiveness.

Government would also seek to leverage its international relations to expand its export footprint, including with the BRICS+ bloc, through the African Continental Free Trade Area, as well as through the African Growth and Opportunity Act with the US and the Economic Partnership Agreement with the EU.

In his address, Deputy Minister Andrew Whitfield, of the Democratic Alliance, also argued that South Africa could become an export-oriented economy.

Achieving such a goal, Whitfield added, would require a “dedicated focus on implementing measures to boost the competitiveness of local industries in global markets, streamlining export processes, lowering trade barriers, offering financial and technical assistance to exporters, and cultivating beneficial trade alliances with other nations”.

Tau also used the speech to underline the new administration’s commitment to racial inclusivity and transformation, while lamenting that, despite 21 years of implementation, broad-based black economic empowerment (B-BBEE) legislation had failed to “fully achieve its intended outcomes”.

“In the short term, the dtic and the B-BBEE Commission will engage organised business, labour and other stakeholders to encourage firms to comply.

“In addition, the dtic family will combine monitoring resources in order to strengthen the B-BBEE Commission’s capacity to monitor compliance and emerging trends.”