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Govt explores new approach to industrial policy implementation

18th June 2019 BY: Nadine James
Creamer Media Writer

The government – led by The Presidency – is rethinking how industrial policy is conceptualised and implemented as a key element in revitalising the economy.

This emerged during a recent debate organised by trade research organisation Trade & Industrial Policy Strategies (TIPS) on the role of industrial policy in trying to address high unemployment and declining gross domestic product (GDP).

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The Presidency’s Department of Planning, Monitoring and Evaluation employment and inclusive growth outcome facilitator Rudi Dicks, speaking at the TIPS dialogue, explained that a process was currently under way within government on “re-imagin[ing] industrial policy so that it works more effectively”.

He stressed that this process was not about developing a new plan, but rather about taking existing levers and using them in a more coordinated way to derive maximum impact.

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Industrial policy needed to be at the centre of economic reform, he stated, noting that it required proper leadership, a collaborative approach, compromise and consensus.

He pointed out that key to “re-imagining” industrial policy, was ensuring that four key areas were addressed, otherwise there would be no growth in the country.

The four areas are the reliable and cost effective supply and distribution of energy; the reliable and cost effective supply of water; ensuring access to the rail network and reducing rail and port costs for national priority sectors; and allocating broadband spectrum.

Meanwhile, TIPS senior economist Neva Makgetla provided delegates attending the dialogue with some context on the current state of the economy and focused on a range of data, including those linked to the decline in both gross domestic product and jobs.

She sought to explain the origins of the current economic crisis, which she argued were complex and affected by both domestic and international developments.  

Makgetla said an effective response to the economic challenges required the creation of a more equitable economy.

She suggested three interventions that needed to be implemented in the short to medium term.

The first is, “some attempt to meet voters’ demands through more rigorous but also realistic measures to improve equality in income, assets and workplace relationships".

She added that government should explore innovative approaches to stimulate growth – for example, by extending its investment drive to mobilise private savings to support long-term innovations in production and infrastructure, explore a stronger strategy on Unemployment Insurance Fund and Compensation Fund surpluses and fast-track Job Summit commitments to expand industrial output, as well as support for small business.

Finally, she suggested that government urgently roll out programmes to promote drought resistance and other adaptation strategies in agriculture.

Makgetla noted that, for this to happen, an intergovernmental agreement on short- to long-term priorities would need to be decided on.

She stressed that systems to manage risks of change, including mechanisms for feedback, continual evaluation and course correction were needed, replacing rigid plans and projects coupled with the minimisation of unnecessary costs to business.

Additionally, government would need to ensure that sufficient resources were made available for engagement with stakeholders, as well as for unblocking and improving programmes.

Ultimately, Makgetla concluded, the key challenge was about the need for a more responsive State – one that was able to target and prioritise as well as reflect on the political animal and the fact that the country faced a fragmented State and unequal society.

A key part of that was addressing inequality in the workplace.

During discussions some concern was raised by delegates around how government would prioritise targeted sectors; how the Presidency was going to facilitate proper coordination across departments where it was presently lacking; and how, absent the addressing of administrative costs such as electricity, the decline in the economy would not be arrested. 

EDITED BY: Chanel de Bruyn Creamer Media Senior Deputy Editor Online
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