Radical continuity in economic policy
- Trudi Makhaya
- 11 May 2014 (South Africa)
If the (growing) opposition knew how to be constructive, the people would listen to them, President Zuma chides. The morning news confirms that Lindiwe Mazibuko will take some time off politics to study at Harvard. She could use the break after the stream of inane abuse she’s had to field over the past five years. The morning after is chilly, the analysts speak in muted tones, adrenalin runs low.
If the election campaigns were about the economy, so will the next five years be. The president has committed the incoming administration to the National Development Plan and it is widely reported that there is little appetite within the ruling party for new economic policies. The existing policy suite will deliver the ‘radical economic transformation’ that Malusi Gigaba promises at every opportunity. This spirit of radical continuity probably explains the quiet confidence with which the Department of Trade and Industry, just a month before the elections, issued the latest version of the Industrial Action Policy Action Plan for the years 2014 to 2017. Now with the expected firm majority at the national level, the ANC is set to implement its big idea for the 2014 to 2019 term: state-led industrialisation.
My childhood home in Hammanskraal is situated at the edge of a village called Leboneng. Behind our fence is a dwindling forest with the Tshwane river running through it. Growing up in the eighties, every day, I would hear the voices of men and women walking on a path forged through the bush, before making their way across a makeshift bridge to Babelegi, an industrial zone developed by Mangope’s homeland regime. At its height, Babelegi hosted a broad range of industrial enterprises producing shoes, textiles, motor parts, publications, clothes, packaged foods and light machinery.
In the early nineties, the forest went silent. The factories shut down. Our backyards emptied of tenants. The newly unemployed went back to their villages, moved to other towns, or settled in burgeoning informal settlements. The homeland industrial policy that sustained these enterprises was dismantled as the new government pursued other priorities. It became clear that these enterprises were not commercially viable without government support. This financial reality had not only been masked by such support, but the firms were based on an exploitative industrial relations framework, offering very low wages and poor working conditions.
Nestlé, a significant post-Apartheid investor in Babelegi, is blunt when it comes to the business model followed by the homeland-era owners of a plant it acquired in 1999. According to its People Development Review for 2002, it found that the previous owners did not invest in training and limited advancement opportunities for employees. At the time that Nestlé acquired the plant, 65% of the workforce was illiterate.
The empty and dilapidated factories of Babelegi stand as a warning of the potential risks of industrial policy. Today most of the households that depended on Babelegi remain in poverty. Businesses that continue to operate in the area point to a poorly educated workforce, a high crime rate and poor municipal services as some of the challenges that they face. The failure of this industrial development project is partly attributable to the evils of Apartheid, with its uncivilised labour and spatial policies. But even the most enlightened governments find that industrial policy, without strong monitoring and disciplining mechanisms, can turn out to be unsustainable.
Leboneng, at the northern tip of an ambivalent Gauteng, gave the ANC a decisive victory at 70% for the national ballot and 68% for the provincial ballot. This is a notable drop from the 82%/80% (national/provincial) of the 2009 election. In a community languishing on the economic margins, the EFF was the main beneficiary, with 16% /17%. Yet the DA at 10%/10% also has cause for celebration, up from the minuscule 3%/3% of the previous general election. For the past twenty years, all the political parties that have campaigned in Leboneng have promised to boost job creation by revitalising the factories. But till then, an important source of income in the area is social grants, the one sure thing that keeps hunger at bay.
Whether the state’s industrialisation push will help Babelegi to rise again remains to be seen. The main goal of industrial policy should be the development of firms that are able to graduate from state incentives and subsidies to become independently viable. This did not happen in Babelegi. DM