MAT CUTHBERT: Time has come to ditch vertical industrial policy

Minister of trade, industry & competition Ebrahim Patel. Picture: FREDDY MAVUNDA

Think of horizontal industrial policy as the provision of crucial public goods such as network infrastructure , public information, and law and order. This approach aims to improve the overall business climate and enhance competitiveness. The relative success achieved in the automotive sector by way of an industry-specific approach has emboldened Patel and his technocrats in the department to roll this out in other industries, such as sugar, poultry, steel, textiles, furniture and forestry.

What has happened is that specific firms in these industries have been gifted generous lending terms from development finance institutions such as the Industrial Development Corporation and National Empowerment Fund to expand their businesses. Furthermore, they have been provided with tariff protection from international competition by the International Trade Administration Commission , and they have had local content provisions put in place to limit what the state can procure, from whom.

Now, as several commentators have noted over the past couple of weeks, the proverbial chickens have come home to roost. First was the decision by President Cyril Ramaphosa to remove all local content provisions for the procurement of renewable energy supplies in the face of the electricity crisis. Then came the U-turn by Patel on poultry tariffs, much to the dismay of the poultry lobby.

Let's just ditch PATEL and everything will come right.

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