Industrial Policy Framework (NIPF)
19 April 2007
The Developmental State
The government's approach to economic transformation is based on the
understanding that the necessary changes on the economy will not emerge
spontaneously from the invisible hand of the markets but from collective
efforts aimed at shaping economic development and such efforts should be
championed by the state. This suggests a developmental state and a
developmental state is one that is capable of leading efficiently in the
definition of a common national agenda, mobilising all society to take part in
its implementation and directing society's resources towards this common
goal.
For the government to effectively play this leadership role it has to get
the macroeconomic environment, skills development and industrial policy right.
While the government plays this leadership role on one hand, the private sector
on the other hand is the main engine of investment, growth and employment
creation.
Due account must be taken of economic and political interests that are
influential upon the state as well as the capacity to formulate, implement and
monitor polices for any economic development initiatives to succeed. There is a
need for expertise to be developed in industrial policy making in which full
account of social cost benefit analysis is taken before any policy intervention
is adopted.
The need for industrial policy
The industrial policy should play a central role in identifying and
addressing constraints that impede economic development. International
evidence, especially from the newly industrialised countries (NIC) reveals that
no country has ever industrialised without an active industrial policy. The
experience of the NICs demonstrates that developing countries are not
restricted to responding reactively to global forces but can strategise about
their current and potential participation in the global division of labour,
through purposive interventions in their industrial economies.
It is therefore clear that the issue is no more about deciding if there is a
need for industrial policy but how to go about developing and implanting one.
In the case of South Africa there is no question as to where industrial policy
should reside, obviously it will be in the dti. The dti has a very good
infrastructure for economic development in the form of institutions (a
multitude of institutions that fall under the dti; human capital) it might not
be enough but it is there, there is no need to re-invent the wheel) and more
importantly synergic relationship among various mandates. For example, the dti
is responsible for industrial development; investment promotion and trade among
others. These responsibilities cannot be divorced from each other because they
are all inter-linked and should therefore function well under one entity.
It is against this background that the Department of Trade and Industry has
been engaged in a process of developing a National Industrial Policy Framework
(NIPF). The NIPF has a fundamental role to play in achieving the Accelerated
and Shared Growth Initiative for South Africaâs (AsgiSA) goals of accelerating
GDP growth to over six percent by 2010 and to halving unemployment and poverty
by 2014 and the further intensification of industrialisation towards a
knowledge economy beyond 2014. This can be achieved through appropriate
prioritisation of sectors and other cross-cutting initiatives. The question
that is constantly raised in this regard is whether the state is the best
institution for this prioritisation responsibility, citing the lack of capacity
as well as the lack of information amongst many reasons.
The NIPF approach is not about the government unilaterally deciding what the
national economic priorities should be, but to co-ordinate and lead that
process through a an inclusive self discovery process made up of relevant
stakeholders such as business, labour, civil society and the academic community
under strong government leadership. This process ensures that all stakeholders
contribute in shaping their economic future and more importantly all available
resources (Skills, experience, expertise and even funds) are pooled together
and channelled towards a common goal.
The NIPF acknowledges a problem of spreading available resources thinly
across a multitude of priorities, hence the proposal that no more that five
sectors and cross-cutting activities should be prioritised over any Medium Term
Expenditure Framework (MTEF) period of three years. This is designed to ensure
that adequate resources are channelled towards few high priority activities in
order to yield adequate results.
The NIPF therefore, aims to provide strategic direction to the economy with
respect to the issue of industrial development. First, it is aimed at providing
greater clarity and certainty to the private sector and social partners with
respect to investment decisions leading up to 2014 and beyond. Second, it is
intended to provide a reference point for substantial improvements in
intra-governmental coordination of the numerous and complex set of policies and
projects.
The process towards the launch of NIPF
The NIPF was tabled before the Cabinet Lekgotla in January 2007 where it was
approved. The President announced such approval to the public during his State
of the Nation Address and to facilitate its implementation the following
actions have been taken:
A drafting team led by the Department of Trade and Industry has been
established under the auspices of Economic and Employment Cluster (EEC) to
develop the Industrial Policy Action Plan (IPAP). This drafting team has
completed a draft IPAP that is ready to be discussed during the next EEC
plenary meeting scheduled for Wednesday, 18 April 2007.
The Minister of Trade and Industry will deliver his budget vote speech
before the National Assembly on Tuesday, 29 May 2007 and before the National
Council of Provinces on Wednesday, 30 May 2007 and he will announce the NIPF
and its action plan to the public in a more detailed manner.
The announcement made during the budget vote speech will be followed by a
public launch of the NIPF on Thursday, 31 May 2007. The national launch in turn
will be followed by a presentation to the parliamentary portfolio committee on
Trade and Industry on Tuesday, 14 June 2007. The presentation to the portfolio
committee will be a kick-start to a provincial road show process that will see
the NIPF presented to the public in all nine provinces between Monday, 25 June
and Tuesday, 12 July 2007.
For more information, contact:
Lionel October
Deputy Director General: EIDD
Tel: (012) 394 1349
Nimrod Zalk
Chief Director
Tel: (012) 394 1366
Issued by: Department of Trade and Industry
19 April 2007
Source: Department of Trade and Industry (http://www.dti.gov.za)
