When the 5th installment of Industrial Policy Action Plan (IPAP 5) was introduced by the Minister of Trade and Industry Rob Davies in 2013, it was rejected by certain opposition parties on the basis that it ‘included a “heavy-handed state intervention”, instead of a “light-touch rebalancing’.
As with the previous IPAP’s, IPAP 5 was meant to improve the Industrialization design and to deepen the country’s local procurement and localization programme in order to stimulate local economy and sustain local Industries and also to deliver the much needed jobs. Localization was also meant to target small to medium enterprises especially black owned as part of governments economic redress.
As early as 2009, when IPAP 2 was in the works, the frustration was already that the paraded benefits of IPAP, the targeted and bulk procurement, from toilet paper to school desks, was not being realized because the big companies who were given the tenders due to their capacity for big manufacturing were not living up to their end of the bargain. They were not transferring skills, they were not subcontracting to local small to medium businesses and there were no evident reinvestments back to communities.
By 2013, when IPAP 5 came out, the frustration had reached its pick and government was growing impatient with companies who lined up for big government contracts but were not interested in sharing the pie or ensuring broad business participation on the contracts. Something had to give.
It was further rejected as IPAP was asking big business to open up the business space for the previously disenfranchised, something that seemingly threatens the interests of the establishment, who’s only concern is continued monopolization and exploitation, procuring from their international friends, and then shipping their profits out of the country on the back of huge government contracts.
On 15 June 2017, The Minister of Mineral Resources, Mosebenzi Zwane, revealed the Reviewed Broad Based Black-Economic Empowerment Charter for the South African Mining and Minerals Industry. The mining charter covered issues pertaining to ownership, procurement and Supplier development, beneficiation, employment equity, human resource development, Mine Community Development and housing and living conditions.
Under ownership, the charter requested that ‘30% black ownership per mining right with 8% shares equitably distributed among workers and 8% given to mining communities and the other 14% given to black entrepreneurs. Under beneficiation the charter requirement is that ‘A minimum of 50+1% of black people with exercisable voting rights of which 25% must be black females. The Charter also requires that ‘50% of black representatives at executive director level of which 25% must be black females’. There must also be ‘’A minimum of 60% black representatives at Senior management level of which 30% must be black females’. 70% of all mining goods to be procured from BEE entities on a staggered basis. Mining companies must also Invest 5% of payroll in skills development. These are but some of the salient points in the new mining charter.
It is puzzling that these are not already standard practices in the mining industry or any industries in the country. The real problem, according to the Chamber of mines is that whether soft or hard re-balancing of the industry, any re-balancing will chase away investors and these investors were already lining up with their dollars intended to invest in our country but are now changing course to more business friendly and policy clear countries because of the mining charter. If Investors leave RSA because of our non-threatening charter, in which other resource endowed country will they go where they will do as they please with the country’s resources?
If country’s of the world daily compete for the trillions of dollar hovering the world looking for business friendly countries to invest in, It certainly begs a question as to which other country has so much leeway to investors on its natural resources as South Africa.
Based on a 2017 Forbes‘ list, which compiled Africa’s top countries for business looking at 11 different factors: property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance, South Africa is second only to Mauritius, the Island off the coast of east Africa in terms of most business friendly country. (www.forbes.com/best-countries-for-business)
The list was however not only rating Africa but a compilation of 139 nations. South Africa is ranked 48th in the overall list, ahead of India which is 85th, Brazil which is 91 and China which is 102.
Since the introduction of measures to deal with the Injustices of our past, Employment Equity (EE), Black Economic Empowerment (BEE) and various black beneficiation programmes, the establishment has either tried to discredit the programmes, blame it for affecting business confidence, or outright discredit the government officials championing it. South Africa cannot continue where transformation is a sole burden of government while others spend tons of money and time and PR exercises on why we should not transform.
Given the country’s current political and social landscape, urgent measures need to be put in place to streamroll transformation processes particularly when it comes to economic transformation for all demographics.
Mlungisi Mtshali is a social activist and politics commentator.