EDITORIAL: Tau has chance to turn around trade & industry

The imposition of a controversial 10% tariff on imported solar panels is a classic case of incoherent government policy. And it’s one that touches on the controversial role of the department of trade, industry & competition, the minister of which was the subject of a tense tussle between the ANC and the DA before the cabinet was finally appointed at the weekend.

There are only a few local solar panel producers. Imposing a tariff on imports will only increase the cost of the renewable energy SA so desperately needs without necessarily ensuring the “localisation” the department is so fixated on. Nor is a tariff the best way of doing this anyway.

A solid, sustainable pipeline of investment into new solar power generation will provide the basis for local producers to invest in producing the panels here — as long as the government makes it easy to clear the red tape and other hurdles that often make it so difficult to build new factories in SA.

The department would do better to focus its energies on making it easy to do business and invest, instead of endlessly intervening to put up yet more barriers to trade and investment.

This is a ministry that for more than 15 years was led by Rob Davies and Ebrahim Patel, both ideologically driven interventionists of note. It is a department that is at the heart of industrial and trade policy, as well as overseeing the competition authorities — and the BEE commission and black industrialist polices.

It has tentacles throughout the real economy. It has used tariffs extensively in the past decade or more to try rescue uncompetitive industries such as steel, sugar and poultry, driving up tariffs steeply on the staple foods poor people rely on.

It has used BEE to push its own definition of empowerment, industrialisation and localisation. And it has made extensive use of competition policy to drive those “public interest” objectives too, sometimes at the expense of enhancing competition in the market.

Patel used competition legislation to give his ministry extensive powers to intervene in mergers, powers he has used aggressively to extract ideological rents of one sort or another as conditions of approving mergers, especially large foreign direct investment deals. We don’t know how many potential foreign investors he might have driven away in the process. But what we do know is that all those efforts to promote industrialisation and development have done nothing to stem the decline in SA’s manufacturing sector or to boost the economic growth rate.

No wonder the more market-friendly DA wanted to get its hand on the department and, hopefully, make it more market and investor friendly. But the ANC, understandably, was never seriously going to give up control of the department in charge of its core BEE policies, nor one with powers over so wide a swathe of the real economy.

Patel had amassed such power to the ministry that there was always a risk that in the hands of a corrupt minister it could become a licence for looting. Fortunately, in Parks Tau the department now has a new minister who did a good job as mayor of Johannesburg and is well regarded in the market.

He will be on a steep learning curve as he gets to grips with the department’s wide range of powers and activities. But he has a chance to take a fresh look at these and make the department much more investment and growth-friendly. We urge him to do so.