Over the past 15 years, far-reaching structural changes have taken place that impact on how we approach industrial policy.

The global financial crisis shook financial markets and set off a multi-year recession and significant job losses, with a lasting impact on South Africa. International trade stagnated in constant dollar terms from 2010, in the biggest slowdown since World War II. At the same time, international financial markets increased lending to countries in the Global South, leaving them vulnerable later when the world economy contracted during the COVID-19 pandemic.

The climate emergency has begun to have devastating impacts across the globe, including deepening droughts and floods across Southern Africa. Efforts to internalise these costs nationally and internationally have placed immense pressure especially on energy systems, including the national grid and transport technologies, and are increasingly affecting trade regulations. These changes have taken place in conjunction with rapid and disruptive technological changes that threaten to strand older producers while opening new opportunities for growth.

The COVID-19 pandemic exacerbated an already fragile global economy. Among others, it challenged social protection systems, supply chains, fiscal policy and trust in national governments. The lingering consequences include extraordinary fiscal pressure on countries in the Global South, including South Africa, as well as the deepening slowdown in the Chinese economy, South Africa’s largest trading partner.

Growing rivalry between major economies in the context of tighter international markets and slower growth has brought new barriers to trade and investment. The Russian invasion of Ukraine underscored the risks from rising international tensions. It has led to wild speculation in some international markets as well as very real disruptions to critical supply chains.

These developments have heightened the need for African countries to strengthen their economies through industrial policy and to improve continental trade arrangements. The African Continental Free Trade Area (AfCFTA) negotiations symbolised the overwhelming pressure to respond to new realities.

The global slowdown in the 2010s was mirrored in slow domestic growth for most of the decade. At the same time, South Africa continued to face unusually deep inequality and high joblessness. The impacts have been compounded by increasing policy contestation and protests as well as struggling state-owned companies and the fragility of the national grid.

For industrial policy, the question is how to respond effectively to the profound shifts in national and international realities. By definition, industrial policy cannot be one size fits all. Rather, it must adapt to current realities based on the available evidence – a particular urgent and difficult task in the midst of the far-reaching structural changes now seen worldwide. Policy-oriented research is required to better understand the political-economy impacts, the socioeconomic costs to society, and the interventions that will best fit the unique circumstances of African economies and their communities.

The TIPS 2023 Forum will bring together academics, policymakers, civil society organisations, workers and practitioners to discuss these issues and share ideas on the way forward.

TIPS is partnering with, and receiving financial support for the Forum from the DSI/NRF South African Research Chair in Industrial Development (SARChI) based at the University of Johannesburg. The Forum will be undertaken in association with the Department of Trade Industry and Competition (the dtic).

For enquiries please contact Daphney@tips.org.za or Rozale@tips.org.za

Call for Papers: Closed

Themes

The TIPS Forum aims to deepen the understanding of industrial policy in the context of the structural changes taking place. The Forum offers the opportunity for collective critical analysis of possible solutions that consider related opportunities and challenges, and further actions. Papers can cover any aspect of practical industrial policy, including but not limited to:

• Global trade and reshaping value chains: Implications for industrial policy
• Opportunities for Southern Africa in emerging technologies: How the Global South should adapt to and take advantage of emerging technologies
• The energy transition, the climate emergency and industrialisation
• Understanding the changing skills landscape and its impact on jobs
• Managing the just transition
• Making inclusive growth central to industrial policy
• Evolving fiscal and monetary constraints
• The role of the financial sector and services in industrial policy
• Industrial policy in post-colonial economies
• The nature and implications for African countries of geo-political realignment
• Trade policy and the AfCFTA
• Strengthening regional integration (within the Southern African Development Community)

In the first quarter of 2022, 33 new projects were added to the Tracker, of which 30 recorded a total pledged investment value of R79.4 billion for the period. With the exception of three investments, projects captured this quarter were announced at the South African Investment Conference held in March 2022. The Tracker further identified 3 720 employment opportunities from five projects, comprised of 1 720 permanent jobs and 2 000 temporary opportunities. Monitoring has updated 12 projects previously added to the Tracker.

Nondwe Majundana is a communications and marketing professional, with several years’ corporate experience in communications, public relations, and event management. Her previous roles include Communications Associate at the USAID Southern Africa Trade and Investment Hub,  where she focused on capacity building, providing strategic public relations and communications guidance. She created all the content for the Hub to increase international competitiveness, intra-regional trade, and food security in Southern Africa. She joins TIPS as Communications Officer to develop its communications strategy, ensure its communications goals align with activity plans, and increase visibility and marketing of the organisation’s communication products.

Nondwe has a Bachelor of Arts majoring in Journalism and Corporate Communications and has completed a business course at the Graduate School of Business at the University of Cape Town promoting tourism in the South Africa wine industry. She recently obtained a Post Graduate Diploma in Leadership at the University of Stellenbosch Business School focusing on innovation, digital collaboration, and high-performance team culture for non-profit organisations.

TIPS will host its Annual Forum on Tuesday and Wednesday, 1-2 August 2023. The theme is Industrial Policy in an era of global structural change: Implications for Southern Africa. For more information and to register go to TIPS Forum 2023.

TIPS FORUM 2024 - CALL FOR PAPERS

Small Business, Inclusive Growth, and Industrial Policy in South Africa
30-31 July 2024

Find out more or submit your paper >>>

Lucas Mthembu is a Researcher at TIPS. His research interests include industrial policy, global value chains, and socioeconomic development. He holds a Bachelor of Social Science in Social Development and Industrial Sociology and a BSocSc Honours in Social Development from the University of Cape Town. He is completing a Master's in Social Development at UCT. His dissertation explores the experiences of South African youth seeking investment opportunities through Easy Equities and contributions to their socioeconomic inclusion. 

South Africa’s merchandise exports experienced a marginal decline in the second quarter of 2022, decreasing by 1.8% year-on-year to R514 billion, while they increased by 10.3% from the previous quarter (Q1 2022). The second quarter of 2022 saw imports increase by 27.7% year-on-year, amounting to R446 billion in constant rand terms, representing a 10.8% increase from the previous quarter. South Africa experienced a R68 billion (US$4.3 billion) trade surplus, a significant decline from a R174 billion surplus in the second quarter of 2021. In US dollar terms, merchandise exports were down by 4.9% from Q2 2021, amounting to US$33.1 billion, although they increased by 9.6% from the previous quarter. Imports were up 23.6% to R28.7 billion, an increase of 10.1% from Q1 2022.

Main Bulletin: The Real Economy Bulletin - Third Quarter 2022

In this edition

GDP growth: GDP grew by 1.6% in the third quarter of 2022, an unexpectedly strong performance in light of intensified loadshedding and continuing volatility in the global economy. Agriculture grew most rapidly, at an exceptional 19%, while the rest of the economy expanded far more modestly. For the first time, the GDP has now exceeded pre-pandemic levels. Read More

Employment: According to the Quarterly Labour Force Survey (QLFS), in the third quarter of 2022 the formal sector employed around 615 000 fewer people than in the third quarter of 2019. There has, however, been a significant recovery from the third quarter of 2021 with close to 1.5 million jobs gained, led by robust recoveries in white collar jobs and in the informal sector. Domestic workers have continued to experience job losses this quarter, with no sign of recovery to pre-pandemic levels. The response rate for Stats SA’s QLFS has continued to improve, rising from 79% in the second quarter of 2022 to 85% in the third quarter of this year, approaching pre-pandemic rates. Read More

International trade: South Africa’s surplus in goods trade continued to narrow in the third quarter as prices for key export commodities declined, with the exception of coal, while imports climbed. Logistics challenges have affected coal and auto, and imports have grown faster than exports across most manufactured goods categories. In these circumstances, soaring coal prices have not been sufficient to maintain the record trade surpluses seen since the pandemic. Read More

Investment: Investment in the third quarter of 2022 grew 0.3%, with private investment contracting slightly and public investment expanding sharply for the first time in a decade. The investment rate maintained the 14% level from the previous quarter, up from 13% in the third quarter of 2021 – still far below the level of around 20% required for steady growth. Returns on assets climbed sharply in manufacturing and the rest of the economy outside of mining and construction. Despite the decline in mining, profitability remained very high by historic standards. Read More

Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects on a quarterly basis, using published investment information. Twelve projects were added to the Tracker in the third quarter of this year. The pledged investment value recorded for the third quarter of 2022 was just over R22.6 billion, captured from nine projects. Information was updated for nine investments previously captured in the Tracker. Read More

Briefing Note: JETPs - just transition finance blueprints or business-as-usual?  - by Gaylor Montmasson-Clair and Muhammed Patel. Just Energy Transition Partnerships (JETPs) have emerged as a mechanism to foster the transition in the Global South. Following on the announcement at COP26 of the US$8.5 billion JETP for South Africa (with the UK, Germany, France and the US along with the EU), Indonesia struck a US$20 billion deal at COP27. Many others could follow, from India, to Vietnam, to Senegal. With such arrangements becoming more prevalent, it is worth taking a closer look at South Africa’s JETP, the most advanced of the partnerships to date. Read the Briefing Note online: JETPs - just transition finance blueprints or business-as-usual.

Briefing Note: Economic implications of the 2022 MPBPS - by Nishal Robb. The 2022 Medium Term Budget Policy Statement (MTBPS) reaffirms National Treasury’s commitment to pursue steep budget cuts over the next few years despite the negative social and economic outcomes that the cuts are likely to produce. Read the Briefing Note online: Economic implications of the 2022 MPBPS.

This new TIPS publication tracks South Africa's progress towards an inclusive green economy with 14 national indicators to understand the country's path to transition. Read here: Green Economy Bulletin 2022

Business Day - 26 September 2022 by Neva Makgetla (TIPS Senior Economist)

Read online at Business Day

Or read as a PDF

Following three consecutive quarters of decline, South Africa’s trade surplus increased from R61.4 billion in the first quarter of 2022 to R71.1 billion in the second quarter of 2022. Still, this surplus is about 56% lower the peak of R160.1 billion in the second quarter of 2021. Exports declined by about 0.2% to R519 billion in the year to the second quarter of 2022, but were nevertheless 70% higher compared to the second quarter 2020, at the peak of the COVID-19 pandemic-related lockdown for South Africa. In contrast, imports increased by about 28% to R448 billion in the year to the second quarter of 2022, and about 64% higher than in the second quarter of 2020 (in constant 2022 Rand). This is the highest reported value for second quarter imports, driven in part by South Africa’s deepening energy crisis.