Is the dtic sabotaging its minister?

In an interview last week, PowerFM’s Mbuyiseni Ndlozi quizzed Minister of Trade, Industry and Competition Parks Tau about his department’s plan to create 6.4 million jobs and support a million small and medium-sized enterprises and 441 000 subsistence farmers through a variety of initiatives it plans to roll out.

Ndlozi’s proposition to Tau was that members of the Department of Trade, Industry and Competition (dtic) who allow Tau to publish documents stating ambitious and completely unrealistic targets are sabotaging the minister since none of the numbers is remotely feasible.

Tau’s response centred on the audacity of hope rather than the practicality of reality.

ALSO READ: Proudly SA launches online store – here’s how to list your business on it

The reality …

The poor and declining state of various industries in South Africa has contributed to the poor growth and employment outcomes seen over the last two decades.

Part of it has been attributed to the natural shifts inherent in some industries on the local and global landscape, and part to the policy and regulatory frameworks which – when well executed – are meant to help affected industries stay ahead of the curve.

When they don’t work well, such policies contribute to the decline and fall that impacts the nation at large.

The dtic’s mandate places it at the epicentre of ensuring continuous competitiveness and the creation of support mechanisms for new industries responsive to the issues of our time.

ALSO READ: Transformation Fund offers second chance for inclusive reform

The hope …

Tau’s hope for the reindustrialisation of the country lingers on the department’s ability to resolve a few difficult conversations, both internally and internationally.

On the international front, he has found himself vaulted to the forefront of the frankly impossible conversations regarding South Africa’s trade relations with the US.

US President Donald Trump has managed to lump his universal disdain for global trade with his now-defunct brotherhood with Elon Musk – who harbours personal disdain for the South African policy framework – in order to launch a tariff and ideological war on the country.

Resolving this requires the dtic to navigate through the noise and lead the negotiation towards something resembling a settlement.

South Africa’s trade relationship has shifted from the favourable model of Agoa (the US’s African Growth and Opportunity Act) – which enabled some South African goods to access the US market without tariffs. It now lies at the opposite extreme where tariff rates of 30% to 40% are proposed, with exceptions only made for those items that happen to matter to Trump.

Tau’s problem is that he is tasked with creating an economic and trade policy solution to a problem whose genesis has little to do with the trade relationship but is premised on various factors and issues far from the ambit of the dtic.

President Cyril Ramaphosa’s interventions, which have included a visit to the White House and the appointment of an envoy to manage the relationship, have so far borne little fruit.

As Trump moved from the erratic tariff model unleashed on his ‘Liberation Day’ – which saw South Africa hit with a 34% tariff rate that was suspended pending direct negotiations – to the adjusted rate of 30%, it has become increasingly difficult to figure out if South Africa can present anything that placates the Trump administration.

The fallout from the tariffs is expected to hit South Africa’s exports and, in the absence of a structured solution, decimate some companies whose business models are highly dependent on the US market.

ALSO READ: Is government’s R100 billion Transformation Fund a pothole or highway to growth?

Locally …

On the local front, Tau is juggling a few balls on the policy and governance front.

Pursuing an industrial policy framework fit for the problems of the day and enabling enough to unleash the country’s industrial revival that Tau (and everyone else) covets requires the collaboration of many stakeholders within and outside the state.

Finding the right model for collaboration is a difficult task that requires a meeting of the minds between those with an inclination to defend the practices and ideologies of yesteryear – the bureaucrats and politicians – and those with an eye to the future who require instruments that enable them to innovate fast enough to stay ahead of the competitive curve.

Instances of delayed approvals or rejections that are subsequently overturned do not assist anyone.

Take the proposed transaction between Peermont and Sun International that was abandoned because bureaucrats apparently could not convene a meeting on time to deliberate on the deal, or the Vodacom-Maziv deal that was on and off again.

Tau’s flagship programme aimed at growing the small- and medium-sized enterprises (SMME ) sector – the R100 billion Transformation Fund – is currently subject to public consultation and deliberations.

If it sees the light of day, it might make a dent in the SMME sector, but it is unlikely to get us anywhere close to the employment numbers that underpin the department’s mission.

ALSO READ: Government called to take the lead in restoring the steel industry

Own goals

What also doesn’t help the department is the range of own goals that keep popping up.

In recent days, the dtic decided to refresh the board of the Industrial Development Corporation (IDC), submitting a list to cabinet that was approved.

Only after the approval did it emerge that one of the recommended board members happened to not only owe the IDC but is also subject to litigation with the IDC itself.

Quite how the vetting process could have missed this glaring anomaly, or why anyone with such a history with the institution would make himself available for a board seat to begin with, remains unclear.

But someone has to explain it all if there is to be any sense of faith in the institutions that Tau oversees given their critical role in aiding the country’s economic prospects.

ALSO READ: DTIC and organised business can improve the business environment – BLSA

The messy national lottery situation

The fate of the national lottery licence – where Tau eventually announced a winner after a long process of deliberation – is even more murky as losing bidders insist on getting an explanation of how the adjudication was completed.

The tender is one of the most lucrative ones in the country and, uniquely, is one of the tenders where there is an explicit expectation to deliver on social responsibility programmes.

Any interruption to the continuity of the lottery system disrupts existing social responsibility programmes and creates an opening for more loosely-regulated online options to capture the gambling rands.

The complexities of running a lottery are such that deep pockets are needed – and few have the combination of financial resources and technical expertise to get it done.

Getting the lotto decision right is one of the processes the dtic should be expected to exercise with a much greater sense of vigilance.

The current turn of events, however, indicates that such a threshold has not been met.

While a new operator has been appointed, its confirmation as the winner was so late that it simply could not take up the job on the projected date.

Such a delay means that the incumbent – Ithuba – has been informed that its term is over, yet the country depends on it to continue running the lotto until the new operator is ready.

ALSO READ: GNU: Tau describes ‘a new era of collaboration’ with big businesses

The difficulty with this turn of events is that the dtic – having set the rules for transition – should be explaining how it imagined it could reconcile the late announcement with the transition date if all bidders had explained how long their transition period needed to be either as continuing incumbents or new operators.

In the absence of a cogent explanation, the courts have had to intervene and endorse an interim arrangement, which works on the premise that the new operators will be able to start at the end of the interim period.

The adjudicators and evaluators appointed to run the process seem to have underdelivered for the dtic and the country.

What happens now is that losing bidders are demanding an explanation of how the decision was made and whether it all passes the muster for integrity.

Additional questions regarding the evaluation of bidders and the assessment of potential conflicts of interest will naturally emerge as part of the process of discovering how such complex tenders are assessed and whether South Africans get the best value for money.

As we wait for the court processes to unfold, Ithuba will continue to run the lottery, which addresses the risk of interruption.

ALSO READ: GNU: Tau describes ‘a new era of collaboration’ with big businesses

Can the dtic explain and defend itself?

What the dtic does in explaining its processes and defending the integrity of its systems will be an important reflection moment for the dtic:

• Can it subject its processes to external scrutiny;
• Will the bidders be able to make peace with how it all happened; and
• Will the country get to understand how those tasked with critical decisions that bind the nation in such large value contracts actually perform their jobs?

If it turns out – as other bidders allege – that much of the processes leave a lot to be desired, Tau’s mission to position the dtic as the engine room for the turnaround in the country’s fortunes, will unfortunately invite more sceptics for the key future projects that underpin the dtic agenda.

This article was republished from Moneyweb. Read the original here.