Industrial policy, the manufacturing sector and black in South Africa1

Black Economic Empowerment (BEE) in South Africa has undoubtedly been ambitious in seeking to transform ownership, control, and management of the economy's productive assets and resources. While BEE policy has been applied as the African National Congress government's primary strategy for bringing about transformation in the ownership and control of productive assets in the economy, the outcomes in key sectors of the economy have been poor in terms of inclusion. This paper considers the interrelations between the black empowerment programme and industrial policies in South Africa, with specific reference to transformation in the manufacturing sector. The paper examines the extent of transformation in the manufacturing sector in South Africa. The paper seeks to understand why South Africa has not seen the emergence of a large, economically significant black industrialist class that owns and controls economic assets and resources that are competitive at different levels in the manufacturing sector. The paper further explores the extent to which South Africa's industrial policy strategies have contributed to or undermined deep transformation in the manufacturing sector. The paper identifies key limitations of BEE and South Africa's industrial policy framework, and the gaps between these policies in terms of addressing the factors that restrict the inclusion of black-owned firms in manufacturing. It further considers how industrial transformation could be accelerated in South Africa.