"Ebrahim Patel’s successor in industry ministry will have big shoes to fill"

By Professor Richard Calland  

Minister Ebrahim Patel announced he was bowing out, saying it was time for reflection. Regardless of any weaknesses the Trade, Industry and Competition Minister may have had, his dedication to public service, as well as attention to detail, will be sorely missed in cabinet. 

Will they stay or will they go? The question of who will serve in the next Cabinet is always an important one. The uncertainty that envelopes the outcome of the 2024 election makes it all the more intriguing. We can’t even be sure who will be the next president, never mind the composition of the cabinet. If there is to be a coalition government, seats in cabinet will be one of the main trading points.

Ebrahim Patel has now removed himself from the mix, meaning that one of the most critical and powerful positions in cabinet will be up for grabs — Trade, Industry and Competition (DTIC).

Patel was appointed as minister of a new department of economic development in 2009 by Jacob Zuma in recognition of Cosatu’s role in the coalition that had brought political change at the ANC’s watershed national conference at Polokwane in 2007. But even more so because of the labour federation’s then political and policy prominence and leading role in society — an influence that was depleted drastically during the Zuma years, ironically.

Frankly, I did not expect Patel to last 15 months, never mind 15 years. But he has.

Secretary-general of the Southern African Clothing and Textile Workers’ Union from 1993 to 2009, Patel is not really an ANC man (despite having been drafted into parliament to sit on the governing party benches more than once during his time in cabinet). He does not have a major constituency within the African National Congress — which may have allowed him to keep his head down and avoid the brutal internecine factional battles that have destroyed the ANC over the past two decades.

A combination of gritty determination and sheer hard work, allied to astute political management has kept the wily former trade union leader in the game. During that first term in the cabinet from 2009-2014, Patel shrewdly persuaded Zuma to add competition law and policy to the new economic development department, meaning that Patel now had an existing line management function to add to the rather nebulous new portfolio — which initially had to operate as a kind of think tank within government, painfully short of people and budget.

Competition law and policy

Patel recognised the importance of competition law and policy in a modern government and a modern economy. As State Capture swept through the corridors of State power, the competition authorities maintained their institutional integrity — carefully defended by Patel, who saw them as one of the few viable instruments for State intervention in the market.

Later, in 2017, Patel put the proverbial cat amongst the pigeons when at the annual competition commission conference he announced the results of a study of the economic consequences of State Capture, which not only created space for progressive political forces, including Cosatu — who had by then changed their tune on Zuma — to push back against State Capture but also to challenge the ‘white monopoly capital’ trope devised by Bell Pottinger at the behest of the Guptas by laying out the data in terms of loss of jobs (over 70,000 a year) and negative impact on GDP (over R27-billion a year).

The Industrial Policy and Strategy Review that was published by Patel earlier this month proudly cites the ‘wins’ of Patel’s more strategic use of competition law and policy. South Africa’s competition law is distinctive because the “public interest” is a criterion that must be met when determining whether a merger should proceed, as well as more traditional considerations about market dominance and reduced consumer choice.

Accordingly, the strategy review extols the gains of this expanded use of public interest commitments on mergers: “Through a series of high-value interventions, [the Competition Commission] secured over R68-billion in investment pledges, R58-billion in equity participation for about 200,000 employees, R17-billion in local procurement commitments, and R4-billion in supplier development funds. These figures represent very significant wins for the public interest and promotion of structural change in South Africa’s economy.”

Talking of mergers, in 2019, Patel’s diligent defence of institutional integrity was rewarded by Cyril Ramaphosa, who not only appointed Patel to minister of trade and industry but allowed him to bring economic development and competition into an expanded department. Patel has relished the opportunity and challenge. Most notably for a leader at this time, he has seemed to crave the systemic complexity that is the hallmark of the current global ‘poly-crisis’ — a concept that is the starting point for the deep diagnostic analysis that is to be found in the industrial policy and strategy review.

This systemic understanding and willingness to grapple with the inter-connected drivers of a modern economy that is being buffeted by a range of systemic shocks and pressures — from climate change to exponential technological change to geo-political shifts to the Covid pandemic and the war in Ukraine — is reflected in the paper.

It is a remarkable document and well worth a read — for several reasons.

Industrial Policy and Strategy Review

As most of the rest of the cabinet coasted lamely into the final days of their time in a government that had largely lost the political will to live, Patel was driving hard in the opposite direction, determined to publish a paper that looks forwards as well as backwards. In addition to a painstaking review of the impact of industrial policy, not just during the sixth administration but stretching further back, the paper draws lessons for the next government. It sets out a framework for industrial policy and strategy for the future — proposing 15 “anchor initiatives” that in a far-reaching and ambitious vision span infrastructure planning, green industrialisation and access to the digital economy, as well as trade policy and investment facilitation.

It has a valedictory tone for sure. And those who know Patel well, and his penchant for close control of everything within his authority, could have been forgiven for thinking that he was seeking to not just influence the next administration and to define his legacy but to contain whoever would take over the empire that he has built, should he not be re-appointed.

But the reality is more complex; this version ignores that, in fact, the paper was commissioned by President Ramaphosa, as part of his own commitment to the “re-imagining of industrial policy”, as he called it in the first State of the Nation address of his first full term as president in 2019. Ramaphosa has had a keen interest in Patel’s work and in the Industrial Policy and Strategy Review.

Now that we know Patel will not be coming back (of his own volition) it makes even more sense. It is, perhaps, one of the longer ‘handover’ notes written for a new cabinet minister — a position that will inevitably be one of the hottest commodities for trading in any coalition negotiations that follow next Wednesday’s election — but is none the worse for that. It reflects the serious-mindedness of Patel; something that is in short supply as populist leaders flourish across the globe.

Which is why it is worth taking a step back, to reprise why industrial policy matters. It is where macro and micro economic policy converges with trade policy to determine who gets what, when and how — to deploy a very old definition of political economy. In the era of globalisation, it is also the space that defines the extent to which a sovereign government is able to not so much protect its own economy but advance it.

In this context, economists will pose questions such as “is a strategic approach to the global poly-crisis and multipolarity to become more protectionist (with a large role for industrial policy), or just more strategic in which global partners to prioritise and on what grounds?”

This was one of the questions that I posed to Patel, when moderating a discussion at the Wits School of Governance on the day of the launch of the strategy review a couple of weeks ago. His reply was essentially that it should not be a binary choice between the two. This reflects the delicate dance that any serious minister of trade and industry must perform if they are to be effective. Unusually for him, Patel had begun the evening with a simple soundbite: “Industrial policy is back”.

What he explained to a packed house of thought leaders, policy wonks and students was that an inclusive industrial policy is one that reverses or defies the extractive logic of the Victorian and colonial period of Africa, and builds meaningful value chains

In relation to the just energy transition, for example, this means ensuring that the transition is not only from coal to renewable energy, but can galvanise what I have written of as a ‘whole economy transition’, that can create more new jobs, directly and indirectly, by building industrial value chains around the new energy infrastructure.

This is why industrial policy is back and why it matters — it is critical to inclusive growth and has the potential to help shift South Africa and the region onto a different, far more sustainable economic development pathway. Achieving ambitious outcomes will require agile leadership across government and private sectors, with a willingness to share Minister Patel’s disposition for navigating complexity.

Importance of State role

As the global leadership summit that I helped convene for my institute in Cambridge concluded in February: the state matters and matters greatly for sustainable development, recognising that while private sector innovation is vital, policy and governance co-ordination, alignment and regulation are also needed to ensure the right blend of sticks and carrots are in place.

Patel certainly believes in the role of a strong State and recognises that a weakness in his strategy is that State capability has been eroded and must be re-built. That will be a singularly important goal for the next administration — regardless of who is president.

Patel’s critics are fond of complaining that he “meddles” too much; that he should get out of the way and “just let market forces do their job”. This is old thinking. And Patel’s retort is “look at the evidence”, as well as to understand that regulation and partnership between private and public sectors are essential to cope with the complexity of the moment.

Patel argues that policy initiatives implemented in South Africa have shown significant gains in driving industrial outcomes” — the evidence is set out in commendable detail in the strategy review, for anyone who cares to look and learn, including the increases in inward investment over the past five years.

Patel adds that “the new conditions require a strategic focus on aligning South Africa with the opportunities arising from the global green economic and technology revolutions, whilst strengthening economic integration on the African continent. Implementation requires agility in leadership and in State capability, as well as even deeper partnerships across government and with the private sector; all underpinned by an appropriate set of support measures”.

Industrial policy may be back, but it is still like walking through treacle. It requires dedication and devotion to public service, as well as the attention to detail that Patel, regardless of any weaknesses that can be ascribed to him, has in spades.

In this respect, he will be sorely missed in cabinet. His successor has big shoes to fill.

It will require a minister who in addition to these attributes, can maintain an optimistic mindset, given the scale of the challenge.

Unusually for him, Patel ended his presentation at Wits with a literary reference — to the great Mexican filmmaker Guillermo del Toro, who wrote: “Optimism is radical. It is the hard choice, the brave choice…These days, the safest way for someone to appear intelligent is being skeptical by default…Optimism is not uncool; it is rebellious and daring and vital”.

This article was first published on Daily Maverick.

*Richard Calland is a visiting adjunct professor at the Wits School of Governance and Director of the University of Cambridge Institute for Sustainability Leadership (CISL)’s Africa Programme.