The somewhat lukewarm reception to the latest version of the Industrial Policy Action Plan (Ipap) is possibly unsurprising, given that it is near impossible to add much radically new to a rolling plan dealing with industries and projects that take years, if not decades, to evolve.

However, to dismiss the plan entirely might also disguise some of the incremental progress being made in trying to build an industrial policy as a third pillar in South Africa’s bigger economic policy, albeit that monetary and fiscal policy are likely to remain the dominant pillars.

Evidence of this shift is probably far more noticeable off-Budget, with the Industrial Development Corporation expected to disburse more than R100-billion in loan finance over the coming five years to support the productive sectors outlined in the New Growth Path, including manufacturing, mining and beneficiation and agriculture and agroprocessing.

But the on-Budget support, albeit modest, is also beginning to emerge in the form of sector-specific support to the automotive, clothing and textiles and business process outsourcing industries, as well as the R21.7-billion 12(i) tax incentive for large manufacturing investments, and a range of other smaller generic incentives to support research and development, training and exports.

Then, there is the new R5.8-billion Manufacturing Competitiveness Enhancement Programme (MCEP), which is being established to support the embattled domestic manufacturers not covered by the sector-specific schemes.

The rules governing access to the MCEP have been canvassed with business and Trade and Industry Minister Dr Rob Davies says the scheme will be open to all manufacturing enterprises not covered by sector-specific industrial financing support mechanisms. In addition, the MCEP is also unlikely to support capital-intensive industries, firms in sectors with high levels of market concentration, or those that have been found guilty of anticompetitive behaviour.

The Department of Trade and Industry’s (DTI’s) The Enterprise Organisation will administer the incentive, which could become operational during May.

The incentive is one of the few new elements within the larger Ipap and will also be deployed over the three-year fiscal period from April 1, 2012, through to March 31, 2015, with yearly revisions. Davies stresses that the latest version of Ipap has been closely calibrated to the R845-billion public infrastructure programme and would seek to leverage industrial development opportunities on the back of general public-sector procurements and the investments into power, transport and water infrastructure.

The focus of the MCEP, however, is on supporting domestic manufacturing enterprises to upgrade their facilities, processes and products, as well as to initiate targeted skills initiatives.

Government believes the scheme should be viewed as part of a “proactive” response to some of the prevailing headwinds, including a slowdown in key trading economies, rising power and transport prices and the volatile currency, which a number of manufacturers continue to argue is overvalued.

Davies says such proactivity is needed to ensure that there is no repeat of the 2009 recession, when manufacturing shed 200 000 of the nearly one- million jobs lost over the period. “There is a risk that we could repeat the situation of 2009, where there is a depressing effect on the South African economy arising from global conditions, and that manufacturing could be disproportionately affected,” Davies warns.

That said, there is still general distrust that industrial policy truly is emerging as a serious weapon in South Africa’s economic-policy arsenal. Some believe the DTI remains isolated and that, when push comes to shove, its programmes will not be supported across government.

In other words, Davies and his officials still face a serious credibility challenge. It is, thus, vital that they get some high-profile runs on the board early with both the MCEP and some of the other Ipap elements. Until they do, there will be no convincing the sceptics that industrial policy is truly a serious third pillar in this country’s economic policy.