South Africa’s Industrial Policy Action Plan (Ipap2) was being diluted by ancillary objectives, the biggest being unemployment and black economic empowerment, the University of Cape Town’s School of Economics director for policy research on international services Professor Mike Morris said on Tuesday.

While good industrial policy intervention led to growth, and eventually created a platform for job creation, its underlying principle of creating international competiveness was being diffused by other key objectives of government.

“If you want to solve unemployment, then South Africa must have a focused employment policy that should not be mixed with every other government policy.

“Spreading it across industrial policy will result in the diffusion of focus, fragmentation of interventions and dissipation of resources,” Morris said at the South African Chamber of Commerce and Industry convention in Johannesburg.

It was critical to empower the country’s previously disadvantaged and create employment, but it should not be the job of industrial policy “to fix” the country’s racial and income inequalities and unemployment challenges.

“In most developing countries, corruption is hidden and countries are publicly ashamed of it, and individuals who engage in it are open to criminal punishment. However, in South Africa corruption is being ideologically legitimated through the interpretation of transformation, such as through tenderpreneurs and deployment, and hence corruption has become endemic. . The country has lost all policy balance in dealing with the racial and income inequalities of the past,” he explained.

As such, the South African government has “confused” the primary focus of industrial policy and diluted it with important secondary objectives, which would eventually dissipate and distort the objectives of employment, equality and non‐racialism.

The Ipap2 also failed to reflect the key role of value chains, and did not fully recognise that the industrial base was materially downgraded. “Government assumes we have managerial skills, technical capability, and deep manufacturing culture. But in reality, we have it only in pockets and not in scale or concentrations to provide systemic competitiveness.”

He said public-private partnerships (PPPs) remained a key enabler to the success of industrial policy.

Increasing competitiveness through building capabilities and skills, creating systemic competitiveness through facilitating value chain alignment and fostering innovation and technological capabilities to help firms move into higher value-added production space could be achieved through effective PPPs.

In building capacity, it was necessary for government and business to embrace a culture of mutual learning and an exchange of strategic ideas.

“It is necessary for the private sector to drive industrial processes at the behest and support of government. One can not force business to align with political objectives, if the State does not align with businesses’ economic objectives.”