SA must recalibrate its trade compass. Our industrial policy, once anchored in tradition, now faces a crossroads. The path ahead? An industrial strategy to unlock our export potential and open our borders for valuable, climate-conscious technologies that can drive innovation.
Our export legacy — minerals, metals and gold — anchors us. But reliance can breed complacency. The World Bank’s nudge towards diversification is a piece of sage advice. By forging new trade agreements with both advanced and emerging economies, SA can tap into fresh markets and reduce vulnerability to commodity price fluctuations.
Critics may recall the tariff liberalisation of the mid-1990s when SA cut tariffs more quickly than what the World Trade Organisation strictly demanded and transitioned to a simpler ad valorem system, which means tariffs were directly proportional to the value of the imported goods. The result? Cheaper Chinese textile imports flooded the market, obliterating industries, leading to staggering job losses, and leaving scars and lessons for SA’s industrial policy trajectory.
But, in truth, the World Bank isn’t suggesting reckless abandon. Newly appointed trade, industry & competition minister Parks Tau can strike a balance. While embracing global markets, he must also nurture local companies. Import substitution need not be sacrificed. It can coexist with trade openness. Rather than clinging to outdated models, that is localisation, SA should prioritise importing cutting-edge technologies with innovation outcomes. These innovations can ignite local industries. Picture this: our factories humming with artificial intelligence, our start-ups birthing disruptive solutions. Innovation isn’t a buzzword: it’s our ticket to the VIP section of the global economy.
The World Bank’s report astutely highlights the intersection of SA export profile with climate change concerns. The EU’s carbon border adjustment mechanism looms — pioneering a carbon tax with teeth. SA can, and must, position itself as a climate-conscious exporter by focusing on environmentally friendly products. Furnaces, wind-powered generations and catalytic incinerators are already showing promise. Small volumes today, but the compound annual growth rate whispers of demand. Supporting firms in this space will boost overseas market access.
SA stands at a pivotal juncture. The World Bank’s prescription is clear: pivot towards exports, embrace innovation and navigate climate challenges. It’s a crescendo the narrative is building towards. Let’s harmonise our actions, efforts and policies. As Tau holds the conductor baton, investors, countries and observers lean in, waiting to hear what comes next. Will it be a whisper or a roar? The choice is ours.
• Motsoeneng is Business Day deputy editor.
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