Nobody can fault outgoing trade, industry & competition minister Ebrahim Patel on integrity or sheer hard work. He has been one of the few squeaky clean ministers in a government whose leaders have too frequently been more in the news for alleged shenanigans than they have for implementing measures to grow the economy and improve people’s lives. He has also been one of the few who has engaged fully with his extensive portfolio.
Too fully, some would say. And that is where the Patel problem begins. The minister leaves a mixed legacy at best. He has been in office for 15 years, first as economic development minister, then as minister of a merged trade, industry & competition department, which brought together the old trade & industry portfolio with the economic development & competition portfolio, over which Patel presided. And preside he did. He made full use of his extensive empire to stamp his own ideological brand of industrial policy on SA’s economy, using the instruments at his disposal by virtue of his responsibility for the competition authorities and for tariffs and trade, as well as for policy on BEE and industrial incentives — and more recently for the famed master plans.
Broader legacy
For the public at large, Patel might well be remembered as he of the Covid-19 lockdown restrictions — including on open-toed sandals and cropped pants — that helped squeeze the economy far beyond what was necessary for health reasons. But he does leave a broader legacy of innovations. Patel was something of a pioneer in using the levers of competition law to regulate merger deals through a public interest lens, rather than the more traditional competition lens of whether they were good for consumer welfare.
He first intervened in US-based Walmart’s 2010 takeover bid for Massmart to insist on a range of employment, localisation and economic development conditions on the deal. He went on to throw around his ministerial weight to impose public interest conditions on almost every large deal, eventually giving himself formal powers to do so with amendments to the competition legislation in 2018/19. It all made gaining approval to do deals in SA, especially incoming foreign direct investment deals, particularly time-consuming and costly.
There is now enough precedent to make the regulatory landscape fairly predictable. And Patel has to be credited with being way ahead of the global curve on this one. In recent years competition regulators in other countries have also put more weight on public interest criteria.
But the power Patel has amassed for the ministry can easily be abused. We trust his successor will be as squeaky clean as he is.
He has not been shy to detail his legacy on the industrial policy front, with a 150-page report on his achievements of the past five years. It is true, as Patel said in an interview with Business Day, that industrial policy is somewhat back in fashion globally. Whether this is the old-fashioned, 1970s-style protectionism and import substitution that he tends to espouse is a question. Certainly his “localisation” emphasis has caught on politically, including with President Cyril Ramaphosa; likewise his successful black industrialist programme.
Any evaluation of Patel’s legacy has to recognise that the 15 years in which he has been in charge of economic development and industry have been years in which the average economic growth rate has fallen sharply. So while he can be credited with having had a significant and wide-ranging impact on SA’s economic policy landscape, his is inevitably a mixed legacy.
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