Chapter 5 : Strategies for Industrial Development

Aim of apartheid industrial development strategies

From the 1960s: to provide employment in/near the new homelands, help the poorest areas develop, and define a 'white' South Africa distinct from the ten black homelands.

Homelands

The ten areas set aside by the apartheid government to be the 'home' country of black South Africans according to ethnic identity; four gained 'independence' recognised by no one but SA.

Three components of the apartheid location plan

(1) Industrial growth points in/near the black states;

(2) regional deconcentration points near metropolitan areas;

(3) existing metropolitan areas already attractive to private enterprise.

Incentives offered under apartheid strategies

Financial help with land/buildings, rail rebates (up to 60%), wage subsidies, electricity subsidy, tax rebates, relocation allowances (up to R500 000), training grants (125% of cost), and preference on government tenders.

Why apartheid industrial strategies failed

Few minerals in homelands; agriculture hampered by overpopulation; only ~4 500 new jobs a year (vs 100 000 job seekers); little commerce; 79% of budgets spent on administration; poor education; and abuse of incentives (factories moving to chase grants).

RDP (1994)

Reconstruction and Development Programme; replaced the failed apartheid scheme. Ended 1998. Achievements: clean water for 1,7 million people, 8 300 water-programme jobs, and 400 000 new houses.

GEAR (1996-2003)

Growth, Employment and Redistribution strategy; aimed to expand the private sector, encourage trade, improve output and investment. Succeeded in attracting foreign investment but failed to reduce poverty and unemployment; opposed by trade unions.

BEE (1995)

Black Economic Empowerment; introduced by the ANC to rectify inequalities by giving disadvantaged groups more ownership, management and control of the economy.

Criticisms of BEE

Benefited very few; created a small super-rich class rather than entrepreneurs; makes race the deciding factor over qualifications; violated some foreign trade agreements; and contributed to a brain drain of skilled people.

B-BBEE (2007)

Broad-Based Black Economic Empowerment; introduced to meet criticisms of BEE by setting codes of good practice and awarding points to measure companies' contribution across all sectors.

Industrial Development Zones (IDZs)

Zones (started 1996) located at ports or near airports whose infrastructure is upgraded to make them world-class industrial competitors. Eight selected; by 2012 three operated (Richards Bay, East London, Coega - the most successful).

Why did the IDZ programme 'miss the mark'?

It failed to attract enough investors because it lacked attractive incentives/tax holidays to compete with IDZs in Tanzania, China, Singapore and South Korea, and SA could no longer offer cheap, reliable electricity.

Spatial Development Initiatives (SDIs)

Development corridors along transport routes (extending GEAR) that aim to improve transport infrastructure, correct apartheid damage, attract private investment and support economic activity along the corridors.

Examples of SDIs

Maputo Development Corridor, Wild Coast and Lubombo SDIs, Fish River SDI, KwaZulu-Natal and Richards Bay SDIs, Platinum and Coast-to-Coast SDIs, and the West Coast Investment Initiative.

Criticisms of SDIs

They develop spaces rather than the people in those spaces, and use companies from outside the development area rather than employing local people.

Industrial centralisation

Until about 1960 most SA factories were in a few cities (Johannesburg, Durban, Cape Town, Port Elizabeth). Problems: rural people got no factory jobs, and racial objections to rural black people migrating to cities.

Industrial decentralisation - the issue

Apartheid moved industry to homelands where there were few materials, little power/water and long distances to ports; jobs were often on homeland borders forcing long commutes; and boycotts closed many factories, causing poverty.

Post-1994 decentralisation issue

Apartheid laws fell away in 1994, but many new SDI/IDZ jobs are in underdeveloped areas, not the core cities where people prefer to live - which is partly why Coega (a city with a port) performs best.