Industrial policy implementation challenges in the Department of Trade and Industry in South Africa

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Industrial policy implementation challenges in the

Department of Trade and Industry in South Africa

SM Mosehla

orcid.org 0000-0001-9227-0742

Mini-Dissertation submitted in partial fulfilment of the requirements for the

degree Master of Public Administration at the North-West University

Supervisor:

Ms CH de Wet

Co-supervisor:

Prof WJ van Wyk

Examination:

November 2019

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DECLARATION

I, Sinah Makgoka Mosehla (student number 23339403), hereby declare that the mini-dissertation entitled Industrial policy implementation challenges in the Department of Trade and Industry in South Africa, submitted in fulfilment of the requirements for the degree Master in Public Administration at the North-West University, is my own work and has never been submitted by me to any other university. I also declare that, as far as possible, all the sources used have been acknowledged by means of complete referencing.

I understand that the copies of the mini-dissertation submitted for examination will remain the property of the North-West University.

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DEDICATION

This mini-dissertation is dedicated to:

My God, my saviour, who granted me the strength to push on even when I felt like giving up at some stage. I thank God for the strength, the energy and the wisdom He provided me during the research process. I will continue serving him all the days of my life.

My husband and my children who believe in me; their wisdom motivates and strengthens me in everything that I do.

My parents who raised us with minimal resources, but made us believe in ourselves and ensured us that with education all doors would open for us. I am a living testimony thereof. Thank you, Mama and Papa.

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PREFACE

My first gratitude goes to God the Father, the Son and the Holy Spirit. He created me in his image and He gave me the uniqueness to be the virtuous woman I am today. Glory be to God!

I acknowledge and express my deepest gratitude to the following people who have made enormous contributions in my journey towards the completion of this research study:

 My co-supervisor, Prof Willie van Wyk, who was requested at a very late stage to assist me with this study. Within a period of three months he guided me to produce the first three chapters. He registered my proposal immediately and he showed me the best way to proceed. Prof Willie, your outstanding leadership gave me the courage to finish this study. I have learnt to work extra hard and to be patient with myself under your leadership. May God keep you and bless you for the excellent leadership you provide to students.

 Ms Christa de Wet, my supervisor, who always encouraged me to produce supreme work. It is your trust in me that made me push myself extremely hard; your feedback always gave me hope and pushed me to excel even more.

 Ms Farzanah Loonate, who was my mother, my strength, my guardian angel at the university. You were always willing to listen to my frustrations; you held my hand all the way to the final point. People like you are scarce; please continue being the person you are. Your contribution of care and loyal support will forever be in my heart.

 The Department of Trade and Industry (the dti) who funded my Master’s degree in Public Administration. The dti senior managers who participated voluntarily in this study, and Mr Doctor Mthombeni from the library who walked the extra mile to ensure availability of the necessary books and articles for this research, deserve special mentioning. The contribution of colleagues from the Learning Centre is highly appreciated.

 My parents, although unfortunately not privileged to have received formal education, instilled in me through their love, lessons and support the character to be persistent to the finishing point.

 My siblings who always encourage me to do more. Your love and acceptance humble me.

 My loving husband, Melvin, my sons, Letlhogonolo and Tumelo (and their brother). In pursuit of knowledge I robbed you of family times by spending most weekends and nights in the study room. Your understanding showed me that God really made you for me. My husband, this one goes to you because you listened, advised, encouraged and edited the research. Your love amazes me. I will forever be grateful.

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ABSTRACT

The Government of South Africa is currently faced with high rates of unemployment, poverty and inequality. Through departments like the Department of Trade and Industry (the dti), government aims to reduce these high rates. The dti’s mandate aims to transform the economy through supporting industrialisation.

After 1994 government has introduced a number of economic policies, of which the Reconstructive Development Programme (RDP) was introduced first. Implementation of the RDP has realised a number of challenges like lack of coordination amongst departments. The Growth, Employment and Redistribution Strategy (GEAR) was then introduced to reduce government’s debt so that money saved could be used to address issues of service delivery. Shortcomings of GEAR forced government to develop a new policy called Accelerated and Shared Growth Initiative of South Africa (AsgiSA). In order to implement AsgiSA, the National Industrial Policy Framework (NIPF) was introduced. The dti is the custodian of the NIPF, which is a policy framework providing the tools for industrialisation. The NIPF highlights priority sectors that South Africa need to focus on in order to stimulate the economy to grow.

According to the NIPF, the Minister of Trade and Industry should annually develop industrial policy action plans (IPAP) in partnership with other government departments, to stimulate manufacturing and trade that will address race-based poverty, unemployment and inequality. The dti includes a number of Key Action Plans (KAPs) in IPAP that have to be reported to Parliament on an annual basis. The IPAP’s annual reports indicate that the dti is failing to meet targeted KAPs annually.

This study aims at investigating challenges experienced by the dti senior managers when implementing industrial policies of the dti. The study focuses on Policymaking and policy implementation theories. Emphasis is put on standards for community engagement and phases of policy cycles. Understanding these theories helped the researcher to identify challenges that the dti experience when implementing industrial policies.

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LIST OF ABBREVIATIONS AND ACRONYMS

ANC African National Congress

ASGISA Accelerated and Shared Growth Initiative of South Africa CCRD Consumer and Corporate Regulation

CIPC Companies and Intellectual Property Commission COTII Council of Trade and Industry Institutions

DA Democratic Alliance

DDG Deputy Director-General

DG Director-General

DSBD Department of Small Business Development ECIC Export Credit Insurance Corporation

EDD Economic Development Department

EFF Economic Freedom Fighters

ENE Estimates of National Expenditure

ESEID Economic sector, Employment and Infrastructure Development

ETU Education and Training Unit

GDP Gross Domestic Product

GEAR Growth, Employment and Redistribution GSSSD Group Systems and Support Services Division ICT Information and Communication Technology

IDAD Incentives Development and Administration Division IPDD Industrial Policy Development Division

IID Industrial Infrastructure Development IPAP Industrial Policy Action Policy

IPLAA Intellectual Property Laws Amendment Act

ISA Investment South Africa

ITED International Trade and Economic Development

KAP Key Action Plans

MTBPS Medium-Term Budget Policy Statement MTEF Medium-Term Expenditure Framework MTSF Medium-Term Strategic Framework

NA National Assembly

NCC National Consumer Commission NCOP National Council of Provinces

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NDP National Development Plan

NEF National Empowerment Fund

NIPF National Industrial Policy Framework

NGP National Growth Path

NRCS National Regulator of Compulsory Specifications RDP Reconstructive Development Programme

RSA Republic of South Africa

SABS South African Bureau of Standards

SANAS South African National Accreditation Systems SAPS South African Police Service

SCDC Scottish Community Development Centre

SEZ&ET Special Economic Zones and Economic Transformation

SP Strategic Programmes

TFTA Tripartite Free Trade Agreement The dti The Department of Trade and Industry TISA Trade and Investment South Africa UNECA Nations Economic Commission for Africa Unicef United Nations Children’s Fund

WPTPS White Paper on the Transformation of Public Service WTO World Trade Organisation

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LIST OF TABLES

Table 4.1: Demographic profile of respondents ... 79

Table 4.2: Participants’ responses on whether processes and methods to implement industrial policies in the dti are clearly described ... 81

Table 4.3: Effectiveness of the dti’s internal organisational structures to implement industrial policy effectively ... 83

Table 4.4: Responses on organisational structural challenges within divisions/business units.. 85

Table 4.5: Responses on policy implementation and skills of persons who implement polices ... ... 87

Table 4.6: Responses on broad external challenges experienced ... 89

Table 4.7: Responses on broad internal challenges experienced ... 91

Table 4.8: Responses on coordination of implementation ... 94

Table 4.9: Responses on the evaluation of results of the implementation process ... 95

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LIST OF FIGURES

Figure 3.1: Policy-making process ... 45 Figure 3.2: A generic policy cycle ... 46

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CHAPTER 1: INTRODUCTION TO THE STUDY

1.1 Introduction

Industrial development in South Africa is a core function of the government and as such, the Department of Trade and Industry (hereafter referred to as the dti) plays a crucial role. The dti is responsible for the transformation and promotion of industrialisation in the country to reach the government’s broad vision to address unemployment, poverty and inequality (the dti, 2015:23; Republic of South Africa (RSA), 2018:1). To achieve this, government departments such as the dti have to implement government policies, like the industrial policy, effectively. According to the dti, ongoing efforts to implement the government’s industrial policies effectively will ensure economic growth in the country to the advantage of all its citizens (the dti, 2013:5).

The dti has however experienced significant implementation challenges to be overcome to implement industrial policies effectively in order to make a success of industrial development in the country. These challenges are of such complex nature that a number of the policies have been only partially implemented while others have not been implemented at all. To address implementation challenges, the dti started with a restructuring process of its organisational entities. This resulted in the creation of three distinct departments, namely the dti, the Economic Development Department (EDD) and the Department of Small Business Development (DSBD). The purpose of creating the individual departments was to adhere to the principle of specialisation, so that each of these departments could focus only on specific functions. The creation of these departments was done with the anticipation that each department would function more effectively with regard to the implementation of the policies of the dti (the dti, 2015:23).

The primary objective of the dti and its various departments is to promote industrialisation and industrial transformation by implementing the industrial policies of the country, such as the Industrial Policy Action Plan (IPAP) for South Africa. The focus of the IPAP is entrenched in the government's overall policy and plans to address key challenges of economic and industrial growth, race-based poverty, inequality and unemployment. The IPAP is regarded as the apex policy document that lays down strategies and programmes for government departments, including the dti, to take on the responsibility for trade, investment and promotion of export and enterprise development (the dti, 2013:6-8).

The vision of the IPAP is to prevent industrial decline in the country and to support the growth and diversification of South Africa’s manufacturing sector. The manufacturing sector is regarded as the ‘engine’ of growth in all economic sectors in the country. Manufacturing can directly generate

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significant economic growth that is especially important for the creation of employment opportunities (the dti, 2013:6-8).

Cloete (2018:1) states that the tenth IPAP, as presented by the former Minister of Trade and Industry (Dr Rob Davies), has a sharp focus on deepening industrial development, speeding up radical economic transformation and increasing the ability to produce higher value-added products. The reason for this is to create more jobs in South Africa and to become more competitive internationally on matters of trade and industry.

The dti has, inter alia, the following challenges that have impacted its ability to effectively formulate and implement its trade and industrial policies (the dti, 2007:20; RSA, 2018: 1):

 Insufficient coordination of trade and industry activities amongst and between the three tiers of government;

 Insufficient coordination of trade and industry activities between the government departments responsible for the development and implementation of trade and industrial policies, and

 The lack of human resource specialists to formulate and implement high-quality industrial policies.

In order to understand the principles and context of trade and industry policies, it is important to understand and define the concept public policy-making, and to analyse and describe the theories on which it has been founded (Cloete, de Coning, Wissink, & Rabie, 2018:7). After understanding what public policy-making and its process entail, it is easier to explore what policy implementation means (Khan, 2016:3).

The focus of this study was to, inter alia, determine what public policy is and what the policy-making process entails. Within this context, the phenomenon policy implementation was investigated, and the challenges that the dti encountered to implement the country’s and its own policies on trade and industry was determined during the empirical phase of this study. Recommendations to address the identified policy-implementation challenges were made based on the analysis of literature and relevant theories, as well as the results of the empirical study.

1.2 Problem statement

The dti’s industrial policy annual reports on the monitoring and evaluation of the implementation of set targets for 2014/15/16 and 2017 reflected that some of the dti’s set targets to develop and improve industrialisation in the country had not been achieved by the department (the dti, 2014/15-16/17:19 & 2016/17:40). The reports identified specifically that the implementation of the

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the dti. It became clear that this division experienced problems with regard to the actual development of industrial policies, as well as the monitoring process related to the implementation of these policies (the dti, 2017:31).

During a preliminary investigation by the researcher, it was discovered that the reason for challenges with the implementation of industrial policies could partially be attributed to a lack of financial and skilled human resources. It also became known that proper consultation between the dti and other government entities and stakeholders on how the industrial policy should be developed and implemented, lacked transparency (the dti, 2014/15-16/17:19 & 2016/17:40). It was also established that policy implementers in the relevant government departments were not fully succeeding to keep within the predetermined time frames for implementation of industrial policies, and that departments therefore missed their policy implementation targets on a regular basis. This had a negative effect on the proper functioning of the dti and its role in the effective development and oversight of the implementation of industrial policies. This, by implication, was the primary reason that the dti failed to meet its objectives of developing and implementing the country’s industrial policies (the dti, 2014/15-16/17:19 & 2016/17:40).

According to the dti, the successful implementation of industrial policy in South Africa was also negatively affected by the global economic recession since 2008, which highlighted the ongoing domestic challenges (the dti, 2013:19; the dti, 2015a:7). Although the dti is not able to stop negative global economic occurrences and trends in the world, it also seems that domestic challenges such as high prices for fuel and electricity, the decline in the gold price, decrease in export and a decline as producer of goods had a negative influence on the implementation of industrial policies. These domestic challenges had a definite influence on the functioning, not of the dti alone, but also of other government departments in South Africa (the dti, 2014/15-16/17:19 & 2016/17:40).

To ensure that the dti plays its role in the successful development and implementation of industrial policies, a revisit of how policies have been implemented was undertaken, and challenges that the dti experienced in the process were identified. Against the background of the discussion thus far, a general research question surfaced: What does the theoretical foundation of policy-making and policy implementation entails, and which industrial policy implementation challenges are experienced in the the dti, and how can these challenges be addressed?

To answer the general research question, specific research questions were formulated, as explained in Section 1.3 below.

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1.3 Specific research questions

The specific research questions were as follows:

 How has the dti been structured within the wider context of the public sector and services? (Chapter 2)

 How has the dti been structured to implement trade and industry policies? (Chapter 2)

 Which challenges exist within the dti that hinder the successful implementation of trade and industry policies? (Chapter 2)

 Which are the institutional requirements that direct the implementation of trade and industry policies? (Chapter 3)

 Which theoretical framework lays the foundation of policy implementation within the context of the policy-making process in the public sector? (Chapter 3)

 What will an empirical investigation reveal about the challenges that the dti experience regarding the implementation of industrial policies? (Chapter 4)

 Which recommendations can be made to contribute to the achievement of effective and efficient industrial policy implementation in the dti? (Chapter 5)

The specific objectives of this study will be presented in the next section.

1.4 Research objectives

The objectives of this research study are to:

 Present the dti’s structure within the wider context of the public sector and public service (Chapter 2).

 Present the dti’s structure that enables the institution to implement industrial policies (Chapter 2).

 Identify and present the challenges that exist within the dti that hinder successful implementation of trade and industry policies (Chapter 2).

 Present the institutional requirements that direct the implementation of trade and industry policies (Chapter 3).

 Present the theoretical framework that lays the foundation of policy implementation within the context of the policy-making process in the public sector (Chapter 3).

 Present the results of an empirical investigation that reflect the challenges that the dti experience regarding the successful implementation of industrial policies (Chapter 4).

 Present recommendations that contribute to the achievement of effective and efficient industrial policy implementation in the dti (Chapter 5).

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1.5 Theoretical statement relevant to study

The following theoretical statements are applicable to this study:

Public policy is a public sector (government) statement of intent, including in some instances a more detailed program of action to give effect to identified service delivery challenges in communities, in order to improve the citizens’ living conditions in a structured way (Cloete et al., 2018:7).

Industrial policy refers to a government’s intent to encourage a nation’s industrial development and growth. A country’s implicit industrial policy is defined as the tax and monetary policies that directly influence the decision-making environments of all businesses and they are not industry specific. Explicit industrial policy is the set of interventions that is designed to differentially affect specific industries or enterprises (Northsworthy & Tsai, 1998:20). Similarly, industrial policy is government’s intent to strategically influence industries’ activities to ensure that such industries reach their objectives to the benefit of the citizens of a country (Khan, 2014:109).

Industrial policy is defined as a series of strategic policy mixes that lead the state’s industrial structure towards the intended direction, through the government’s advancements into a specific industrial activity or market, and its effective distribution of the country’s resources to fix the market’s failure or to secure a dynamic comparative advantage (Harisson, 2014:98). In South Africa industrial policy reflects the government’s intent and advancement into a specific industrial activity or market to effectively distribute the country’s resources to fix the market’s failure in its attempts or ignorance to redress mostly poverty and inequality as the most prominent socio-economic ailments (National Development Plan: Vision for 2030 (NDP), 2011:1; Harisson, 2014:98).

Policy implementation reveals a number of models that relate to the implementation of public policy. The majority of these models have been developed from a North American perspective and they are generally embedded in a discussion of the policy process, emphasising that implementation is intimately linked to the political process of governing (Schofield, 2001:248).

Policy-makers take decisions to improve the wellbeing of citizens. Industrial policy implementation is therefore critical in understanding the role that government institutions have to play in the implementation of industrial policies that give provision to industrial financing, job creation and economic growth (Paudel, 2009:38).

Formal adoption of policy is critical for every government institution. Even though political buy-in is important, critical groups that benefit from the status quo may actively oppose the

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implementation of reform and try to halt the process. In most cases, the organisation charged with carrying out a given policy is different from the one that has adopted the policy through legislative or executive action (Mazmanian & Sabatier, 1979:503).

Policy implementing departments are those government departments responsible for the implementation of policy. The effective functioning of such government departments is influenced by negative factors such as a lack of funding, a lack of human resources, authority, motivation, capacity and the necessary experience to implement policies.

In the next section, the theoretical statement of the study is discussed. Theoretical statements support the theory/theories that the study has/have been founded upon. Theoretical statements also introduce and broadly describe the theory/theories that explain(s) how the research problem, general research questions and objectives would be addressed (Swanson & Chermack, 2013:47).

1.6 Research methodology

It is not always clear what the difference between research methodology and research design is. Scholars therefore use the two concepts interchangeably. In this study the researcher prefers to use the terminology research methodology, which includes the research design. Kothari (2004:7) views the research methodology as methods and procedures used by a researcher to collect and analyse data to address the problem statement and objectives of the study. In order to answer the research problem and objectives, a qualitative research design (also called an approach) would be followed to outline, according to Tlhoalele, Nethonzhe, & Lutabingwa, (2007:562), the manner in which data would be collected (population and sampling, data-collecting instruments and data analysis), to answer the general research questions and objectives of a study. A research design refers to a set of guidelines and instructions on how to reach the goal that the researcher has set for the study. These guidelines and instructions should be followed in addressing the research problem (Mouton, 1996:108), which in this study was ‘to determine what the theoretical foundation of policy-making and policy implementation entails, and to determine which industrial policy implementation challenges are experienced in the Department of Trade and Industry, and how these challenges can be addressed’.

1.6.1 Qualitative research approach

The research approach of this study, being qualitative in nature, aimed at an in-depth analysis of a phenomenon in the real world. It sought to explore such phenomenon in depth in order to understand the nature of it and to determine on which theories such phenomenon had been founded (Webb & Auriacombe, 2006:591, 662). According to Kothari (2004:3) qualitative research

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institution, and also seeks to discover underlying motives of human behaviour. Generally, data collecting techniques entail a literature review, focus group discussions, structured or semi-structured interviews, in-depth interviews, questionnaires and the analysis of legislation and policies (Webb & Auriacombe, 2006:592).

In this context, a qualitative research approach entails the following:

 To answer questions about the complex nature of a phenomenon with the purpose of describing and understanding the phenomenon from the participants’ point of view;

 To seek a better understanding of complex situations;

 To explore the environment in which the phenomenon occurs, and

 To start with a research question, rather than a specific hypothesis.

The study also focused on experiences and perceptions of selected policy-makers and implementers in the dti, with regard to the role of this government department in the successful implementation of industrial policy. The research was conducted in the natural setting of the department as is usually the case with qualitative research. Natural setting was where industrial policy-makers and implementers operate, namely within the dti (Head Office).

The event or phenomenon studied is ‘industrial policy implementation challenges’ experienced by policy implementers in the dti. A discussion of the specific data-collecting instruments utilised in this study is undertaken in the next subsections.

1.6.2 Literature review

Mouton (2008:86) identifies a literature review as the first stage of a study. The process of reviewing existing literature ensures that important literature on the subject under investigation is retrieved, analysed and described in a scientific manner. Mouton (2008:86) also explains that the researcher should review an existing body of scholarly literature to obtain the recent most reliable sources of information to build her/his research on. Through the literature review, the researcher establishes general knowledge and understanding of fundamental concepts regarding his/her own study (Mouton, 2008:86).

Reviewing scholarly literature requires the ability to identify and select literature which is relevant to the study. The literature that has been selected should be analysed and synthesized to make sense of which thereof would be suitable for the study. This requires critical thinking from the researcher (Mouton, 2008:86).

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According to Pautasso (2013:1) the following elements are important when undertaking a literature study:

 Define the topic precisely;

 Search and re-search the literature;

 Always keep the purpose of the study in mind;

 Be critical and consistent;

 Find a logical structure to present information;

 Always be objective, and

 Use contemporary sources, but do not forget older sources.

According to Maree (2012:82) literature reviews provide researchers with current and past information on the topic. After the analysis of the information gathered, the findings were interpreted to attach significance and meaning to it.

The following databases were consulted to ascertain whether the available information was sufficient to undertake the study:

 Databases on theses and dissertation;

 Books;

 Online research databases;

 Scholarly journal articles;

 Academic conference papers;

 Government official documents, and

 The dti’s official reports

An empirical study was undertaken to determine the current situation in the dti regarding the implementation of industrial policy and to determine any challenges that the dti experienced in this regard. For any problems detected, the researcher determined the causes, shortcomings and challenges that the dti had been confronted with and recommendations were made, based on the information gathered through the literature and empirical studies.

1.6.3 Empirical investigation

Empirical research is based on theoretical principles and the data obtained through the literature study should focus on addressing the identified problems and to answer the specific questions asked, in order to address the stated problems. What constitutes empirical research is the scientist’s ability to formally obtain information from various data-collecting techniques (Maree,

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A qualitative study is usually based on information gathered through interviews with knowledgeable people on the subject under investigation (Wagner, Kawulich, & Garner, 2012:125). Focus group discussions and questionnaires can also be used as techniques to collect data. An empirical investigation in this study was conducted through semi-structured interviews and the analysis of relevant legislation, policies and official documentation. The interviews were conducted face to face and were unstructured with open-ended questions, allowing the researcher and participants the opportunity to elaborate on the answers of the questions.

Questions that were posed to policy implementers focused on their roles and responsibilities, the challenges experienced with regard to the implementation of industrial policies, and their views and experiences in this regard. Furthermore, policy-makers and implementers were requested to indicate which factors, organisational structures and mechanisms, based on their personal views and experiences, contributed to the addressing of any challenges regarding the implementation of industrial policy in the dti.

1.6.3.1 Population and sampling

The total population included the senior managers in the various organisational divisions in the dti, who have been involved in policy-making and specifically policy implementation of industrial policies. The IDD is responsible for the implementation of industrial policies and the total population equals 100 employees. Of these, the total population of senior managers directly responsible for the development and implementation of industrial policy equals 30.

Due to the fact that the total population of senior managers was too large, a sample of 12 senior managers would be selected for semi-structured interviews. According to Babbie and Mouton (2001:202) a sample can be defined as a subset of a population, which can be regarded as representative of the entire population. The senior managers were selected based on the knowledge that they have on the subject under discussion. In other words, the information presented by the sample group was regarded as primary knowledge (Babbie & Mouton, 2001:202; Kothari, 2004:5). With this number of participants, it was not expected that saturation would play a role.

1.6.4 Data collection

Semi-structured interviews were used so that the researcher could ask both the standardised (everyone asked the same question) questions and to enable the researcher to ask questions of clarity or probe participants for reasoning (Leedy & Ormrod, 2015:160). The questions that were asked were constructed by the researcher with the assistance of the study leaders. The questions

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were developed at the hand of the knowledge gained from the literature analysis, which included the analysis of the relevant theories.

1.6.5 Data analysis

The analysis of the data gathered by the researcher provided a general sense of what the gathered data entailed. This is also called the identification of repeating ideas, expressed by different authors and the interpreting of these ideas in order to report it to a specific audience. Maree (2013:82) states that when themes and categories have been identified and data has been analysed, it can be produced in a rich and exhaustive manner in the form of a scientific report.

All data obtained from the data-collecting techniques or instrument was processed and the researcher reached a specific conclusion, based upon the findings. According to Neuman (2006:467) ‘…data analysis involves examining, sorting, categorising, evaluation, comparing, synthesising and contemplating the coded data as well as reviewing the raw and recorded data.’ Qualitative analysis involves the ‘breaking up’ of the data into manageable themes, patterns, trends and relationships. Raw data collected would be reviewed, examined, sorted and categorised according to themes (Neuman, 2006:467).

This form of data analysis is called thematic analysis. The output of the analysis provides coded data that is synthesised and interpreted, which is used to answer the research questions. Results are presented in text and tables with supporting narratives. The advantage of this form of analysis is provision of significant insight into the research problem, which ensures scientific rigor and allows the researcher the ability to derive generalizable results from qualitative data (Neuman, 2006:467).

Data gathered was converted into one or more forms that can be easily organised and analysed (Leedy & Ormrod, 2015:310). The researcher then made sense of all the information received; sifted data to reduce volume, wrote notes based on the information gathered; developed tentative ideas about categories and relationships; coded data according to topics; highlighted key words from interviews; analysed and summarised data, and drew recommendations and conclusions. Leedy and Ormrod (2015:311-12) state that the final product of the data-analysing phase of a study should be presented in a narrative format in a scientific document.

1.7 Limitation of study

Availability of industrial policy-makers and implementers was a limitation since the nature of their work requires almost full-time attention. The researcher therefore had to plan the interview

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Interviews were conducted only with industrial policy-makers and implementers at senior management level in the Head Office of the dti, therefore their views and experiences were not necessarily identical to those of officers at non-senior manager’s level. However, since qualitative research is not focused on the generalisation of results but rather on representativeness, this was not a huge concern as the researcher ensured that the results obtained were representative of the research of this study.

1.8 Significance of the study

The findings from the investigation are of value to the dti and its policy-makers and implementers, since the challenges encountered by the policy implementers were identified and recommendations made to address such challenges. The study also aimed to contribute to the subject Public Administration’s body of knowledge, science in general, and to make a theoretical contribution to the academic field of Public Policy Implementation. Inclusive growth in the country is a mandate of the dti and can only be achieved if it implements its industrial policy effectively and efficiently. The locus of the study was in the dti Head Office, focused on a division called IDD and other relevant divisions.

1.9 Ethical considerations

This is a low-risk ethical level study which the Faculty of Humanities (Arts) Ethics Committee had assessed and approved, and an ethics number was already provided. All participating policy-makers and implementers were taken through a process of explaining ethical aspects to them prior to participating in the study. Together with this explanation, an informed consent form was used to explain ethical issues and, if in agreement, they were requested to sign and date the consent form. Furthermore, participants were informed about the purpose of the research in which they had been requested to participate. They were also informed that participation was voluntary and that they could withdraw from the study at any time. The ethical guidelines of the NWU Research and Ethics Regulatory committee were implemented.

1.10 Chapter layout

CHAPTER 1: ORIENTATION AND BACKGROUND

Chapter 1 included the introduction and background to the study. The researcher aimed to demonstrate a basic understanding of the research problem investigated. The research topic is embedded within the context of industrial policy implementation in government, decent employment through inclusive growth and creation of a better South Africa that contributes to a

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better Africa and a better world as outlined in the NDP. Research problems, objectives, research questions and research methodology followed in the research were also outlined in this chapter.

CHAPTER 2: THEORETICAL FRAMEWORK FOR INDUSTRIAL POLICY IMPLEMENTATION IN THE PUBLIC SECTOR

Chapter 2 included the theoretical framework that focused on policy implementation and industrial policy-making and the role of the dti in this regard. Specific factors, structures and mechanisms that contribute to successful industrial policy implementation were reviewed. This chapter also focused on policy implementation practices, particularly with regard to government’s role. The dti structure within the wider context of the public service and public sector was discussed. The dti’s structure with respect to the implementation of industrial policies was described. The challenges that exist within the dti that hinder the successful implementation of trade and industrial policies were described. Lastly, the institutional requirements that direct the implementation of trade and industrial policies were elaborated upon.

CHAPTER 3: STATUTORY AND REGULATORY FRAMEWORK FOR THE IMPLEMENTATION OF INDUSTRIAL POLICY

Chapter 3 included guiding legislation and policies in government that guide industrial policy-making and implementation. Furthermore, an overview of legislative and statutory mandate available for the dti to develop and implement industrial policy was viewed. A theoretical framework laying the foundation of policy implementation within the context of the policy-making process in the public sector was presented.

CHAPTER 4: EMPIRICAL RESEARCH: RESULTS AND FINDINGS

Through an empirical investigation by means of personal semi-structured interviews, this chapter established the causes of industrial policy implementation challenges in the dti. The results of an empirical investigation that reflected the challenges that the dti experiences regarding the successful implementation of industrial policy was explained. A systemic section of recommendations was provided against each of the research findings.

CHAPTER 5: FINDINGS, RECOMMENDATIONS AND CONCLUSION

The final chapter contained a summary of the final findings of the study. An indication that the objectives of the study have been reached was provided and the contents of each chapter were discussed. At the hand of the knowledge gained from the literature study and the analysis of theories the researcher made recommendations to contribute to the achievement of effective and

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1.11 Conclusion

Chapter 1 focused on the Department of Trade and Industry, a government department mandated to promote industrialisation and transformation in South Africa in order to address unemployment, poverty and inequality (the dti, 2016a:12). The Department is also responsible for shared and inclusive growth in the economy of the country.

An introduction of the research had been given to introduce the reader to the environment in which the Department functions. The problems and challenges that the department face were elaborated upon and a general research question was asked. Specific questions were identified that should be addressed and the objectives of the study were determined.

The methodology that the researcher would follow to address the objectives was discussed in detail. The population and sample were indicated as well as the manner in which data would be analysed and presented. The value of the study for the dti was also indicated.

The next chapter concentrated on the structure and functions of the dti within the context of the public sector and applicable legislation.

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CHAPTER 2: THE STRUCTURE AND FUNCTIONS OF THE DTI WITHIN

THE WIDER CONTEXT OF THE PUBLIC SECTOR

2.1 Introduction

This chapter defined the phenomena public sector and public service and how government departments (also called state departments), such as the dti, fit into it. The phenomenon industrial policy would be defined and analysed to give meaning to it.

The chapter looked at the South African Constitution that had been adopted into law in 1996 (RSA Country Report, 2016:81). It concentrated specifically on what the Constitution, 1996 determines on the country’s trade and industrial responsibilities. Other relevant legislation was elaborated upon.

The way the Department of Trade and Industry (the dti) has been structured to reach its objectives was discussed and the purpose and functions of the department elaborated upon. In this regard, the strategic plan of the dti plays an important role to indicate how the purpose of the department has to be reached, mainly as the developer and implementer of industrial policy. The Department’s activities to create an environment where business in South Africa can operate to their full potential, were discussed.

The factors necessitating the development of industry specific policies, as set out in the Constitution, 1996, (RSA, 1996:195) as well as the core objectives of the IPAP 2017/18–2019/20, (the dti, 2017:6) were analysed in order to understand the dti’s responsibilities to improve industrial growth in the country. An understanding of the founding principles on which policy implementation had been initiated and which formed the basis of this study were analysed and discussed.

Challenges that hinder successful implementation of trade and industry policies within the dti were discussed.

2.2 The public sector and public service

It needs to be understood what the public sector and public service refer to in order to understand the contexts in which the dti is functioning. Fox and Meyer (1995:107) describe the public sector as that portion of the economy (economic and non-economic) that is under the control and direction of the state. The state owns the resources in the public sector and uses them to ensure that services are delivered to the public. Fox and Meyer (1995:101) describe the private sector

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The establishment of the public service in South Africa was founded on principles as set out in section 197(i) of the Constitution, 1996 (hereafter called the Constitution, 1996), that make provision for a public service for the Republic, which has to function, and be structured, in terms of national legislation, and which has to loyally execute the lawful policies of the government of the day, such as the industrial policy. The Constitution, 1996, as supreme law in the Republic of South Africa, thus legally mandates the establishment and existence of the public sector in South Africa (RSA, 1996:102).

2.2.1 The public sector

The broad difference between the public and the private sectors is that the public sector focuses on service delivery and the private sector largely on profit-making (Surbhi, 2015:2). According to Surbhi the public sector can be described at the hand of the following criteria:

The public sector is a part of the country’s economy, but its management and control are in the hands of government.

The aim of the public sector is to serve the people of the country.

 In the public sector, the government has full control over its government departments that are responsible for the delivery of specified services.

 The employees of the public sector have job security and benefits such as salaries, health care and pensions that is not always the case in private organisations.

 In the public sector, performance is measured in terms of the delivery of quality services at the required quantity. Public sector performance is also measured against efficiency, effectiveness and economy, as outlined in the Constitution, 1996, section 195(1)(b), (RSA, 1996:99).

 Meanwhile, in the private sector, performance is regarded as the most important aspect to secure the survival of the organisation.

The establishment of a public service will be discussed next.

2.2.2 The public service

The South African Constitution, 1996, specifically states in section 197(1) that ‘…there shall be a public service for the Republic, structured in terms of a law to provide (an) effective public administration’ (RSA, 1996:102). The public service must adhere to the following stipulations in Section 197(1) as stated in the Constitution, 1996, (RSA, 1996:102):

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 It must function and be structured, in terms of national legislation which must loyally execute the lawful policies of the government of the day to the benefit of the citizens living in the country.

 It must adhere to the terms and conditions of employment as regulated by the national legislation.

Section 7 of Chapter 3 of the Public Service Act of 1994 is of particular importance because it makes provision for the establishment of national, provincial and local government departments, each with its own purpose, mandate and objectives, such as the dti (RSA, 1994:11). According to Du Toit and Van der Waldt (2008:8), government institutions such as government departments are established by society primarily to create law and order as well as to provide collective products and services for society on a non-profit basis.

A ‘quality’ public service is critical with regard to the lives of citizens, and should ensure, through its government departments, that the provision of services is delivered to the citizens (Du Toit & Van der Waldt, 2008:8; Reddy, 2016:2). This is an essential and vital function of government. Service delivery is a well-known axiom that is used to denote the distribution of basic communal needs and services to society, notably housing, water and sanitation, land, electricity and infrastructure (Du Toit & Van der Waldt, 2008:11; Reddy, 2016:1). Reddy (2016:1) describes these services as key tasks of government. Citizens have to rely on government for not only the provision of services but the services should be of high quality and easily accessible (Du Toit & Van der Waldt, 2008:33; Reddy, 2016:2).

Experience and studies have shown that government cannot address the delivery of all the services on its own and that civil society and the private sector also have a role to play in improving and delivering public services (Du Toit & Van der Waldt, 2008:29). Public services account for a large portion of public spending and should in theory see to it that adequate money is raised from various sources (Surbhi, 2015: 2; Education and Training Unit (ETU), 2019:2).

2.2.3 Constitutional provisions for the establishment of the public sector

In the build-up period to the creation of a democratic government for South Africa, the adoption of an interim constitution was established, after intensive negotiations (led by the current President of the Republic, Mr Cyril Ramaphosa, together with Mr Roelf Meyer from the erstwhile National Party) (Parliament of the Republic of South Africa, 2016:38). Input from other prominent stakeholders in the private sector, labour, civil society and government (Parliament of the Republic of South Africa, 2016:38) also added to the basis for development of the interim constitution. The final constitution came into being in 1996.

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2.2.4 The Constitution, 1996, and the establishment of the three tiers of government The Constitution, 1996 make provision for three spheres of government, namely the National, Provincial and Local (Municipalities) spheres (RSA, 1996:21; RSA, 2014:20; ETU, 2019:1; Cloete, 1996:7). Each of the three spheres has its own focus and has to exercise their own powers and functions as stipulated in the Constitution, 1996, and relevant legislation (Section 41(1) of the Constitution, 1996), (RSA, 1996:21; Ababio & Tengeni, 2008:421). As the dti is a department that falls under the jurisdiction of the national sphere of government, the next subsection will focus on this sphere.

2.2.5 The national sphere of government

The Constitution, 1996 also makes provision for the creation of government departments in the national sphere to address and implement the requirements as set out in the Constitution, 1996 (RSA, 1996:21).

The national sphere of government is responsible for several functions that affect the country as a whole. According to the Constitution, 1996, Section 146(2c), (RSA, 1996:72) these include, amongst others, the responsibility for:

 Securing a safe and secure environment for its inhabitants to live in.

 Maintaining a defence force.

 Establishing a foreign affairs service.

 Securing economic development.

 Addressing trade and industry responsibilities.

Government departments on national level, such as the dti, must take the responsibility to make policies and see that they be implemented for every identified function (Du Toit & Van der Waldt, 2008:14; ETU, 2019:2). As such, the dti has been established to ensure that the trade and industry function are effectively administered (Cloete, 1996:18).

National departments, such as the dti, make decisions on and have legislative powers over matters of national interest (ETU, 2019:2). Van Dijk and Croucamp (2007:673), argue that national government has an overarching responsibility to ensure that the objectives of a developmental state are achieved. This responsibility is instituted in government departments. Government should however capacitate its departments to develop strategies to improve the lives of their constituencies (Cloete, 1996:88). The national government will have to adopt a more prescriptive approach towards the functioning of its departments to ensure that service delivery does not fail (Van Dijk & Croucamp, 2007:673).

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In terms of the National sphere of government, its executive competence or mandate is vested in the state president (ETU, 2019:2). The state president, together with members of cabinet, (the ministers) have to take responsibility for the effective functioning of national governments and should ensure that government policies are developed, and should also act as an overseer for the implementation of such policies Section 85 (2) Constitution, 1996, (RSA, 1996:47; Cloete, 1996:94). This entails the ‘preparing, initiating and implementing national legislation, developing and implementing policy, coordinating the functions of state departments and administrations, and preparing and initiating legislation’ (Van Wyk, 2012:290). It should however be mentioned that Section 43 of the Constitution outlines that the national sphere of government’s legislative authority is vested in Parliament (Freeman, 2014:567).

Within this context, national government departments are linked to the developing, implementing and monitoring of national policies; programmes, projects and strategic plans of government (ETU, 2019:2). For instance, the National Development Plan: Vision for 2030 (2011:4) was introduced by the President in 2011 to act as a long-term plan to alleviate poverty and to secure economic development in the country. Government departments have to align their own strategic plans, policies and processes with those of government to ensure consistency and coherence in the implementation process (Freeman, 2014:567).

The implementation of the NDP has to be measured through the Medium Term Strategic Framework (MTSF), a five-year implementation framework (Luiz, 2007:6). The MTSF has been structured into 14 priority outcomes, which cover focus areas identified in the following NDP chapters: education, health, safety and security, economic growth (including industrial development) and employment, skills development, infrastructure, rural development, human settlements, local government, environment, international relations, public sector, social protection, nation building and social cohesion (NDP, 2011:5).

Although the structuring of the national sphere of government is in place, as discussed, funding of the government departments is the next important action to take by government.

2.2.6 Funding of government departments such as the dti

Funding is a critical element in advancing government’s objectives and as such the allocation of money to each department is of crucial importance so that departments be enabled to perform their tasks. In determining the manner and extent to which budget allocation is made, the National Treasury has to develop the Medium-Term Budget Policy Statement (MTBPS) which provides insight and guidance on the economic outlook, fiscal policy, expenditure priorities, risk and general government financial responsibilities (MTBPS, 2017:25-26). With this in mind, the

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National Treasury allocates funds to national government departments in terms of Chapter 4 of the Public Finance Management Act of 1999 (National Treasury, 2010:26). These funds are allocated by National Treasury on an annual basis (Du Toit & Van der Waldt, 2008:224).

The dti’s total budget for 2018 was R30.2 billion over the medium term, of which a projected 80.8 per cent (R24.4 billion) was used for transfers to public corporations and private enterprises, and departmental agencies and accounts (Estimates of National Expenditure (ENE), 2018:690). Over the medium term, the dti’s plans to continue focusing on intensifying the implementation of the IPAP, which aims to promote industrialisation and expand production in value added sectors with opportunities for high employment growth, are developed. This entails providing industrial financing, developing industrial infrastructure and strengthening export capabilities (ENE, 2018:690-92).

One of the service delivery mandates of government includes the development of the economy through industrial activities (Du Toit & Van der Waldt, 2008:78), an important role that the dti has to play. To this effect, government has allocated a percentage of its budget to the dti towards encouraging industrial activities that stimulate economic growth and job creation (ENE, 2016:608; ENE, 2018:690). Government spending on incentives for industrial activities during 2016/17 financial year amounted to R5.7 billion (National Treasury, 2016:608; ENE, 2018:691). The allocation of money to industrial activities is governed by government policies, which derive their mandate from the Constitution of the Republic of South Africa, 1996 (RSA, 1996:135-136). The dti is responsible to implement these policies on trade and industry in South Africa (ENE, 2018:689).

The dti as a government department has to promote industrialisation by spending on infrastructure projects through the Infrastructure Investment Support subprogram (ENE, 2018:691). Funds are mainly used for infrastructure development in special economic zones and in government-owned industrial and critical infrastructure projects (ENE, 2018:691). By designating special economic zones in terms of the Special Economic Zones Act of 2014, the department aims to improve industrialisation, regional development, exports and employment through foreign and domestic direct investment (ENE, 2018:691-692).

The dti also focuses more on the implementation of the critical infrastructure programme, which provides the required infrastructure for leveraging investment and lowering the cost of doing business in South Africa (ENE, 2018:691). Over the medium term, the department plans to revitalise roads and bulk water and electricity supply in 13 industrial parks throughout the country, whereby an estimated 55 000 work opportunities (ENE, 2018:691) would be supported. To

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implement the critical infrastructure programmes R721.9 million is provided to the dti over the Medium-Term Expenditure Framework (MTEF) period (ENE, 2018:691-692).

Having discussed the public service thus far, it is important to shed more light on the dti as government department.

2.3 The Department of Trade and Industry as part of the public sector and public service In the early nineties of the previous century, South Africa had succeeded in transforming the governance landscape by building critical institutions such as the National Assembly (NA), National Council of Provinces (NCOP), provincial legislatures and municipal councils; these developments were put in place to ensure that South Africa could be regarded as a constitutional democracy (The Presidency, 2014:11; RSA, 1996:23; Gumede, 2008:11).

Section 55 of the Constitution, 1996, requires that the National Assembly must ‘provide for mechanisms to ensure that all executive organs of state (e.g. national departments) in the national sphere of government are accountable to it and the NA must also maintain an oversight on the implementation of legislation by national government’ (RSA, 1996:29-30; Gumede, 2008:11). According to the Constitution, 1996, the dti, as an organ of state, reports to the NA through its Minister (RSA, 1996:49).

The vision of the dti supports the securing of inclusive economic growth, comprehensive development of rural areas, land reform and the security of better lives and living conditions for all South African citizens (ENE, 2016:594). In order to achieve these, the dti has inevitably to collaborate closely with the private sector (ENE, 2018:636, 691) to ensure satisfaction of the needs of citizens. Lall (2003:5) argues that this is only one side of the argument and that the private sector also needs government interventions to provide critical public input for them to survive.

2.3.1 Legislation on the dti

Schedule 4 of the Constitution, 1996, of the Republic of South Africa indicates functional areas in which government, inter alia, should focus. One of the listed functions under this schedule is the promotion of industry and trade, which forms the basis for the formation of the dti 1996 (RSA, 1996:135-136). In response to schedule 4 of the Constitution, the dti developed a service charter delivery that highlights the services offered by the dti; the focus of this charter includes the development of industrial policy and how it should be implemented (the dti, 2012:2).

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Africa (ASGISA); the National Industrial Policy Framework (NIPF); the New Growth Path (NGP), and the National Development Plan: Vision 2030 (NDP). These government policies were launched to speed up employment creation with a target of halving unemployment decreased by 2014 from 28 percent in 2004 to 14 percent by 2012 (Kanjere, 2015:745), and by accelerating gross domestic production (GDP) to over 6 percent (MDG, 2013:17; NIPF, 2007:6, the dti, 2013:21; Kaplan, 2013:2; ENE, 2016:608).

The dti is subjective to 45 key legislations (the dti, 2013:13) The list of acts includes the Companies Act of 2008, the Manufacturing Development Act of 1993, the Broad-Based Black Economic Empowerment Act of 2003 and the Consumer Protection Act of 2008 (ENE, 2018:689; the dti, 2015:19). The overarching purpose of acts such as these is to create a dynamic industrial, globally competitive South African economy that is characterised by inclusive growth and development, decent employment and equity, and to build on the full potential of all citizens (the dti, 2016:12). Within the guiding principle of the Constitution, 1996, and the regulatory directives, the dti was able to develop its vision and mission statements and establish its strategic objectives. The dti thus created its vision and mission statements and established its strategic objectives. 2.3.2 Vision, mission and strategic objectives of the dti

 The vision and mission of the dti to promote the transformation process in the country are (the dti, 2014:16):

 To secure a dynamic industrial and globally competitive economy.

 To provide a predictable, competitive, equitable and socially responsible environment, conducive to investment.

 To broaden participation in the economy to strengthen economic development; and continually improve the skills and capabilities of the dti.

 To deliver on its mandate to address the economic needs of South Africans.

Within the set vision and mission of the dti, the department’s strategic objectives could be formulated. These objectives focus on the transformation of the economy to promote industrial development, investment, competitiveness and employment creation (the dti, 2014:16). They also promote regional and global relations to advance South Africa's trade, industrial policy and economic development (the dti, 2014:16) The dti must thus facilitate broad-based economic participation through targeted interventions to achieve more inclusive growth; create a fair regulatory environment that enables investment, trade and enterprise development in an equitable and socially responsible manner, and to promote a professional, ethical, dynamic, competitive and customer-focused working environment (the dti, 2017a:15).

Industrial policy implementation challenges in the Department of Trade and Industry in South Africa