LETTER: Less interventionism needed, not more

Ayabonga Cawe writes that “localisation aims to unlock short- and medium-term interventions that move in tandem with long-term plans to secure our energy supply and transform our network industries” (“Localisation can bring about structural change and place SA on a firmer footing”,  September 6).

The government has tended towards more interventionism, rather than less. SA would not be well served by opening the door to yet more of this in the form of centrally planned trade master plans. More resilient supply chains are desirable. But supply chains that are formed on the back of protectionism will ultimately fall apart when exposed to unforeseen, unpredictable events and market forces. Government-enforced localisation will only bring about artificially resilient supply chains.

I support Cawe’s insight that we should be changing “the terms of the engagement to one where we are no longer mainly an exporter of raw materials” — where we are no longer a colonial economy defined by “pit to port” accumulation paths. But to achieve this outcome we need serious skills — and industrial development. Instead of dictating subjective import and export quotas that will ultimately hurt small to medium businesses most, a better use of state resources would be to invest in training and education programmes that are devised and administered by international trade and manufacturing experts.

SA entrepreneurs and businesses are already hobbled by bureaucracy and a generally antigrowth environment — all the government plans and edicts in the world won’t solve this problem. It is not for central planners, by way of subsidies, to decide which products and businesses should win, and which should lose. The SA government and department of trade, industry & competition would achieve growth goals by removing the structural barriers that inhibit job creation and both local and foreign investment.

Organic, ground-up localisation is possible, but the arbitrary edicts of central planners are not the appropriate path to achieve it. Government-enforced localisation will only ensure arbitrary subsidies for those with the necessary connections, and various soft forms of corruption, to the ultimate cost of the consumer.

Chris Hattingh
Free Market Foundation

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