A critical analysis of South African industrial policy and its impact on the domestic clothing and textile industry from 1993-2010.

Abstract

As a developing country South Africa is faced with mammoth tasks of both creating employment/jobs that require less skill to be able to absorb millions of job-seekers who are less skilled, as well as putting its economy in proper footing, through investment in continuous labor skills and technological upgrading, so as to compete in the global market characterized by trade liberalization. Unfortunately the 20th century trade liberalization drive caught domestic industry off-guard. Domestic industry was found wanting and job losses tide was triggered. The labor-intensive clothing and textile industry was severely affected. The most vulnerable sections of the society (unskilled/semi-skilled and women laborers) were dealt a terrible blow. The government developed an industrial policy that contained sector-specific intervention measures to rescue the sector. Initially, the clothing and textile sector benefited from export promotion drive expedited through General Export Incentive Scheme and Duty Credit Certificate Scheme. Later on, the government introduced the Clothing and Textile Competitiveness Improvement Program which intended to build domestic production capacity of the sector and make the sector globally competitive. This research intended to conduct a critical analysis of the South African government industrial policy and its impact on the domestic clothing and textile sector from the period 1993 to 2010. On the one hand evidence on the ground indicates that General Export Incentive Scheme and Duty Credit Certificate Scheme failed to salvage the sector through building its competitiveness and strengthen its employment creation potential. On the other hand, while the Clothing and Textile Competitiveness Improvement Program’s positive contribution towards addressing crucial challenges facing the clothing and textile sector is acknowledged, the evidence on the ground also demonstrated that some crucial pitfalls need to be addressed to enable the sector to become globally competitive and to realize its employment potential.