In many Western governments, a trade & industry department is viewed as representing the interests of business and pushing business-friendly policies.
In SA, the role of the DTI has traditionally been more complex: until recently, it attempted to achieve a balance between the interests of companies and labour. Since Mandisi Mpahlwa took over the department in June 2004 it has also attempted to balance business interests with the urgent requirement to uplift the so-called second economy.
In this vein, DTI policies and strategies - from empowerment legislation to regulatory requirements - are geared as much to the benefit of the poor and marginalised as they are to the business community.
Whichever way one looks at it, Mpahlwa's more activist DTI is having an impact on the way companies do business and his agenda has required corporate SA to pay close attention to policy stemming from his ministry. Under his predecessor, Alec Erwin, the department was widely criticised as being an academic think-tank whose policies yielded little benefit and had only a marginal impact on business.
The introduction of black economic empowerment (BEE) legislation and the BEE codes of good practice is undoubtedly the most far-reaching of the DTI's policies. Every company is now required to apply BEE measures to a wide range of business activities, from procurement to training and, crucially, ownership.
All but the mining industry, which has its own charter, will have to adhere to the codes, which prescribe minimum percentages of BEE adherence and introduce a complex and confusing scoring system. Like it or not - and many traditionally white firms are being dragged kicking and screaming into the policy environment - the legal backing Mpahlwa has given to empowerment legislation is requiring a fundamental overhaul of company policies.
Sectors that were previously unaffected by charters have been included in the net and previous sectoral charters have had to be aligned with the new legislation and codes.
It's work in progress; the latest draft of the codes was released only this week, fuelling further uncertainty over the policy and requiring that many BEE deals will have to be reworked in order to score well.
Mpahlwa has added to the complexity of the policy by heeding calls to encourage more broad-based BEE structures at the expense, critics argue, of black entrepreneurs and their ability to accumulate capital.
Furthermore, a vast bureaucracy of ratings and verification agencies will have to be established to ensure successful implementation and maintenance of the BEE framework.
In so far as broad-based empowerment is seen as improving the lot of SA's poor and unemployed, it will fit in well with Mpahlwa's important role in government's Accelerated & Shared Growth Initiative (Asgi), the programme designed to accelerate economic growth and job creation. Mpahlwa has the Asgi task of reviewing the impact of labour policies on small business and identifying key sectors for government support and investment.
It's a sure sign that supply-side incentives, so frowned upon by government's previous Gear policy, are back in fashion. Mpahlwa has indicated that four key sectors will be targeted: probably tourism, chemicals and agricultural processing; and more certainly business process outsourcing (call centres), for which R200m has already been set aside in incentives and support measures.
Identifying priority economic sectors is a controversial strategy . But Mpahlwa seems undeterred in his drive for a more interventionist industrial policy.
As regards labour policy, the DTI looks set to identify a restrictive regulatory environment as the key obstacle to the growth of small and medium enterprises. If Mpahlwa decides to recommend relaxing the more stringent labour and tax rules, as seems likely, he will come into conflict with the trade unions and, to some extent, the department of labour.
The activist DTI has not limited its agenda to "second" economy issues. While handling big issues such as international trade negotiations, it has gone about strengthening the capacity of most of the 11 agencies under its aegis, such as the competition commission and tribunal, the microfinance regulatory council and Khula Enterprise Finance, which provides loans to small, medium and micro-enterprises. It has promised to toughen competition policy, redraft the Companies Act, reshape agencies aimed at supporting small business and review trade accords, particularly a new deal with China.
Clearly, this minister will not always work for business's interests. But Mpahlwa has elevated trade and industrial strategies to the centre stage of economic policy, where they belong.
