A contrast of good and ‘sorry’ — how labour and business see Ebrahim Patel’s legacy in government

Ebrahim Patel, who has served in Cabinet since 2009 under two Presidents, plans to bow out of public service after the general election, with his impending exit drawing mixed views from business and labour about his legacy in government and shaping policy.

Patel first served in Cabinet in 2009 under the Jacob Zuma presidency as the Minister of Economic Development, a department which was later reconfigured as the Department of Trade Industry and Competition (DTIC) under the Cyril Ramaphosa presidency in 2019. Patel has since led the reconfigured department but plans to no longer serve under the incoming seventh government administration.

In a media statement, Patel said his decision to retire was prompted by a desire to spend time with his family and reflect on his years of active politics. Public Enterprises Minister Pravin Gordhan also expressed similar sentiments as he also plans to retire after the 29 May general election.

Trade and Industry Minister Ebrahim Patel in Parliament. 25 June 2019. (Photo: Jaco Marais)

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Patel is seen as a powerful figure in government as his focus during the Zuma and Ramaphosa presidencies was largely about expanding the role of the State in the economy and job creation, through public policies. This drew fierce criticism in business and investment circles, with Patel being viewed as an interventionist and promoting overarching state ownership of the economy.

Patel’s public popularity was further dented during the Covid pandemic and related lockdowns as he was seen as the poster boy for irrational rules implemented by the government. Patel defended the government’s decision to ban the sale of alcohol and cigarettes, t-shirts, sandals, and crop-bottoms, and prevent restaurants and e-commerce businesses from operating, which resulted in the loss of jobs and livelihoods.

A business source, who is close to investments and government policies, told Daily Maverick that Patel’s public policy approach and that of his Cabinet colleagues has “caused untold damage to South Africa’s economy and competitiveness.” “Patel’s legacy in government is also a sorry one,” the source said.

Patel’s focus has also been on driving localisation in flailing sectors of the economy such as manufacturing (mainly textiles), including public interest and Broad-Based Black Economic Empowerment clauses in company mergers and acquisitions, and promoting increased competition and economic inclusion in the economy by taking a hard-line approach to market abuses and concentration.

President Cyril Ramaphosa and Trade and Industry Minister Ebrahim Patel at the opening of the first Black Industrialists and Exporters Conference at Sandton International Convention Centre, Johannesburg. 20 July 2022. (Photo: Twitter / GCIS)

Patel has also been tasked with heightening South Africa’s global profile by using the government’s strength from existing financial and trade relationships to achieve geo-political and economic goals. He has done this through the BRICS coalition of countries and the African Growth and Opportunity Act.

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Labour is largely glowing about Patel’s track record and policy positions in Cabinet over the past 15 years. Arguably this is not surprising as it is largely believed that labour federation Cosatu asked Zuma — fresh from his election victory in 2009 — to appoint Patel as a Cabinet minister to increase the labour/union representation in government, owing to his strong roots in the Southern African Clothing and Textile Workers’ Union.

Said Matthew Parks, Cosatu’s acting national spokesperson and parliamentary coordinator, about Patel’s legacy:

“He [Patel] has remained true to his roots in his tour of Cabinet. During his tenure at Economic Development and later DTIC, he ensured labour had a seat at the table during critical negotiations affecting the lives of workers; he put in place through various programmes, the foundations for a more equal economy; and solidified the social partnership between government, business and labour that is key to growing the economy, creating jobs, and slashing poverty and inequality.”

Minister of Trade and Industry Ebrahim Patel at the Inaugural Worker Share Ownership Conference at Sandton Convention Centre, Sandton. 23 April 2024. (Photo: Gallo Images / OJ Koloti)

Harm on the economy 

Quarters of the manufacturing industry have been critical of Patel’s track record in managing public policy and the economy. His interventions, coupled with electricity and logistics crises in South Africa and the global economic decline, are largely blamed for the country’s de-industrialisation.

In South Africa’s steel industry alone, production at steel factories is estimated to have fallen by 1.3% a year between 2008 and 2023, while the number of jobs fell by 214,636, or 37.2%, since then. ArcelorMittal South Africa, which is Africa’s largest steel producer, is considering cutting 3,500 jobs.

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What pushed ArcelorMittal to consider shutting its steel operations and cutting jobs were policy blunders by Patel’s DTIC. The DTIC introduced a new preferential pricing system for scrap, a 20% export duty, and a ban on scrap exports that have given steel production via electric arc furnaces an “artificial” competitive advantage over steel manufacturers that use iron ore to produce steel. This means scrap metal traders who recycle steel are gaining an advantage over ArcelorMittal’s more intense operations such as Newcastle, which consumes heavy raw materials such as iron ore.

The Steel and Engineering Industries Federation of Southern Africa (Seifsa) — an industry body whose members include 1,300 companies, employing around 170,000 workers — has called for Ramaphosa to urgently intervene to correct the policy as “it seems that the DTIC seemingly does not have the capacity, nor the grasp of the broader implications of these developments.

“The matter is now beyond urgent and we urge the President and key ministers in the Economic Cluster to treat it as such, if we are to avoid a socioeconomic catastrophe of gigantic proportions in the metals and engineering industry which will reverberate throughout the economy and the continent, impacting the auto, motor, construction and mining subsectors of the economy and all who work in [them],” Seifsa COO Tafadzwa Chibanguza has warned. DM