The Commission of Enquiry into Policy relating to the Protection of Industries, also know as the Viljoen Commission, sat in 1958. They concluded that, in South Africa, an economy based soundly in primary sector industry (agriculture and mining.), could only provide employment for the rapidly expanding population by intensifying secondary sector economic activity at a constant rate. The recommended a program of Import Replacement/Import Substitution as the most effective industrialization strategy. They also emphasized the importance of encouraging exports as well as inducing foreign capital inflows, although to a far lesser degree that that of their importation policies. The commission instituted a series of import tariffs and an economic quota system.
The supporting policy of export promotion was never taken fully into account. As a result of this, many South African manufacturers undertook a program of high-cost, import intensive production processes. Needless to say, this had a negative effect on the South African economy, a problem exacerbated by the 1985 Debt Crisis. The increase in domestic economic activity was accompanied by a similar increase in import demand. This put a great deal of pressure on the current account of the Balance of Payments and the value of the Rand, vis-à-vis the currencies of South Africa’s key trading partners.
Following the lack of economic ground gained by the Viljoen Commission, the government convened a study group on industrial development strategy. This group was headed by Dr. S. J. Kleu, who was at the time, the Chairman of the Board of Trade and Industries. The Kleu Report was commissioned in 1977, though they only presented their report in 1983. Dr. Kleu concluded that further development of the Import Substitution program could only be successful via the natural growth and development of domestic industry, and not as a result of increased import tariffs and trade quotas. They suggested that the economy be focused on Export Promotion as opposed to Import Substitution.
The Viljoen Commission had emphasized the protection of domestic industry whereas the Kleu Report proposed to stimulate domestic industry by advancing exports and finding new international markets for domestically produced goods.