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New supplier development body to stimulate infrastructure localisation

New supplier development body to stimulate infrastructure localisation

Photo by Duane Daws

24th April 2014

By: Terence Creamer

Creamer Media Editor

  

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A new business association has been formally launched to link foreign suppliers of equipment to State-owned companies (SoCs) with large and small domestic companies in an effort to improve prospects for higher levels of local content in South Africa’s multibillion-rand infrastructure programme.

Known as the Industrialisation Supplier Development Association (ISDA), the organisation was unveiled during a televised breakfast in Sandton on Thursday, hosted by SABC 2 and The New Age newspaper and addressed by Public Enterprises Minister Malusi Gigaba.

The initiative emerged following a supplier development summit in 2013 and Gigaba said it was designed to support government’s plan to use the ongoing infrastructure programme to stimulate industrial development and the creation of black industrialists.

South Africa planned to invest R827-billion on energy, transport, water and social infrastructure over the coming three years and higher levels of local content were already being stipulated in tenders being issued by SoCs such as Eskom and Transnet.

In addition, government had adjusted regulations associated with the Preferential Procurement Policy Framework Act to enable it to designate good and services that must be produced locally to be considered for purchase by government and the SoCs. There had also been an effort to harmonise the National Industrial Participation Programme and Competitive Supplier Development Programme to ensure industrialisation offsets from all large public procurement programmes.

“We will change the discourse on transformation when we no longer focus only on tenders and begin to put in place the framework for deeper and more meaningful [economic] transformation that helps build black and women industrialists,” Gigaba said.

He urged the ISDA to assist in creating a network that could help government realise its 75% localisation aspiration for public procurement.

ISDA chairperson Thabiso Taaka said the organisation had been structured in such a way as to ensure the inclusion of small businesses and to put both small and large South African manufacturers in contact with the original-equipment manufacturers (OEMs) looking to increase their domestic sourcing.

“The ISDA is a network that brings together SoCs, local and foreign OEM and smaller companies with the view of ensuring that supplier development becomes a national movement,” Taaka enthused.

GE South Africa CEO Tim Schweikert, who participated in a panel discussion with Gigaba and Japanese Ambassador Yutaka Yoshizawa, highlighted the fact that about 70% of the inputs for GE’s industrial products, from locomotives to aircraft engines, was sourced from third-party suppliers, including small manufacturers.

Schweikert also revealed the US multinational planned to establish a ‘supplier development vehicle’, backed by R200-million of GE seed capital, which the company hoped could attract up to R3-billion-worth of further funding.

“The idea of the fund is to provide all the financing and business development aspects of helping small and medium enterprises.”

GE was also planning to establish a R500-million customer innovation centre, staffed with 100 engineers, to work with large and small manufacturing companies to help upgrade industrial processes and enable them to supply into the bigger group.

Edited by Creamer Media Reporter

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