Photo by: Duane Daws
The Department of Trade and Industry (DTI) aims to improve the enforcement of localisation by having the Auditor General flag as “irregular expenditure” any flouting of buy-local procurement rules by government departments and State-owned companies.
Preferential Procurement Policy Framework Act regulations came into force on December 7, 2011, empowering the DTI to ‘designate’ the products that should be sourced locally. Already included on the list are items such as buses, uniforms, power pylons, canned vegetables, rolling stock, pharmaceuticals, furniture, set-top boxes, cables and solar water heaters.
Trade and Industry Minister Dr Rob Davies said on Friday that, once a product had been designated, it was no longer optional, but rather a requirement, for government departments and State-owned companies to buy local.
He said the intention was to sensitise the Auditor General to the matter so as to reduce “slippages” in the system, which the DTI was currently working to quantify.
The department was also hoping to encourage private companies to adopt localisation in an effort to support reindustrialisation and growth in manufacturing output and employment. Davies noted that a number of companies had already endorsed the vision of procuring more than 70% of goods and services from local suppliers.
Localisation was seen as a key instrument for lifting the domestic manufacturing sector out of its current doldrums, with manufacturing output falling 7.9% year-on-year in the July.
However, Davies said that the department was tracking a pipeline of productive investments worth R60-billion and that there was still material foreign and domestic investor interest in South Africa, much of which aligned with the rise in African economies.
He also dismissed the argument of opposition parties that government’s industrial policy interventions were failing, saying that manufacturing could have been decimated had government not intervened in recent years.
“[But] our interventions are not defensive, they are about growth in the manufacturing sector,” he said, adding that where the DTI had acted “we have made progress”.
Director-general Lionel October added that during 2013/14 there had been record investments in the automotive sector of R16-billion, which would not have materialised had it not been for State incentives. There had also, for the first time in two decades, been a rise in employment in the clothing, textiles and footwear sector.
“By the end of this five-year term [of government] one of the objectives in the Medium-Term Strategic Framework is that we should be having 5% growth . . . and if we are going to have 5% growth, manufacturing has got to be up there leading the pack,” Davies said.
The challenge, he said, was to “raise the game” through supporting beneficiation, pushing ahead with infrastructure programmes and raising the localisation levels.