Steel and Engineering Industries Federation of Southern Africa (Seifsa) president Mervyn Naidoo has called on government to urgently close the prevailing gap between its stated commitment to support industrialisation through localisation and the manner in which public procurement is being implemented.

“The problem is not the rhetoric,” Naidoo argued at a Seifsa event in Johannesburg on June 24, attended by government officials.

“The problem is the gap between what is promised and what actually happens on the ground,” Naidoo, who is also Actom CEO, said.

Speaking against the backdrop of ongoing deindustrialisation and amid warnings that South Africa risked losing its historical capability and capacity in the metals and engineering sector as imports surged, Naidoo described industrialisation as a deliberate policy choice.

Delivering on that choice, however, required not only clear policy intent, which Naidoo said was largely in place, but also “long-term consistency and disciplined execution” rather than policymaking that reacted to crises or short-term shocks.

“Competitive advantage is created. No country develops globally competitive industrial policy by hoping that market forces alone will deliver it,” Naidoo added, pointing to China, where manufacturing had underpinned the country's sustained period of economic growth and modernisation.

While welcoming recent initiatives to increase tariff protection for companies operating in the steel value chain, the Seifsa president argued that the two immediate policy challenges now were those of growing demand and lowering the cost of doing business.

Describing demand as the “oxygen” of industrial activity, he also argued that demand alone was not enough.

“Demand must be consciously directed where domestic capability and domestic capacity exist,” Naidoo said, while calling for public procurement to transition from the prevailing transactional model to one that was more long-term and strategic in nature.

Seifsa was particularly keen for such a procurement model to be implemented as government pursued its R1-trillion infrastructure roll-out over the coming three years, and would make the case for this new approach in its official input on the regulations arising from the Public Procurement Act, which were out for public comment until July 15.

The regulations are necessary to bring into effect the Public Procurement Act, 2024, which was assented to by President Cyril Ramaphosa in July 2024.

Various Seifsa members regularly report that government’s localisation commitments have failed to translate into procurement decisions at departments, municipalities and State-owned companies.

The second priority highlighted related to improving the cost structures confronting industry, particularly in the areas of energy and logistics, where South African manufacturers had experienced steep and sustained input cost increases over the past number of years.

“Companies cannot compete locally or globally while carrying structurally inflated costs,” he said.

The address was made just over a week after the Department of Trade, Industry and Competition published its Cabinet-approved Industrial Development Strategy (IDS), which had been met with a mixed reaction.

Seifsa itself described the IDS as strong in articulating broad principles and policy intentions, but thin on implementation detail, and said more consultation was needed to develop the strategy into practical sector-specific road maps.

“For the metals and engineering sector, this means focusing on the core enablers of competitiveness: affordable and reliable energy, logistics efficiency, infrastructure-led demand creation, effective trade measures, localisation, investment support and policy certainty.”