Localisation a key ‘policy tool’ for South Africa – Davies

05 April 2017

Localisation is an important policy tool for industrial development in South Africa and will assist in growing the economy and the manufacturing sector, Trade and Industry Minister Dr Rob Davies said on Tuesday.

Speaking at the 2017 Proudly South African Buy Local Summit, in Johannesburg, he highlighted that the policy stipulates that it is government’s preference that State entities buy locally manufactured goods.“It is a widely deployed policy tool. If government decides to source products that are locally made, it will support the enterprises that are producing those products in our own economy, while creating and supporting jobs,” Davies said.

He noted that the amendments to the Preferential Procurement Policy Framework Act have allowed government to designate certain products that have to be bought from locally manufactured sources, according to meticulous specifications.

He noted that 21 products have been designated for local procurement, with stipulated minimum thresholds of local content.“And there are more in the pipeline. Work is continuing on another range of products that will be subject to designations.He added that, if this policy tool was applied properly, individual enterprises and value chains would benefit significantly.

He noted that, if government were to offer international companies a tax incentive to set up manufacturing plants, allowing them to take advantage of preferential procurement by advancing localisation, “we will expect them to have a certain level of broad-based black economic empowerment recognition.

“Some of this, under the new [Broad-based Black Economic Empowerment] scorecard, will have to be earned in some form of enterprise and supplier development,” he said, adding that international companies needed to include black suppliers in their value chain.

The Black Industrialists Programme will ensure that black entrepreneurs are meaningfully involved in the manufacturing sectors.

“Instead of targeting 100 black industrialists within two years [as had been originally intended], we will reach that target in the next financial year ending March 2018,” Davies said.

The public infrastructure build programme, operating under the slogan ‘Turn South Africa into a Construction Site’, has led to a significant increase in investment in building and construction. The industry has grown sevenfold since 2000, with investment increasing from R55-billion to R380-billion,” he said.

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