9 December 2011
South Africa has put the buying power of the state firmly behind local manufacturers, with a new law now in force that allows the government to name sectors and products that will have to have a minimum level of local content to qualify for state procurement.
The amendments to the Preferential Procurement Policy Framework Act, which aim to boost local entrepreneurs while creating more jobs in the private sector, came into effect on Wednesday.
Launching the new regulations in Durban, Trade and Industry Minister Rob Davies said the first wave of designations marked an important milestone in the government’s efforts to support the manufacturing sector and reverse industrial decline.
The designated sectors for now are the manufacturers of buses, power pylons, rolling stock, TV set-top boxes, clothing, canned vegetables, footwear and leather products. Further designations will follow next year.
“Each designation will stipulate a minimum level of local content for the relevant sector,” Davies said. “Wherever relevant, the designations also set out specific recommendations for ensuring competition among domestic producers and value for money for the state.”
Davies said the regulations would also enable state entities to include as a specific tendering condition that only locally produced services, works and goods could be procured.
The National Treasury has led workshops to make supply chain officials aware of the new regulations.
“Supply chain practitioners are crucial implementation agents of government’s localization programme, given the quantum of capital expenditure budgets in the years ahead,” Davies added.
The designation follows just weeks after the adoption by the government, business, labour and social partners of a Procurement Accord which commits the parties to work together to increase local procurement as part of South Africa’s plans to create five-million jobs over the next decade.