Johannesburg - The local procurement accord, which aims to promote the buying of South African goods and services, should now be presented as an instruction rather than in the form of an appeal or advice, Trade and Industry Minister Rob Davies said yesterday.
Davies told Business Report that, although the aspirational target of 75 percent local procurement was a good move, the government and public entities should now be obliged to procure at this level.
The accord, signed in October 2011, is intended to commit business, labour, the government and communities to a partnership to increase domestic procurement and support local manufacturing capacity with the hope of creating 5 million jobs by 2020.
The first step in this process was the amendment of the regulations for the Preferential Procurement Policy Framework Act, which came into effect on December 7, 2011.
These regulations designate specific sectors, sub-sectors and products that are subject to mandatory local procurement rules for public entities.
Speaking on the sidelines of the National Localisation indaba in Durban, Davies said the government was entitled to set up such procurement rules.
“We can do this under international rules under the World Trade Organisation (WTO) because we have not signed the optional protocol on government procurement and we will not sign it, because we still want to support local procurement,” Davies said.
“We will be setting higher targets of local content and it will be no longer an advice or appeal but an instruction to all levels of state and all public entities that they will be obliged to procure at a set level.”
Davies added that these rules were supposed to apply to regular purchases made by the government for items such as food, uniforms, medicines, railway locomotives, wagons and electricity transmission equipment, among other supplies.
Davies said the government could not impose these regulations on everyone else, especially under some of the WTO regulations.
“We can only incentivise, support, encourage and cajole.”
He said in the automotive industry the Department of Trade and Industry could apply an incentive and encourage players to see the advantages of local procurement.
Davies told the host of the indaba, the Durban Automotive Cluster, that the automotive industry was one of the biggest manufacturing sectors in South Africa.
Through the Automotive Investment Scheme, the department had invested about R22.5 billion in 193 projects.
Through the scheme component manufacturing had managed to create 7 079 jobs from 177 projects with original equipment manufacturers creating 2 674 jobs from 16 projects.
He said the biggest focus on the continent was industrialisation and South Africa could not afford to be left behind.
Speaking about how the automotive industry could benefit most from local procurement, Davies said this could be done through component manufacturing.
“We have done designation in this sector through bus bodies, and also we have indicated that we are doing work towards yellow fleet, which will include companies that specialise in earth-moving equipment,” the minister said. - Business Report