The National Treasury’s instruction issued yesterday ordering all government departments and state-owned enterprises to purchase their clothing, textile, footwear and leather from local manufacturers has been lauded as the panacea to save a textile industry that is teetering on the brink of collapse.
The instruction note comes after the preferential procurement regulations pertaining to the Preferential Procurement Policy Framework Act, which came into effect on December 7, last year. The regulation was pushed by both the Department of Trade and Industry and the Department of Economic Development to save the sector.
The directive, which was signed by the Treasury last month, will now force municipalities and government departments, including the SAPS, the SA Post Office, the Department of Defence, Transnet, Eskom, Airports Company South Africa and the Department of Health, to source their uniforms locally. These include shirts, trousers, overalls, shoes, boots, caps, hospital linen and other products from local textile, clothing, leather and footwear companies.
Accounting officers from government departments, municipalities and state-owned enterprises will be compelled to advertise procurement in the sector with the bidding condition that only locally produced goods with a stipulated minimum threshold for local production and content be considered.
All procurement documents are to be accompanied by the bidder’s declaration certificates for local production and content.
According to the Department of Trade and Industry, the stipulated minimum threshold for the local textile, clothing, leather and footwear sector is 100 percent.
Companies in the sector said they were encouraged by the implementation of the local content regulation.
The industry has in past years suffered major job cuts and endured a number of factory closures. Earlier this year, two companies, Seardel and Trubok, announced plans to retrench about 1 900 workers due to shrinking margins. JSE-listed Seardel, which planned 1 500 retrenchments, said this represented less than 5 percent of the company’s workforce. Trubok, responsible for 400 job losses, said it was restructuring.
Stuart Queen, the chief executive of Seardel, said yesterday: “We believe that this is an encouraging development. We welcome it and if the follow through in the implementation is there then it will surely provide a much needed boost to the local industry.”
John Haveman of KAP International, a manufacturer of industrial leather footwear, Glodina towels, linen and other products, said: “It is clear that this initiative could result in job creation and many other benefits, but we are unfortunately unable to quantify the extent of these benefits at this stage.“
Johann Baard, the executive director of Apparel Manufacturers of SA (Amsa), said while it acknowledged the implementation move, it was unlikely to save the industry from cheap imports from countries outside of South Africa.
Baard said this would be beneficial for some Amsa members who specialised in making clothes for parastatals such as SAA.
The Department of Trade and Industry has the right, as and when necessary, to request for auditor’s certificates confirming the authenticity of the declarations made in respects of local content.
The instruction note said that should the bidder not have enough raw material and need to import the material, “they will have to obtain a written authorisation from the Department of Trade and Industry”.
The copy of this authorisation letter should be submitted with the bid documents.
“Accounting officers must ensure that contracts are awarded at prices that are market related taking into account, among others, benchmark prices, value for money and economies scale,” said the note.
The Southern African Clothing and Textile Workers’ Union said the instruction note was a major step forward in the implementation of the local procurement regulation.
“The implementation of these regulations is a boost for local jobs in the ( clothing and textile) industry because it now directs millions in state spending towards the industry,” said the union’s general secretary, Andre Kriel.