Localisation for Africa
Product Designation
On the 29th of January industry had much to celebrate. The Department of Trade and Industry( the dti) officially announced the further designation of valves, manual and pneumatic actuators, electrical and telecommunication cables as well as components of solar water heaters for local production and content in the public sector procurement system.
The Minister of Trade and Industry, Dr Rob Davies has signed the necessary authorisation in terms of his powers under the Amended Regulations of the Preferential Procurement Policy Framework Act( PPPFA). The National Treasury will in due course circulate the instruction notes, which will regulate the environment within which government departments and public entities may procure designated products.
The instruction notes will have minimum local content thresholds.
Sectors already designated for local production with minimum local content thresholds are:
rail rolling stock, power pylons, bus bodies, canned / processed vegetables, certain pharmaceutical products, furniture products, and the textile, clothing, leather and footwear sector.
Public procurement is one of the key industrial levers in the Industrial Policy Action Plan( IPAP). The revised Preferential Procurement Policy Framework Act( PPPFA) regulations, which came into, effect on the 7 December 2011 empowers the Minister of Trade and Industry to designate industries, sectors and sub-sectors for local procurement at specified levels of local content.
The designation policy instrument is one of a suite of policy levers designed to maximise support for domestic manufacturing, others are the Competitive Supplier Development Programme( CSDP) which is led by the Department of Public Enterprises and governs the procurement programmes of State Owned Companies( SOC’ s) and the National Industrial Participation Programme( NIPP).
At the end of 2012 the National Cabinet signed off on a set of policies that tighten the NIPP framework, close existing loopholes and aligning the policy with other public procurement instruments. NIPP obliges overseas companies that have won tenders worth more than US $ 10 million to provide‘ offset’ obligations through investments in the domestic economy.
The dti is confident that local production of designated products will help to stimulate aggregate demand and strengthen support for the domestic manufacturing sector. In so doing, the deployment of procurement policy levers is an added incentive for foreign direct investment in the production sectors of the economy.
“ In the year ahead the dti will significantly scale up designations and other procurement policy levers in support of domestic manufacturing. This will be done at the same time as the dti deploys a range of other supportive and inter-locking instruments to raise the competitiveness of South Africa’ s manufacturers. This will be done in close collaboration with business and labour,” says Minister Davies. LFA
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