Public sector driven localisation is a relatively new topic in South Africa . It depends heavily on the buyer ’ s ability to provide detailed forecasts of purchasing , often over long time frames .
Localisation for Africa
Comparing the priorities of private sector localisation with public sector localisation
by Dr Shawn Cunningham
In working with the metal sector to strengthen local supply chains , I have come across both public sector and private sector driven localisation . There are some interesting similarities ’ and important differences between these two approaches .
Private sector-led localisation does not refer to demand that is created through political or public sector pressure , such as a successful bidder in a Transnet tender wanting to create local value . Rather , this is classified as public sector-induced localisation . On the other hand , a pump manufacturer wanting to shift orders from China to South Africa in order to increase competitiveness or local content is clearly private sector driven .
In facilitating localisation I have often encountered vagueness on the part of “ buy local ” purchasers in terms of their requirements and objectives . By the same token , the abilities , competencies and capacity of our local manufacturing sector is neither visible nor apparent . It is very hard to identify local firms with unique capacity , equipment or process skills .
These two distinct groups of buyers have different objectives for localisation . The highest priority for public sector procurement strategies is securing local suppliers that can meet volume and quality commitments . Of course , broadbased black empowerment credentials are also important , but in many cases the ability to supply higher value products competently is more important .
Firms involved in public sector-driven localisation are often required to work closely with successful foreign bidders . Because public procurement is all about local value add , the competencies required and the ability to absorb foreign technologies is also important . Strangely , creating unique local capacity is often mentioned but not specially addressed .
I have also come across many private sector buyers that want to strengthen their local supply chain . Their main priority is a reliable partner who can strengthen their supply chain , not only by supplying with the right product quality at the right time , but also by developing new markets and competencies .
Buyers typically have two priorities : to make the local supply chain more flexible and responsive ; and to identify partners with whom new markets can be explored . Here , the ability to start small and then grow with demand is important . Perhaps most critical is that the local suppliers must be able to deliver good quality much faster than an international supplier can . Public sector driven localisation is a relatively new topic in South Africa . It depends heavily on the buyer ’ s ability to provide detailed forecasts of purchasing , often over long time frames . This means that buyers must negotiate with their first tier of suppliers to commit to local value addition . It often also involves centralising decisions that have been delegated in recent years .
For instance , for Eskom to commit to local valve procurement , the central buying department , the decentralised maintenance and site managers , and the subcontractors involved must all commit to localisation . It is therefore a slower process that involves many meetings , many reports , many questions and very few concrete answers about when orders will materialise .
Public sector driven localisation is a relatively new topic in South Africa . It depends heavily on the buyer ’ s ability to provide detailed forecasts of purchasing , often over long time frames .
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