September 22, 2011
The initial products to be “designated” by the Department of Trade and Industry (DTI) as ones that should be procured locally by all spheres of government and State-owned enterprises in line with the amended Preferential Procurement Policy Framework Act regulations would be products used in infrastructure programmes, as well as those regularly purchased by government departments, Trade and Industry Minister Dr Rob Davies revealed on Thursday.

Speaking to the business community in Cape Town about the second iteration of the Industrial Policy Action Plan (Ipap2) at an event hosted by Wesgro and Webber Wentzel, Davies stressed that the designation of products was part of a government plan to leverage procurement in order to raise domestic production and employment.

The main vehicle would be the new preferential procurement regulations, which become effective on December 7. These amended regulations allow the DTI to designate particular parts and products that will have to be procured locally by all organs of State and Davies intends that the effect will be felt immediately.

“The 7th of December is actually when the first group of designations takes effect, not the date that we start the work,” he said.

The idea behind the designation was also to stimulate South Africa’s struggling manufacturing sector, the economic importance of which should not be “underestimated” in a developing country such as South Africa. Manufacturing, Davies averred, should not be considered to be dispensable simply if other sectors in the economy are flourishing.

“The lessons of economic history tell us that there is no case anywhere in the world, at any time, of any country that has taken itself out of being an underdeveloped economy to become a developed economy without this being led by manufacturing,” said Davies.

Acknowledging the challenges present in the manufacturing sector as a result of factors such as the 2008/9 global economic crisis, the rand’s overvaluation (which was now rebalancing) and industrial action, Davies said that Ipap2 was attempting to address some of the structural issues around manufacturing, though in an economic climate that is itself not ideal…Read more.