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Trade and Industry on the implementation of the Local Content Policy

The implementation of the Local Content Policy critical in directing R76 billion worth of public contracts to the South African manufacturers

The implementation of the local content policy since 2011 has to date assisted in directing R76 billion worth of public contracts to the South African manufacturers. In the absence of the local content policy, this public money could have otherwise been used to procure imported products thus externalising the South African fiscus and supporting foreign economies and jobs. This was said by the Chief Director of Industrial Procurement at the Department of Trade and Industry (the dti), Dr Tebogo Makube during a briefing to the Portfolio Committee on Trade and Industry which took place in Cape Town, today.

Makube explained that local content was one of the public procurement and industrial policy instruments used by the government to leverage public expenditure to support industrial development and economic growth in the country. He also emphasised that the local content policy should not be viewed in isolation from other industrial instruments that are being used by the government to support industrial development in the country.

“The challenges encountered in the implementation of this policy are multifaceted and they range from the advertisement of designated tenders without local content requirements, lack of proper evaluation of bids/tenders in line with the local content requirements by some organs of state, the manipulation of the bid price to meet local content requirements, illicit importation of products which are supposed to be manufactured in South African in line with the local content policy. The lengthy time it takes to adjudicate tenders and place orders, sometimes negatively affect the operation and profitability of local manufacturers,” said Dr Makube.

Dr Makube also indicated that complaints have been raised by non-manufacturing bidders that they are being given inflated prices by manufacturers who also bid for the same tenders.

“This practice is both anti-competitive and anti-transformation That is an area we intend looking at together with the Competition Commission in particular and other organs of state such as the National Treasury,” noted Makube.

On the way-forward, Makube reported that the dti has availed R20 million over the medium term to the South African Bureau of Standards to continue with the local content verification. The government is also looking at other options to strengthen local content verification process.

The Department is also working with the Proudly South Africa (PSA) through the tender monitoring system to monitor tenders in line with the local content requirements. This includes working with the office of the Auditor-General to ensure that tenders which are designated for local content and production are audited and audit opinions issued by the latter. In closing, Dr Makube welcomed the gazetting of the Public Procurement Bill, which creates an opportunity to strengthen compliance on local content and the leveraging of public procurement to support transformation, economic and industrial development.

Source: Government of South Africa

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