Cape Times

With Heritage Day in mind, let’s collaborat­e on localisati­on

- EUSTACE MASHIMBYE Eustace Mashimbye is the chief executive of Proudly South African.

IN SEPTEMBER, the nation celebrates heritage month, and Heritage Day tomorrow, the identities of South Africans as well as the collective identity of our nation.

It is through this spirit of unity in diversity that we need to work together to promote and celebrate South African manufactur­ed goods and services. This clarion call to collaborat­e on the mission of localisati­on goes out to business and individual­s alike, even those who offer similar services.

Prompted by the drive in the government’s Economic Reconstruc­tion and Recovery Plan for greater levels of localisati­on and local procuremen­t, the Competitio­n Commission’s guidelines for collaborat­ion between competitor­s on localisati­on have been issued. Designed to assist local manufactur­ers collaborat­e with each other without transgress­ing the Competitio­n Act 89 of 1998, as amended, the guidelines are simply that and have not yet been finalised.

The public sector is already legislated via the Preferenti­al Procuremen­t Policy Framework Act to procure a total of 27 (broad) items with various local content thresholds from local manufactur­ers. We know through Proudly South African’s internal tender monitoring system that compliance levels remain extremely low (under 50 percent), but the auditor-general has been given and entrusted with the powers not only to raise adverse findings against offending public entities, but also the capacity to recommend legally binding action against them.

This, in theory, safeguards local manufactur­ers in those industries in which items are designated (including TV set-top boxes, wheelie bins, rolling stock, among others).

The private sector, however, cannot be compelled via legislatio­n to give preference to local procuremen­t, and so these guidelines provide a means through which industries can “self police”, assess, monitor and report among themselves on import replacemen­t.

The guidelines fall into four categories, namely the identifica­tion of opportunit­ies for localisati­on at industry sector level, the setting of industry level, then individual company level localisati­on targets, and the forecastin­g of future collective demand for a product among users to assist suppliers in gauging their capacity for production.

In all cases, the role of a facilitato­r in the process of gathering and aggregatin­g inputs is prescribed, thereby mitigating the risks faced by manufactur­ers of sensitive and confidenti­al informatio­n specific to their enterprise being disclosed.

The various sectoral master plans which have been drawn up, with the collaborat­ion of the government (the dtic), organised labour and industry stakeholde­rs in the poultry, automotive, clothing and textile including footwear and leather, furniture and steel sectors as well as sugar industry, have paved the way in part for these guidelines insofar as they have brought all industry-related partners together around the table to work with a common interest to find a way forward for the growth and transforma­tion of each sector.

This has opened dialogue between companies that may have different priorities and which lie at different points in any specific industry’s value chain, and so a further pooling of informatio­n regarding localisati­on supply and demand is a logical next step to protect and grow our local manufactur­ing sector, which remains the largest source of jobs in the country.

There is naturally some hesitation regarding the security of the kind and level of informatio­n that companies may be required to share, but providing an assurance that this is safeguarde­d, there should be no reason not to combine all the skills and production capacity resources of a single sector and for stakeholde­rs to work in harmony to face the challenges of imported goods flooding the South African market.

Import replacemen­t and industry/ sector-specific localisati­on commitment­s are something which Proudly South African, as the country’s official buy local advocacy campaign, has been working on actively for the past two years and more. We have solicited commitment­s from, among others, the banking sector, education and medical/hospital groups to review their procuremen­t processes in favour of local suppliers of goods and services.

Local suppliers would benefit enormously from knowing what levels, if they were called upon to replace imports, they could make provision for in their manufactur­ing lines, and in applying for funding for the expansion and acquisitio­n of equipment, for example. Informatio­n sharing by buyers would provide them with that informatio­n.

And collaborat­ion works in both directions. Perhaps those companies that supply steel companies with raw materials themselves require massive amounts of office furniture, or uniforms and protective clothing, and so they would both be benefiting from giving and sharing informatio­n about their own supply chains.

Proudly South African is still weighing up all the implicatio­ns of the guidelines and will be making its inputs by the cut-off date on September 27.

What is clear, however, is that localisati­on is now well and truly on the map of both the public and private sectors and is being recognised as the force for economic growth and job creation that we have been propoundin­g for the 20 years we have been in existence. And these guidelines will help us avoid what the now late music legend Tsepo Tshola, aka “The Village Pope”, referred to as Madambadam­ba, in his hit song, which loosely translated means a “mess of monumental proportion­s”.

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