Patel looking for R200 billion in additional localisation

Trade, Industry and Competition Minister Ebrahim Patel says that his department’s localisation strategy is gaining increasing traction, and has now received the support of 30 local chief executives from companies such as Clicks, Anglo American and Sasol.

Presenting his departmental budget speech to parliament in May, Patel said the strategy would see the localisation of up to R200 billion of additional production over a five-year period.

“An initial list of 42 products have been identified for localisation, and R240 million has been raised from the private sector to appoint technical experts to drive localisation, bringing together industrial engineers, supply-chain managers, experts in dealing with illegal imports, and project managers,” he said.

Patel said that government would also increase its exports through trade with the rest of the world.

“Trade policy needs to be a source of new jobs and expansion of the industrial economy. Last year, we secured a trade surplus of R270 billion, the largest on record, mainly due to a decrease in import levels, and exports to the US increased in absolute terms.”

“Agricultural exports have grown and so too the export of manufactured products such as catalytic converters used to reduce carbon emissions in cars and trucks, mining equipment, and cosmetics.”

“Our quantitative study shows that under the right conditions, meeting localisation targets within the next five years is possible for a number of key manufacturing sectors including paper, wood, motor vehicles, ceramic products, glass, basic iron and steel, and food and beverages. But other manufacturing sectors are highly unlikely to meet localisation targets without significant policy support and macroeconomic tailwinds. These sectors include printing and publishing, textiles, clothing, footwear, rubber and machinery and electronic equipment,” a recent Intellidex research report stated.

Small business development minister Khumbudzo Ntshavheni said that she was in talks with the Department of Trade, Industry and Competition to designate more products under the 100% local content category to support SMMEs in the local manufacturing sector.

Ntshavheni said: “South Africa runs an open economy, which means it competes internationally and products are allowed to be imported into the country. However, the Department of Trade, Industry and Competition designates certain products for 100% local content, which means that products that are produced in other countries in certain categories cannot be allowed into South Africa because the products that must be in the country are those products that are produced locally.”

“For instance, we are working with the Department of Trade, Industry and Competition to designate more products for 100% or 80% local content to minimise the entrance of other products in the country. In addition, we are working with the South African Revenue Service and customs to make sure that those products that are designated for 100% local content are not allowed arrive on our shores so we can protect local companies.”

She said the department’s primary responsibility as a department is to ensure that SMMEs in this country who are operating in the manufacturing space can produce products that are of good quality which are also competitive in terms of pricing to ensure that products that are made outside of the country do not find traction with our consumers.