South Africa's two largest State-owned companies (SoCs), Eskom and Transnet, would soon launch the second phase of their local-procurement plans, with targets for increasing the local content in their multibillion-rand investment programmes.

The Economic Sectors and Employment Cluster, which gave a post State of the Nation briefing on Thursday, indicated that the move, along with efforts to boost local procurement across government departments in line with new procurement rules under the Preferential Procurement Policy Framework Act (PPPFA), were designed to stimulate domestic demand, especially in light of the instability in international markets.

It added that the Passenger Rail Agency of South Africa (Prasa), which would receive substantial fiscal support over the coming two decades to recapitalise its rolling stock, expand its depots and modernise its infrastructure, had committed to a minimum of 65% local content for its rolling stock.

"In addition, an agreement on local procurement has also been reached with business, and ways to develop local suppliers more proactively are currently being explored," the cluster said.

The SoCs, whose investment plans are core to the R850-billion infrastructure roll-out due to be deployed over the coming three years, had been asked to review their procurement policies and align them to the New Growth Path's aspiration to build industrial capacity around their build programmes.

The plans would also need to be calibrated to the new PPPFA regulations, from which the SoCs had received temporary exemption - the new rules came into force on December 7, 2011, and the SoCs had until December to adjust.

Under the regulations certain products had been specifically designated for local procurement by government departments and the SoCs.

Besides the drive to raise local content, the cluster pointed to other industrialisation programmes, including the new Manufacturing Competitiveness Enhancement Programme (MCEP). Under the scheme a total of R25-billion would be set aside over the coming six years for a variety of programmes to support the manufacturing and farming sectors in particular.

The 2012 Budget allocated R5.8-billion to the MCEP and a further R2.3-billion would be deployed in support of the proposed new special economic zones, supporting legislation for which was currently out for public comment.

Further tax relief was also being considered for businesses that invest in these zones, including a reduction in the corporate income tax rate and support for employment and training expenses.

The cluster also announced that the Automotive Investment Scheme had approved 92 projects, seven for final car producers and 85 related to component manufacturers.

The projected investment resulting from these approvals was close to R9-billion based on incentives of R2.5-billion and would create over 7 000 jobs directly.