While Department of Trade and Industry (DTI) Minister Rob Davies believes that public procurement is key to developing a competitive domestic supply base, he is of the view that progress on the issue, first raised in the Industrial Policy Action Plan (Ipap) 1, has been slow, but that recently there has been significant progress.

These views were expressed at a recent Trade and Industry Portfolio Committee public hearing process, in Cape Town.

The development of public procurement instruments will improve efforts in procuring entities (particularly State-owned entities and parastatals) to scope out in greater detail which components and subcomponents need to be imported, with a view to what can be localised, and this will then improve the efficiency of the procurement process. This is because localisation requires a far more detailed specification of what needs to be procured, indicating more clearly where cost savings can be made by standard- isation, and limiting the scope for introducing unnecessary requirements into the procurement process, he explains.

“A reading of the submission by the eThekwini transport fleet procurement programme is reason to be optimistic about the powerful potential for using procure- ment to build domestic industrial capacity. The localisation of fire engines has resulted in lower costs to the fiscus,” he added.

The eThekwini municipality has used its transport fleet procurement in the best interests of domestic production and supply capacity without compromising price, quality or other policy aims. The model can serve as a useful case study on how a carefully designed and calibrated procurement process, in this instance for vehicles, can be used to leverage local production and strengthen domestic supply chains, he says.

Conceding that the progress of this leveraging has been slow, Davies points out that, in terms of section five of the Preferential Procurement Policy Framework Act, 2009, the draft Preferential Procurement Regulations, 2009, is being evaluated by a task team comprising members of the Economic Development Department, the National Treasury and the DTI. This team will set out an agreement on a new set of regulations to the Act, which, subject to Cabinet approval, will create a significant platform to advance the aims set out in Ipap 2 with respect to public procurement.

“In this regard, it is disappointing that private-sector bodies have chosen to remain silent on the issue of the potentially positive role that their procurement can play in the process of supporting and building domestic production capacity and supply chains. Many private-sector players, particularly large conglomerates and retail chains, can complement a public-sector procurement programme by ensuring proactive support for local production. I wish to reiterate this challenge to the private sector and call on Business Unity South Africa and other business organisations to join government in support of South African producers,” he emphasises.