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Weak Enforcement

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Weak Enforcement

Photo by Duane Daws

22nd May 2015

By: Terence Creamer
Creamer Media Editor

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The local manufacturing industry has generally been supportive of moves by the Department of Trade and Industry (DTI) to designate specific products for local procurement by the public sector.

However, industry has also repeatedly questioned whether the strategy is actually being implemented and enforced, with some executives arguing that locally manufactured products continually lose out to cheap imports in competitive processes run by the public sector.

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In announcing a further set of product designations earlier this month, the department responded to the anxiety by indicating that efforts would be stepped up during 2015 to improve compliance across all government departments and State-owned companies (SoCs).

Through the Preferential Procurement Policy Framework Act, Trade and Industry Minister Dr Rob Davies has the authority to direct government departments, agencies and SoCs to procure specifically selected products and services from local manufacturers, or providers. Over the past few years, a number of designations have been made, covering everything from transport and energy equipment through to canned-food products and uniforms.

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The newest designations, which have been unveiled together with the latest Industrial Policy Action Plan (Ipap), cover transformers, power-line hardware and structures, steel conveyance pipes, mining and construction vehicles and building and construction materials.

In the case of the building and construction sector, the DTI has indicated that the “first round” of construction material designations include cement, fabricated structural steel, pipes and fittings, sanitary ware, glass, frames and roofing materials.

But Davies has also acknowledged that the designation instrument is only as strong as the level of compliance by departments and SoCs, which, by all accounts, is currently weak. He insists that measures will be taken under the aegis of Ipap 2015 to ensure higher levels of compliance across all government departments and agencies.

Davies has outlined a three-pronged strategy to improve adherence to the designations, including making compliance an audit requirement. Detailed compliance guidelines are to be produced in collaboration with the National Treasury, which will guide the auditing and reporting frameworks.

Secondly, training and capacity building will be undertaken with institutions that lead public procurement and strategic sourcing and, thirdly, a monitoring and evaluation tool is to be developed for designated sectors.

“Across the whole range of Ipap interventions, local content requirements will continue to be strengthened wherever applicable – including in flagship success areas like the latest window of the Renewable Energy Independent Power Producers Procurement Programme,” Davies reports.

Besides the infrastructure programme, where the aim is to leverage the 18 so-called Strategic Integrated Projects being overseen by the Presidential Infrastructure Coordinating Commission to accelerate industrialisation, the DTI is also turning its attention to private-sector supply chains.

The department is particularly keen for the “linkages and multipliers that exist between mining and manufacturing” to be further developed.

The latest Ipap points to efforts to build working relationships with large mining companies, including collaboration on the development of new technologies to beneficiate the country’s mineral wealth.

Davies even argues that the revised black economic- empowerment codes will create the foundation for “building world-class engineering companies in the mining supply chain”.

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