Business is failing to contribute enough to the drive towards localisation, which is central to the government’s push to industrialise and expand the domestic economy, said Trade and Industry Minister Rob Davies.
Commitments to local procurement were made in an accord between the government, business and labour. However, “progress by the private sector has been minimal. Greater impetus to convert high-level commitments into concrete actions is required”. Much stronger processes were needed “to secure private sector commitments to local procurement in key sectors such as mining, construction, health, retail and so forth,” said Davies.
The failure by provincial and local government to promote local procurement meant that “significant leakages from the economy persist”.
He said the initiative had had negative consequences, such as excessive premiums for localisation. Vigilance was also required to prevent “ongoing import fronting” and government oversight of large and strategic procurements was necessary to better monitor costs, technical specifications and technology spillovers.
The Department of Trade and Industry has initiated a number of measures to accelerate local procurement, including amending the regulations under the Preferential Procurement Policy Framework Act so that the department could designate industries for local procurement.