Local business gets a boost through procurement regulation

Government has made effective the amended regulations to the Preferential Procurement Policy Framework Act (PPPFA) that allows the department of trade and industry to designate sectors and products for local procurement by state entities.

Finance Minister Pravin Gordhan first promulgated these amendments in June.

The regulations enable all state entities to include as a specific tendering condition that only locally produced services, works or goods, or locally manufactured goods with a stipulated threshold for local production and content be procured.

A joint statement by the trade and industry and economic development departments said the “first wave” of designations that would become effective as from Wednesday were power pylons, rolling stock, buses, canned vegetables, clothing, textiles, footwear and leather products and set-top-boxes (that would be used to convert digital broadcast signals for viewing on analogue TV sets).

The statement said further designations would follow next year and emphasised that the procurement policy was not a static instrument that should be used mechanically or in isolation from other policy instruments.

It said that in keeping with the other components of the IPAP2 (Industrial Policy Action Plan 2) these designations would be the subject of regular monitoring, evaluation and “evolution”.

Both departments said the first designations marked an important milestone by government to reverse industrial decline with and in support of the private sector.

“The designation instrument serves to strengthen public procurement in support of the multipliers derived from reducing the trade deficit, strengthening and diversifying South Africa’s industrial base and to build up competitive value-adding exports onto the rest of the continent, high growth developing economies and traditional export markets,” the statement said.

The local procurement designations take place against the adoption by government, business, labour and community social partners of a Procurement Accord in terms of government’s overall economic policy called the New Growth Path, which has been driven by Economic Development Minister Ebrahim Patel.

According to the statement treasury has led workshops to make government supply chain practitioners aware of the new regulations.

“Supply chain practitioners are crucial implementation agents of government’s localisation programme given the quantum of capital expenditure budgets in the years ahead,” the statement said. — I-Net Bridge

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