Is your business compliant with localisation requirements?

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Luncedo Mtwentwe AGA (SA), Managing Director of Vantage Advisory, explains

What is the purpose of localisation policy in South Africa?

The localisation policy in South Africa has received a lot of backlash from the private sector in terms of its implementation, but if it is implemented correctly, its purpose is to stimulate the local economy and create jobs via government spending on goods and services that have been produced locally or have local value add.

How is it different from BBB-EE?

Localisation policy emanates from the Preferential Procurement Policy Framework Act (PPPFA). This deals with public procurement processes and requirements of goods and services by all state organs.

What is the impact on localisation policy as a result of the Constitutional Court judgement regarding Preferential Procurement Regulations, 2017?

Following the Constitutional Court judgement issued on 16 February 2022 on the matter between the Minister of Finance and Afribusiness NPC regarding the 2017 Preferential Procurement Regulations, the new draft Preferential Procurement Regulations were published in the National Gazette for public comment; the closing date was 11 April 2022. We shall await for the Department of National Treasury to issue the new regulations that will be in line with the Constitutional Court recommendations. In the meantime, some of the organs of state were granted exemptions to procure goods and services using their procurement policy. 

How will you know as a business if your industry is designated for localisation in South Africa?

You can obtain the information of designated sectors on the National Treasury and Department of Trade, Industry and Competition (DTIC) websites.

Are there any exemptions granted on specific products  to not be subjected to local content requirements?

Yes, only for goods that cannot be manufactured locally and we do not have the skills and resources to produce them. Any organisation that does business with the state organs can apply for its imported goods to be exempted to DTIC and the department will issue them with an exemption letter. A copy of the exemption letter must be submitted together with the bid document when tendering.

What happens if you do not meet localisation requirements set on a tender document?

On a tender adjudication process, the bidder might lose the localisation points on the scoring of the tender unless the bidder can provide an exemption letter on those products being tendered for.

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