Business Unity South Africa and Business Leadership South Africa recently presented research that suggests a more prioritised approach to localisation, a move that will see South Africa produce more products, create more jobs and ultimately grow the economy. Picture: Oupa Mokoena/African News Agency (ANA)
JOHANNESBURG - BUSINESS Unity South Africa and Business Leadership South Africa recently presented research that suggests a more prioritised approach to localisation, a move that will see South Africa produce more products, create more jobs and ultimately grow the economy.
The move to prioritise local production comes at a time when the country’s economy is facing daunting growth patterns that have been engulfed by the Covid-19 pandemic, which has created difficult trading conditions in most sectors.
The research on localisation, which was presented by Peter Attard Montalto from Intellidex, a research consulting firm that specialises in capital markets and financial services in Africa, scrutinised the viability of the proposed 20 percent import substitution.
He said the idea behind localisation was inspired by the government in discussions at the National Economic Development and Labour Council (Nedlac), where a 20 percent import substitution was proposed.
The viability of the proposed 20 percent localised output, and the question of whether there is enough capacity within government to see the idea come to life, is something even Montalto was sceptical about.
“Business in our survey showed scepticism on the capacity of the Department of Trade and Industry to understand the complexity of the issue across sectors,” he said.
Matthew Parks, Cosatu’s negotiator at Nedlac, said the trade union would reject such research as nonsensical, devoid of logic and not worth the money spent paying the researchers.
“South Africa is a highly industrialised, developed and diversified manufacturing economy. There is no product that we cannot produce and there are just a few we do not produce,” said Parks.
When asked if the proposal was doable, Parks was quick to affirm the capabilities of the South African workforce, saying the proposed target was far too low.
“The target is doable and far too low. Many of the targets are higher, eg 60 percent for clothing for the retail sector. Other are 100 percent in government.
“There are no goods that we cannot produce or develop the capacity to produce, and to produce so affordably. Many imports are subsidised by their governments and artificially cheap,” said Parks.
“These threaten local jobs and companies and thus cost the economy more,” he added.
“Cosatu and our affiliates are involved in many of the engagements, although not all.
“We have raised concerns where movement is not taking place fast enough,” said Parks
Busa chief executive Cas Coovadia said there was no set date for the implementation of the localisation initiative.
“We don’t want to rush this but will start implementing with some products as soon as we have done the necessary work,” he said.
“We are identifying specific products and sectors amenable to localisation and have identified ’champions’ in these areas and will facilitate interactions between businesses and stakeholders to put into place implementation plans,” he added.
When asked if there was enough capacity to see this idea come to fruition, Coovadia preferred that this question be directed to the Department of Trade and Industry.
The department was afforded the opportunity to respond to questions forwarded to them on several occasions, but no response was received by the time of publication.
The questions were as follows: How much money is being prioritised to implement the idea of localisation? Will there be enough capacity within the government and the department to see this idea become reality.
What happens when there is not enough variety in the market, or production is not meeting demand? How will you avoid a more stagnant economic pattern should this idea backfire?
Such idea must have contingency plans. What are they?
Elaborate on your efforts to run through a seamless integration of a more localised market.
Broadly explain how the budget will be spent. For what and how much?
We hope to have an update on this story containing the Department of Trade and Industry’s response.
investigations@inl.co.za
BUSINESS REPORT