Improving Local Procurement Essential for Emerging Markets

Improving Local Procurement Essential for Emerging Markets

Image via Flickr by ninahale

Local manufacturing and infrastructure play a big role in a nation’s ability to compete on a global platform. Domestic improvements and better local procurement systems are becoming the focus of many foreign aid programs. South Africa has several initiatives in place to boost the local economy, particularly in the manufacturing sector, to improve their place in the global marketplace.

Manufacturing in South Africa

Domestic manufacturing accounts for a rather small percentage of the South African economy with the automotive industry making up nearly half of all production. In 2011, revised Preferential Procurement Policy Framework Act (PPPFA) regulations allowed the Minister of Trade and Industry to request local procurement of specified products. Several sectors are already designated for domestic production and trade, including certain pharmaceuticals, canned vegetables, furniture, leather products, and textiles. Minister Rob Davies recently authorized similar programs for manufacturers of electrical and telecommunications cables, solar water heater components, and pneumatic motors.

Local Procurement Initiatives

“In the year ahead the department (of Trade and Industry) will significantly scale up designations and other procurement policy levers in support of domestic manufacturing,” says Davies. “This will be done at the same time as the department deploys a range of other supportive and interlocking instruments to raise the competitiveness of South Africa’s manufacturers.” Collaborating with business and labor agencies, South Africa has developed several policies to improve the national economy, including the National Industrial Participation Programme. This program boosts foreign investments by requiring any foreign company awarded contracts over $10 million “to provide “offset” obligations through investments in the country”.

According to Davies, the department is confident that these initiatives will “help stimulate aggregate demand and strengthen support for the domestic manufacturing sector”. At the same time, South Africa continues to strengthen their place in the global market.

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