Everyone wants to see SA’s economy grow, for it to attract more foreign investment, for new firms to be started and existing firms to grow, and for all of this to generate many more jobs.
All the evidence suggests that if we are to achieve growth and create the jobs we need, we must move towards greater global integration, not greater self-sufficiency.
Why then, when we so desperately need faster growth and jobs, is the government committed to a policy of localisation when it is clear that its actual effect is to be a brake on investment and growth? And why is organised business endorsing this approach, as it did when it was party to a National Economic Development and Labour Council (Nedlac) agreement that, while unenforceable, envisages a 20% decline in non-fuel imports over a five-year period?
The Centre for Development and Enterprise’s (CDE) most recent report, “The Seven Sins of Localisation: Can SA afford this costly policy?”, is based on a recent round table with experts and stakeholders to assess the case for localisation policies.
Localisation should be understood as an enforceable requirement or economic incentive that domestically produced goods be purchased in preference to imports. This applies both to the state and the private sector. It is reflected in preferential procurement rules for government and industrial master plans.
At the CDE round table there were strong voices in favour of localisation, and people who were earnestly looking for ways to make the policy work in the difficult circumstances in which the country, especially the manufacturing sector, finds itself.