Media statement on Local Procurement Accord

31 Oct 2011

A Local Procurement Accord was signed today in Pretoria that committed the main economic groupings in South Africa to work together to increase the levels of goods and services bought from local producers. 

The Accord sets an aspirational target of 75% local procurement and identifies a number of immediate steps that will be taken by the social partners towards achieving the goal as part of efforts to increase jobs and deepen industrialisation.

The Accord was the result of discussions conducted under the New Growth Path and was signed by representatives of business organisations, trade unions, community organisations and a number of Ministers. The Ministries of Economic Development, Finance, Trade and Industry, Labour, Energy, Public Enterprises and Rural Development were actively involved in the discussions.

Business delegates included those from large companies as well as small businesses. All three labour federations (Congress of South African Trade Unions, Federation of Unions of South Africa and National Council of Trade Unions) were represented. Community representatives were drawn from women, youth, cooperatives and civic formations.

The Accord contains commitments by each party, as well as a monitoring and evaluation mechanism to ensure that the goals of the Accord are met.

At the signing ceremony today, Minister of Economic Development, Ebrahim Patel, welcomed the Accord.

"This is a boost for local industry and for jobs. The Accord brings together the efforts of the public and private sectors and will direct billions of rands to local manufacturers. It must go together with other efforts to improve competitiveness, skills development and better economic infrastructure, in order to achieve our goal of five million new jobs by 2020," Minister Patel said.

"This Accord is one of a series of agreements in which social partners commit to work together to achieve the goals of the New Growth Path. South Africans are drawing together to achieve common national objectives," he said.

In the Accord, government committed to:

• Significantly expand the value of goods and services it procures from local producers, using new regulations that will come into effect on 7 December 2011
• Identify the products that it will designate so that only local producers qualify to produce these. Initial indications are these would include buses, power pylons, railway rolling stock, pharmaceuticals, set-top boxes for televisions, uniforms and other clothing products, certain food products and office furniture and school furniture.
• Adopt a public South African Bureau of Standards standard to define and identify local content in various product categories and
• Use the large infrastructure-build programme to support and create local supplier capacity and work with such companies to produce for export markets.

Business committed to:

• Develop company-level procurement strategies that will analyse existing supply-chains to identify opportunities to increase buying from local suppliers. The 84 largest companies have agreed to drive the effort in the private sector to improve localisation. These companies will report annually on their targets and achievements
• Use the newly-created South African Supplier Diversity Council to support smaller local manufacturers of goods and producers of agricultural products and services
• Support the setting of conditions on companies who benefit from state contracts that will commit them to improve localisation of their own supply-chains, invest in skills development and new technology and undertake efforts to improve overall competitiveness and expand their markets
• Increase levels of investments in areas identified for local procurement, eliminate collusive and unethical pricing practices in public tenders and promote competitive pricing policies and quality products so that citizens receive value-for-money

Organised labour committed to:

• review its own supply-chain in the procurement of goods and services to identify products that can be sourced locally
• work with union investment vehicles and worker retirement funds to align their mandates to support local procurement strategies, including through promoting greater levels of investments in companies who will benefit from the state's local procurement policies
• promote better knowledge and education of labour trustees on retirement funds
• support investment in development bonds that are issued by public entities that will promote infrastructure investment, and so doing, provide support for the localisation effort.

Community representatives committed to:

• strengthening cooperatives and other social economy enterprises including small-scale farmers, craft and creative enterprises and home industries and
• increase public awareness of the buy local campaign, including through work undertaken with churches and other faith-based organisations, women and youth groups.

In addition to these specific commitments, business organisations, trade unions and community organisations committed to ensure their stationery, office furniture and promotional items such as t-shirts and other clothing items are produced locally. They will also strengthen the Proudly South Africa campaign.

A high-level committee will be set up to meet every six months to review progress, receive reports from each constituency on steps taken and the impact of such steps and consider creative ways to achieve the outcomes of the Accord.

Statement issued by Oupa Bodibe, Economic Development Department, October 31 2011

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