{"id":518732,"date":"2021-09-16T10:17:24","date_gmt":"2021-09-16T08:17:24","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=518732"},"modified":"2021-09-16T10:17:24","modified_gmt":"2021-09-16T08:17:24","slug":"government-moves-ahead-with-controversial-localisation-plans-for-some-products-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/518732\/government-moves-ahead-with-controversial-localisation-plans-for-some-products-in-south-africa\/","title":{"rendered":"Government moves ahead with controversial ‘localisation’ plans for some products in South Africa"},"content":{"rendered":"

Trade and industry minister Ebrahim Patel says the government’s industrialisation and localisation policies aim to build and upgrade domestic production to supply domestic and foreign markets, support broader economic development and promote employment growth.<\/p>\n

Patel has faced criticism in some sectors\u00a0after the government announced plans to designate more products<\/a><\/strong> under the 100% local content category to support SMMEs in the local manufacturing sector. It has also considered blocking some imported products that are not 100% local.<\/p>\n

Responding in a written parliamentary Q&A this week, Patel said that the localisation is not just a policy of his department but has ‘resounding support’ among South Africans who recognise the need to industrialise the local economy.<\/p>\n

“It is the policy of the administration and follows the commitment in the manifesto of the ruling party to stronger localisation as a pillar of its industrial policy. The commitment to localisation is included in the Economic Reconstruction and Recovery Plan of government,” he said.<\/p>\n

“The approach on localisation has also been unanimously endorsed by the business, labour and community representatives at Nedlac. They represent a large number of firms and entrepreneurs, workers in different sectors of the economy and organisations made up of representatives of various community interests.”<\/p>\n

Patel said an agreement made at Nedlac provides a quantitative target and a list of sectors and products. <\/strong>In these circumstances, the consultations on the South African approach to localisation were at the appropriate level at which consultations on policy matters usually take place, namely with social partners and with other government policy-makers, he said.<\/p>\n

He said that localisation was not an initiative unique to South Africa and that other countries had introduced similar policies.<\/p>\n

“It is what governments do to enable achievement of national objectives, and indeed there is today a growing consensus on the value of carefully targeted and well-implemented industrial policy measures.”<\/p>\n

He added that the localisation policies are consistent with South Africa\u2019s international trade obligations and that the very purpose of the new African Continental Free Trade Agreement is to reduce the over-reliance by countries on the continent on imports of manufactured products from elsewhere in the world.<\/p>\n

Criticism\u00a0<\/strong><\/p>\n

The Free Market Foundation (FMF) says the government needs to put its localisation plans on ice or risk hobbling economic recovery over the coming months and years.<\/p>\n

The think tank warned that these policies would lead to more isolationism. Instead of implementing policies that serve to act as further barriers to trade, South Africa should be at the forefront of using the momentum afforded by the new Africa Continental Free Trade Area (AfCFTA), it said.<\/p>\n

“The trade area will allow the country to both lower as many of its own duties and trade barriers as possible while encouraging other countries to do the same.<\/p>\n

“Of highest importance for South Africa specifically is the improvement of its ports\u2019 performance, and allowing private investment in both port and rail infrastructure – free from government political interference.”<\/p>\n

The think tank said that government could achieve localisation in two ways:<\/p>\n