Business Report
*Accord sets 75% target for procuring goods made in SA* *Ayanda Mdluli, Business Report, Johannesburg, 1 November 2011*Leaders from business, the government and organised labour signed an accord yesterday that sets a target to procure at least 75 percent of supplies from locally based companies to protect and create jobs and enterprises.
The accord is one of the latest steps taken to achieve some of the aims of the New Growth Path, which hopes to create 5 million jobs by 2020.
The accord identified a number of immediate steps to be taken by the social partners to achieve the goal as part of efforts to increase jobs and deepen industrialisation, Economic Development Minister Ebrahim Patel said.
The accord was a result of extensive engagement between large and small businesses, the government and civil society. An agreement was reached to ensure that all the main economic groups spent more on the local economy, skills development and infrastructure.
The Departments of Economic Development, Finance, Trade and Industry, Energy, Public Enterprises and Rural Development were actively involved in the discussions.
Patel said the participation of both the public and private sectors "will direct billions of rands" to locally made goods.
Trade and Industry Minister Rob Davies said the accord would multiply the effect through commitments made by big business. "The government is on track to change the profile of purchasing decisions."
Investors had to understand that they could replace imports with products manufactured in South Africa, Davies said.
Fifteen companies with a combined annual turnover of about R350 billion pledged their support in the accord.
"Further companies will be recruited from the largest procurers of goods and services in the economy, in support of this initiative, and a target of at least 25 companies by March 2012 is being pursued, rising by at least 10 companies per year," the accord says.
Business will increase investment in viable business opportunities that may emerge as a result. Business will also "investigate potential linkages, evaluate and develop multiplier opportunities among firms to effect economies of scale and increase local manufacturing output and competitiveness in specific value chains", it reads.
Oupa Bodibe, the chief director of specialist sectors at the Department of Economic Development, said it was as yet unclear how much businesses and the government procured from local suppliers.
"We are trying to get information from across the sectors in the economy," he said.
However, he said it was established that there was a huge influx of imports, including capital goods, clothing and labour intensive products.
The accord has been signed at a time when the government and unions are embroiled in a bitter battle to ensure more stringent conditions are imposed on US retail giant Walmart after it bought a controlling stake in Massmart.
On October 10, Cosatu called for Massmart and other local retailers to meet a 75 percent quota for local products.
Finance Minister Pravin Gordhan said supply chains across the world were changing and new opportunities in the value chain should be identified and explored.
Gordhan added that the procurement process for the state had been damaged by fraud and corruption. Business would work with the state to eliminate these practices.
Some goods procured by the state were inflated. For example, if the market value for a laptop was R9 999, the state would pay R19 999, he noted.
Business Unity SA chief executive Nomaxabiso Majokweni said the accord was an indication that the partners had moved beyond talking and were at a point of action.
Businesses committed to revisit their supply chain policies and procure from local suppliers in an effort to create and develop more enterprises. These firms would be able to supply competitive products that were produced efficiently and of sufficiently high quality.
"We will up our effort to source locally produced goods."*From: http://www.iol.co.za/business/business-news/accord-sets-75-target-for-procuring-goods-made-in-sa-1.1168655*
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