South Africa plans to rely on localisation and other tools as part of its post-Covid economic reconstruction plan, says president Cyril Ramaphosa.



Answering a recent parliamentary Q&A, Ramaphosa said localisation is one of several tools in the economic reconstruction and recovery plan to improve the dynamism of the economy, promote investment, develop new markets, transform the economy, promote equitable spatial development and contribute to the development of a capable state.

“Localisation is pivotal in stimulating growth and transformation. It is about creating an enabling environment for inclusive growth, deepening the country’s industrialisation base and creating targeted transformation measures,” he said.

“It seeks to expand the economy to include more participants and to ensure that more parts of the population, including women, young people, black South Africans and the rural poor, can contribute to and benefit from growth.”

Ramaphosa said the government has already seen some success with its recent localisation policies, including in the textile industry, where it is now a requirement for entities such as the South African National Defence Force (SANDF) to purchase all of its uniforms from local producers.

He also cited recent investments in the agricultural and manufacturing sectors, including:

An investment of R1.7 billion by the SA Poultry Association as part of the Poultry Master Plan.
A R3 billion investment by Ford Motor Company of South Africa and a R10 billion investment by Mercedes Benz to expand plants in Port Elizabeth and East London.
Komatsu SA has made a R300 million investment in an engine remanufacturing plant.
“While the evidence suggests that our localisation efforts are on the right path, the challenge of growth and employment is nevertheless challenging and complex,” the president said. He said further public discourse on how government tackles these issues should be encouraged and welcomed.

Controversy

Trade and industry minister Ebrahim Patel has previously faced criticism in some sectors after the government announced plans to designate more products 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.

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.

“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.

“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.”