23 February 2010 | Kim Gurney, in Johannesburg
The South African government has outlined plans to increase local procurement and supplier development.
The changes detail how the government’s R846 billion (£71.3 billion) infrastructure spend for the next three years will be used to benefit the domestic economy.
Currently, purchasing is carried out “ad-hoc” and does not “deliver adequately on either value-for-money or key industrial policy objectives”, the document said.
Under the reforms, published in an Industrial Policy Action Plan (IPAP2), public bodies will be designated large, strategic or repeat procurement projects. These organisations will be expected to work with South Africa’s Department for Trade and Industry to ensure tenders support increased local purchasing and supplier development.
Other measures implemented in the plans include boosting Broad Based Black Economic Empowerment (a policy to spread wealth across as broad a spectrum of South African society as possible) and building domestic production and vendor development requirements into tenders with more than US$10 million (£6.49 million) of imported content.
The government has identified freight and commuter rail, buses, digital set-top boxes and aerospace components as sectors where it plans to use procurement to support the economy.
Trade and industry minister Rob Davies said the overhaul was designed to “sequentially increase competitive local procurement and supplier development opportunities, minimise ‘leakages’ from the domestic economy, and support meaningful Broad Based Black Economic Empowerment”.
Dr Douglas Boateng, CEO of supply chain management consultancy Panavest International, said the proposals were a start but “the proof of the pudding was in the eating”. He added: “It’s good in principle but the details are still missing. It’s not about the ideas; how are they going to implement it?”
Boateng added he hoped the consultation process would include supply chain professionals to avoid procurement objectives being subsumed by industrial policy.
IPAP2, which will run from 1 April, is now open for public comment.