Department of Economic Development's R650-million procurement expenditure to boost township economy



lebogangMaile.jpgThe Department of Economic Development (DED) is finalising a partnership that will pump R650-million procurement expenditure into various townships across Gauteng, said Gauteng MEC for Economic Development, Environment, Agriculture and Rural Development, Lebogang Maile.

The partnership is spearheaded by retailer MassMart and will see the establishment of 500 retail shops within Gauteng townships. The project will be piloted across six Gauteng townships: Katlehong, Attridgeville, Sharpville, Randfontein, Alexander and Khutsong.

Unlike the prevailing trends that define expansion of retail businesses in townships, entrepreneurs operating in Gauteng townships will have a significant share in this development as owners, said Maile, speaking at the Department of Economic Development’s budget vote on 23 June 2015.

The R650-million spend is part of a larger R1,3-billion budget that the department is managing to help one-man and micro businesses to enter retail supply chains.

In a further partnership, the DED is striking a deal with the retailer Pick ‘n Pay that will secure spaza shops a foothold into Pick ‘n Pay’s distribution channels, giving them access to a variety of stock and merchandise at competitive pricing. Spaza shop owners can pool their resources and take advantage of bulk buying while also giving township entrepreneurs opportunities to participate in the Pick ‘n Pay franchise model.

Furthermore, to fulfil the commitment to allocate 30% of government’s procurement spend to township businesses, the DED has assisted many township businesses with ‘government-procurement readiness’ training, which entails information sharing about procurement opportunities, verification of BBBEE status, tax clearance and registration as suppliers on the provincial database.

Only 35% of vehicle components are produced locally

Meanwhile, despite considerable investment in South Africa’s automotive sector, import penetration in the industry is still too high - only 35% of the components and parts used to manufacture vehicles in South Africa are produced locally. Gauteng automotive companies spend nearly R8-billion a year importing automotive parts, components and accessories.

In partnership with Nissan, Gauteng launched the country’s second incubation centre in March this year. Through this facility, eight black-owned SMMEs will get an opportunity to supply parts and components for the Nissan Pick Up truck which is scheduled for production in 2018. An investment of R22-million was secured from the jobs Fund for this project.

The initiative is aligned with the government’s plans to increase black participation in the automotive industry. In addition, Nissan will be investing R200-million for this project which will create 27 000 jobs in the medium to long term.

The Automotive Industry Development Centre’s automotive supplier efficiency programme is a vital component of the DED’s plans to ensure the industry’s expansion with increased local manufacturing. Twenty two component suppliers will be enrolled for training on equality, costing, productivity improvement and supply stability. SMMEs engaged in the manufacturing of bumpers, foundry consumables, seatbelts, windscreens, airbags and moulded plastic components will be targeted for this programme.

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