State enterprises obliged to procure local content, reminds Davies



SA_flag.jpgThe procurement of goods that conform to local content requirements is not a recommendation for State entities, but a legal requirement, said Trade and Industry Minister Dr Rob Davies.

All organs of State are obliged to procure goods on the designated list and that conform to local content requirements, he said during a Portfolio Committee on Trade and Industry briefing.

A challenge is that some procurers do not know what is required of them… Procurement officers should seek assistance with local content verification, he said.

The Department of Trade and Industry (DTI) appointed the South African Bureau of Standards (SABS) to serve as the local content verification agency, in September 2012.

The local content verification office was officially launched in June 2013.

The SABS has since published the approved South African Technical Specification (SATS 1286) for the measurement and verification of local content.

“These standards protect businesses from shoddy verification agents. The private sector must approach the SABS to ensure that verification is done properly,” highlighted Davies.

Auditing and certifying by the SABS was designed to give the State proof that local manufacturers were benefitting from the local content requirements. The winning bidders in government tenders are required to have their local content declarations verified to ensure there is no misrepresentation, fronting or misstatement of local content.

The verification process is of a high international standard, noted Chairperson of the Portfolio Committee on Trade and Industry, Joanmariae Fubbs. This ensures adequate quality assurance, which is important for service delivery, said SABS CEO Dr Boni Mehlomakhulu.

Mehlomakhulu cited an example of low-quality solar geysers, which ended up costing more to repair or replace.
She further warned of products labelled “Made in South Africa”, but which are only assembled in South Africa, with more than 90% foreign content.

Meanwhile, with the release of the second phase of the amended Codes of Good Practice, the outstanding statements of the Codes are now gazetted: the Qualifying Small Enterprise (QSE) statements and scorecards, the statement for specialised entities, the statement on developing and gazetting sector charters, the recognition in the sale of assets and the recognition of equity equivalents for multinationals.

Minister Davies noted the amended QSE code comprised five elements, which accounted for 100 points and provided a measurement framework and scorecards with targets and weighting points for enterprises that fell into this category.

South African Chamber of Commerce and Industry senior policy consultant Pietman Roos said it is positive that the new BBBEE Codes recognised that smaller enterprises had to receive certain exemptions.

However, EconoBEE CEO Keith Levenstein said that while the QSE scorecard was more lenient than the generic scorecard, QSEs would find it difficult to get a reasonable score, owed to the harsher points to level the table.

“The competitive advantage that QSEs enjoyed over generics using the 2007 codes has disappeared,” he said.

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