South Africa is doing a big localization effort – and has stopped using some international products: Ramaphosa

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South Africa plans to rely on localization and other tools as part of its post-Covid economic reconstruction plan, President Cyril Ramaphosa has said.

Responding to a recent parliamentary question and answer session, Ramaphosa said localization is one of many tools in the reconstruction and economic 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.

“Localization is key to driving growth and transformation. It is about creating an enabling environment for inclusive growth, deepening the country’s industrialization base and creating targeted transformational measures,” he said.

“It seeks to develop the economy to include more participants and to ensure that more segments of the population, including women, youth, black South Africans and the rural poor, can contribute to the growth and benefit from it.”

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Ramaphosa said the government had already had some success with its recent localization policies, including in the textile industry, where it is now mandatory for entities such as the South African National Defense Force (SANDF) to buy all their uniforms from local producers.

He also cited recent investments in agriculture and manufacturing, including:

  • An investment of R1.7 billion by SA Poultry Association under 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 factories in Port Elizabeth and East London.
  • Komatsu SA has invested R300 million in an engine reconditioning plant.
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“Although the evidence suggests that our localization efforts are on the right track, the challenge of growth and jobs is nonetheless difficult and complex,” said the president. He said continued public discourse on how the government is tackling these issues should be encouraged and welcomed.

Controversial

Trade and Industry Minister Ebrahim Patel has already faced criticism in some sectors after the government announced plans to designate more products in the 100% local content category to support local manufacturing SMEs. He also considered blocking certain imported products that are not 100% local.

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Patel said the location is not just a policy of his department but enjoys “resounding support” among South Africans who recognize the need to industrialise the local economy.

“It is administration policy and follows the ruling party’s manifesto commitment to stronger localization as a pillar of its industrial policy. The commitment to localization is included in the government’s economic reconstruction and recovery plan,” he said.

“The localization approach was also unanimously endorsed by business, labor and community representatives at Nedlac. They represent a large number of companies and entrepreneurs, workers from different sectors of the economy and organizations made up of representatives of various community interests.


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