Task team set up to address lack of adherence to local-content regulations

12th September 2017 By: Terence Creamer - Creamer Media Editor

Task team set up to address lack of adherence to local-content regulations

Trade and Industry Minister Dr Rob Davies
Photo by: Duane Daws

Trade and Industry Minister Dr Rob Davies reports that a task team has been established to assess how to improve local-content enforcement across government departments and the State-owned companies (SoCs) in line with instruction notes issued by the National Treasury.

The instruction notes outline which products have been designated by the Department of Trade and Industry (DTI) for local procurement by public-sector organisations and cover a range of items from uniforms and medication, through to power pylons, buses and locomotives.

Speaking following the release of the department’s 2016/17 annual report to Parliament, Davies acknowledged that “leakages” and “slippages” in the area of localisation persisted.

Government was having a particular problem verifying local content compliance by suppliers of 1 064 locomotives to Transnet and 600 commuter trains to the Passenger Rail Agency of South Africa. The acquisitions programmes have a combined value of over R100-billion.

The task team was paying particular attention to how the South African Bureau of Standards’ (SABS’s) local-content verification mandate could be funded, with the agency having recently confirmed with Engineering News Online that it had not conducted any verification of local content in relation to the locomotives being acquired by Transnet.

DTI director-general Lionel October said that the task team would assess how to fund the verification and whether the SoC and the supplier should had a role to play in bankrolling the audits.

In addition, the task team was also in discussion with the Auditor General to assess whether it was possible to integrate compliance with the designations into yearly audit reports. Davies said that, once instruction notes had been issued, compliance should be mandatory and there should, thus, be consequences for accounting officers and CEOs where the instruction notes were flouted.

No formal timeframe had been set for resolving either the SABS issue, or the processes with the Auditor General, but Davies indicated that he was eager to see progress on the matter and that he had asked for a presentation from the task team as soon as they were ready with recommendations.

He added that, in the absence of any prospect of new fiscal resources for industrial incentives, the DTI would be placing greater emphasis on adherence to the localisation instrument as a way of supporting government’s industrial policy objectives.

Separately, the Department of Performance Monitoring and Evaluation was conducting a review of government's existing localisation instruments with a view to making recommendations on how these could be improved. Again, no timeframe was provided for the completion of the work.

The DTI received a clean audit for 2016/17, as did six of the ten agencies under its responsibility. Audit issues where raised with regard to the SABS, the National Consumer Commission and the National Regulator for Compulsory Specifications.

The DTI spent R10.35-billion during the year against a budget of R10.39-billion.