By Eustace Mashimbye
As South Africans, we stand on the brink of significant economic change. The recent signing of the Public Procurement Act, 2024 (Act. No.24 of 2024) into law by President Cyril Ramaphosa is not just a legal milestone; it is a beacon of hope for our economy.
The legislation, which reinstates crucial localisation efforts through mandatory local content requirements, comes at a time when South Africa desperately needs to boost job creation and sustain the livelihoods of millions.
The Quarterly Labour Force Survey for Q2 2024, recently released by Statistics South Africa, paints a stark picture of our economic reality. With the unemployment rate standing at a staggering 33.5%, the implications are clear: our economy is in dire need of revitalisation. The youth unemployment rate is even more alarming – at 46.6% – highlighting the urgency of creating new job opportunities, especially for our young people who represent the future of this nation.
One of the most effective ways to combat the challenges is by reinforcing the importance of buying local and seeing procurement decisions being made in favour of locally made products and services. Proudly South African has long advocated for this, and now, more than ever, our message must resonate across all sectors of society. The re-industrialisation drive embedded within the Public Procurement Bill offers a lifeline to our struggling industries, many of which have been severely impacted by the influx of imported goods.
Before the court ruling on the Preferential Procurement Policy Framework Act, which questioned the constitutionality of previous preferential procurement regulations, we had seen meaningful progress in promoting local procurement. The initial designation of products and sectors for local procurement in the public sector had begun to bear fruit, with several industries showing signs of recovery and growth. However, the ruling introduced a level of uncertainty that allowed imported goods to reclaim significant market share, undermining our localisation efforts.
The Public Procurement Act, with its firm localisation provisions, effectively restores the efforts and provides a framework for sustained economic growth. It mandates that all organs of the state must prioritise locally produced goods in their procurement processes when procuring designated items. This is not just a win for our industries; it is a win for every South African. When the government buys local, it sustains jobs and creates new ones, contributing to reducing the high unemployment rate.
Consider this: if every government department, every state-owned enterprise and every municipality committed to buying locally, the ripple effect on our economy would be immense, as the cumulative spend by the public sector just on the previously designated sectors could make a big difference in the respective industries. We could see a significant reduction in unemployment as industries expand to meet the increased demand for locally produced goods. In turn, and as a result of the multiplier effect involved in the manufacturing of products locally, this would stimulate other sectors of the economy, creating a virtuous cycle of growth and job creation.
The best thing that can happen to our economy after the promulgation of the Public Procurement Act, with clear local content provisions, is for the re-designation of sectors to happen quickly, as per the process outlined in the act, for all government entities to comply with the local procurement provisions when buying and for consequence management to be introduced and enforced against all non-complying accounting officers and their respective institutions. High levels of non-compliance were the biggest threat to the success of the previous local content regulations in the public sector. We hope to see better and stricter compliance levels from public sector procuring entities.
But the government cannot do it alone. We, as South Africans, are the solution. Every purchase decision we make is a vote of confidence in our economy. By choosing to buy local, we are choosing to support local businesses, sustain jobs and invest in the future of our country. The statistics are clear: our economy needs this boost and it starts with each of us making a conscious decision to support local products and services.
The Public Procurement Act is more than just legislation; it is a call to action for all South Africans. Let us rally behind the act and embrace the opportunity it presents to rebuild our economy. By buying local, we can create the jobs that are desperately needed and secure a brighter future for all. Together, we can turn the tide on unemployment and ensure that South Africa’s economic recovery is not just a hope, but a reality.
Eustace Mashimbye CEO of Proudly South African.
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