Boost to ailing Proudly SA campaign

The finalisation of long-awaited preferential procurement regulations will be a massive boost to the ailing Proudly South African (PSA) campaign and will help to stimulate local demand and create jobs, said acting CEO Herbert Mkhize.

PSA, which was started in 2001 after the 1998 Presidential Jobs Summit to encourage local procurement, has been struggling to stay afloat in recent years as members have failed to identify concrete benefits.

The organisation has suffered significant losses over the past two years and was bailed out with funding from the Department of Trade and Industry (DTI) last year.

However, a review of government procurement legislation, which should head to the National Economic Development and Labour Council (Nedlac) soon, and the new preferential procurement regulations, which are awaiting cabinet approval, will change the campaign's prospects, Mkhize said this week. The new regulations are expected to bolster local manufacturers when government tenders are awarded.

Mkhize said there is urgency within and outside government to finalise the new framework as soon as possible "because the review of procurement policy is going to be a trigger to so many other interventions that are being proposed for growing this economy".

Strengthening PSA's activities is one of the targets set out in the government's industrial policy action plan (Ipap2), which has identified a number of sectors where local procurement will be encouraged.

But Mkhize said it would be difficult to encourage consumers to pay more for locally produced goods if cheaper imports are available.

Instead of focusing on recruiting new members and marketing activities, as had been the case, PSA now wants firm, concrete commitments from public and private sector entities on local procurement.

"We want people to do demonstrable things to confirm that they are indeed proudly South African," said Mkhize.

"We want a government department to sign on with us, to say from now on 60% of their daily consumables will be goods and services made in SA."

Civil servants will also be targeted to use their buying power to buy locally made goods and services, Mkhize said.

"South Africans must feel a bit embarrassed when they're wearing something that is not made in this country; we want to see them hiding the label. Then as PSA we will say: 'Mission accomplished'."

Mkhize, who also serves as executive director of Nedlac, said PSA's funding challenges had been addressed, and that it expected to increase its staff complement of 30 as it increases its verification activities. A new permanent CEO is likely to be appointed in June.

But Mkhize said that while local clothing and textile companies and the canning industry had been hit by the shift to cheaper imports, South African businesses should also address cost structures to remain internationally competitive.

"For any successful business, you've got to watch your cost structure. That means cutting down on buying costly, or non-competitive goods locally, if you can get them elsewhere. We need to correct this," said Mkhize.

"We must accept the harsh reality, that we're dealing in an environment that is driven by other factors than what we're trying to do, and we need to find a balanced and even-handed way of managing that.

"We don't want our companies to start going away because we're making the environment untenable. So we need to get that buy-in from them; we need to work with them and understand that companies have shareholders who are sometimes very difficult to look after.

"We're not saying we must run companies down just because there is the social dimension that requires to be prioritised, because it could be self-defeating. If they're run down, we won't be able to address the socio-economic deficit. So we need to find this balance," he added.