Govt flexes muscle on local procurement
Pauline Dikuelo | Friday April 3, 2015 18:00
According to a statement from the Ministry of Trade and Industry (MTI), government took this decision to try and curb the unemployment rate, build a sustainable economy and reduce the import bill, which currently stands at about P58 billion per annum. The directive is effective April 2015.
“This is a critical measure through which government wishes to ensure that its purchasing power is used to stimulate economic growth and create the much-needed employment through consumption of locally manufactured products and services,” reads the statement.
Before the directive, government through the economic diversification drive (EDD) encouraged procurement from local firms as it sought to leverage its purchasing power to stimulate local production and consumption by procuring from locally based manufacturers and service providers.
To ensure that this purchasing power is leveraged, Government introduced preference margins to give local manufacturers and service providers a competitive advantage when bidding for Government jobs.
The MTI statement also mentioned that this new intervention would ensure that procuring entities give priority to purchasing all available local products from local enterprises. As a result, these enterprises will overtime expand their production, improve their product quality and build required competitiveness for global markets.
However, government says these goods and services should be competitively priced and should satisfy tender requirements meets quality standards and should be supplied reliably.
This initiative is also expected to promote both domestic and foreign investment into the country. As part of promoting domestic industries government has also, effective this month, banned the importation of less than 100 kilograms of packaged salt in a move aimed at stimulating domestic production and in turn creating employment.
The decision was taken in consideration of the fact that the raw material is available locally and the need to develop the value chain of the specific sector.
Early this year, Minister of Trade and Industry, Vincent Seretse, said EDD had injected P15 billion into local businesses since its inception five years ago.
Over P7 billion of this amount represents purchases from local manufactures and service providers, as at the end of January this year, a cumulative value of over P2 billion worth of purchases were recorded for the financial year 2014/2015.
When presenting the 2015 Committee of Supply statement to Parliament, Seretse said EDD was aimed at promoting production and consumption of locally produced goods and services, adding that it had created 34,861 jobs. “EDD has registered about 1150 enterprises since 2010 that have been issued EDD licences. Out of these 425 are manufactures, 702 are service providers and 23 are agricultural producers,” he said.