Parliamentary Questions and Answers
Media Room Provincial Caucuses Jobs Links Support Services Tenders ANC Homepage

Speech by J.L Fubbs ANC MP, (Chairperson Portfolio Committee on Trade and Industry ) SONA-debate, Monday 19 February 2018

Mr Deputy Speaker Mr President Hon Members of this House Fellow South Africans

A developmental state is one that is determined to influence the direction and pace of economic development by directly intervening in the development process, rather than relying on the uncoordinated influence of market forces to allocate resources.

The establishment of substantive social and economic goals to guide the process of development and social mobilization is critical and reflected in the NDP. The reconstruction of South Africa's industrial capacity is essential and manufacturing has been identified as the critical instrument to drive this through IPAP, Localisation and Local Procurement with enabling legislation and strategic designations.

South Africa's challenges as you pointed out Mr President in SONA are poverty, high unemployment and inequality. However, as you acknowledge we can be address this through increased labour absorbing economic growth. Statistics South Africa's figures for December 2017 show that unemployment rate is currently at 26.7%.

Creating labour absorbing economic growth calls for commitment to supporting sectors of the economy which create the largest employment opportunities, sectors such as manufacturing and agro-processing and tourism.

The presidency of Ramaphosa in the steps of Mandela has ushered in an era defined by, integrity, selfless service, commitment and one that has never tolerated "the plunder of public resources, nor the theft by corporate criminals of the hard-earned savings of ordinary people".

The Manufacturing sector

The manufacturing sector has the second largest multiplier effect of all the sectors in the economy, meaning a R1 investment in the sector will lead to approximately R1.13c in real value.

According to Statistics South Africa's Quarterly Labour Force Survey for the 4th Quarter of 2017, the manufacturing sector accounted for 11.1% of employment in the country.

Between September and December 2017, approximately 1.8 million were employed in the manufacturing sector. According to 2016, Stats SA data, the manufacturing sector accounts for 13.7% of South Africa's Gross Domestic Product.

However, in recent years, South Africa experienced very slow growth in the sector resulting from both domestic and international factors. From 2012 to 2016, the sector grew at rates between 2.1% and 0.7%, this is not enough to make significant impact on unemployment. Hence, government saw the need to stimulate the sector from domestic demand by leveraging government expenditure through the Local Procurement Policy.

The ANCs vision for the SA economy is guided by the Freedom Charter and the clarion call that the People shall share in the country's wealth. We are committed to building a more equitable society in which all the people can find decent work and wages.

Local Procurement

A country wanting to create developmental state uses state resources to address poverty and expand economic opportunities.

One of South Africa's greatest resources is its buying power through government expenditure. The Local Procurement Policy aims to capitalize on the large buying power of government and state-owned entities, in particular public infrastructure investment, and use it to stimulate economic growth. Government spending on locally produced goods will increase local demand and significantly expand local suppliers leading to economic growth.

A strong domestic demand for local production ensures that local manufacturers build their capacity by supplying local demand and developing competitiveness for exporting their products. Goods produced in South Africa, create jobs created and grows the economy. Additionally, opportunities created by local procurement extend to the development of small and medium enterprises through participation in the value chains.

Designations for local procurement

Local public procurement focuses on goods that the government procures the most for its service delivery. Designation is the pronouncement of products which the government (including all national and provincial departments, all state owned enterprises, all municipalities, and all entities of government) should buy from local manufacturers.

Public procurement in South Africa focusses on key industrial sectors such as rail rolling stock, bus fleets, transport infrastructure, automotive, clothing, textiles, leather and footwear.

These are products that the South African government buys the most are in the clothing, textiles, leather and footwear sectors, examples include bedding and clothing for hospitals, uniform for the police service and the defence force.

In the bus fleets, transport infrastructure, automotive; government buys trains and buses for public transportation, cars for the police service, hospitals, government departments among a few.

Other products that have been designated for local procurement

Rail rolling stock
Bus bodies
Canned/processed vegetables
Textile, Clothing, Leather and Footwear Sector
Solar Water Heaters (collectors and storage tanks/geysers)
Set-top Boxes
Certain pharmaceutical Products
Furniture Products
Electrical and Telecom cables
Residential Electricity Meters
Wheelie Bins

In the tenders when the government plans to buy these goods, we will ensure with the changes in implement in SOEs that all tenders will state that only locally manufactured products with a prescribed minimum threshold for local production and content will be considered for the awarding of the tender.

The 2017 Preferential Procurement, in particular Regulation 14 deals with non-compliance on issues of local content and other conditions of the contract. We need proactive business people who report any incident of non-compliance on local content as government cannot act if there is no evidence or reports. The organ of state can cancel the contract if there is non-compliance after a due process. In the forthcoming Public Procurement Bill that is led by the National Treasury, the area of compliance will be beefed including consequences for non-compliance.

There are number of localisation successes that can be pointed out such as the Bus Recapitalisation scheme where busses were manufactured in South Africa, including the procurement of locally manufactured steel and the clothing and textile sectors, and local pharmaceutical companies that benefitted from the policy.

However, government cannot impose location policy on the private sector. In line with the WTO Rules. We have been and will be using other tools like working together with Proudly South Africa, the private sector and manufacturing sector to engage them on the implementation and also pursue more retailers to come on board too.

Legislation enabling localization and local procurement

Regulations will be reviewed to ensure the issue of who carries the cost of verification and the funding of the verification agencies is finalised. Securing stronger localisation requirements in other programmes, including aligning localisation with Black Economic Empowerment (BEE) Codes.

Steps are in place to ensure strict monitoring and remedial process within contract Establishing a compliance working to monitor implementation of local procurement in the designated sectors


Amendments to the Preferential Procurement Policy Framework Act has allowed government to designate certain products that have to be bought from locally manufactured sources, according to meticulous specifications.

The designations indicate the percentage of different kinds of products that have to be locally made. All organs of State must purchase products indicated according to the specifications of designations," 21 products have been designated for local procurement, with stipulated minimum thresholds of local content.

Localization will help to create a more inclusive economy and create more opportunities for entry into the manufacturing space. If government offers international companies a tax incentive to set up manufacturing plants, allowing them to take advantage of preferential procurement by advancing localization, then "we will expect them to have a certain level of broad-based black economic empowerment recognition.

The Black Industrialists Programme is going a long way in accelerating radical economic transformation and changing the ownership patterns of the country's economy and ensuring black industrialists are meaningfully involved in the manufacturing sectors. To date 30 black industrialists with over R500-million in incentives have been supported.

As I deal with Tourism: May I at the outset convey my deepest condolences to the family of the late Cde Beatrice Ngocobo who often assisted me with my zulu and was passionate about Tourism and its job creating potential. She was an activist and worked in her community she will be sorely missed by them by us in the House and her family.


Tourism is a labour intensive sector and can develop other spin-offs, such as attracting foreign direct investment. Tourism offers direct opportunities for SMMEs in terms of developing guest houses, bed-and-breakfast establishments, hotels and lodges, backpackers, tour operators and conference venues.

Currently more than 7000 direct jobs are sustained and its performance is streaks ahead of the other sectors. It employs a range of skills ranging from semi-skilled to specialist skills. It is part of the services sector which is growing at an exponential rate globally and South Africa is no exception. But we have a comparative advantage in our beautiful countryside, the most hospitable people.

Huge variety of flora, the fauna and breath taking scenic vistas that South Africans have yet to fully appreciate. South Africa is also home to nine world heritage sites and an area of global niche tourism. South Africa has also successfully positioned itself as an International and Regional Conference and Sports Event destination.

We will enhance support for destination marketing in key tourism markets and take further measures to reduce regulatory barriers and develop emerging tourism businesses. We call on all South Africans to open their homes and their hearts to the world.

A total of 10 044 163 international tourist arrivals were recorded for 2016 reflecting an increase of 12.8% compared to 2015. Foreign business tourists arriving by air generate the most significant multipliers. South Africa will be positioned as the business and shopping centre for the region. South Africa can do more to develop the region as an international tourist destination.

Tourism is a priority for the ANC Government and it is imperative that it is radically transformed. The ANC National Conference in December 2017 has resolved that: We will step up security for tourists and revisit visa policies.

Just Mandela pointed out: "There is no easy walk to freedom anywhere," so too there is no easy walk to radical transformation but the ANC Government asks all South Africans to join hands and take the difficult steps to radically transform our country. But a new dawn is here and President Ramphosa is restoring hope and ushering in a new era.

Vho Presidente Ramaphosa va do tendelana nanne huri

Hezwi zwi nga itiwe kwine nga hy phata mishumo minji

I thank you.

« back