South Africa's localisation policy needs a nuanced approach

With the elections now fixed for 29 May, we have come to the end of another five-year cycle in both politics and policymaking. Global disruptors such as the COVID-19 lockdown, geopolitical instability and soaring international freight rates make the past five years a bit difficult to assess.

- Theo Boshoff

These factors cannot be ignored. Many countries have had to become more self-reliant and perhaps these global disruptors played a big part towards deglobalisation. However, they coincided with a policy emphasis towards more localised production and procurement.

LOCAL IS NOT ALWAYS LEKKER

Localisation, or the drive to produce and buy local products, has been a central policy objective of the Department of Trade, Industry and Competition over the past five years. When Agbiz and other business leaders recently met with the Minister of Trade, Industry and Competition, Ebrahim Patel, we were presented with a localisation policy framework to comment on.

On the face of it, few South Africans would argue with the sentiment of supporting local businesses, but once you dive a little deeper into the mechanics of localisation, it’s not quite as simple.

First and foremost, localisation should not be pursued at the expense of exports. The agriculture sector in particular has benefitted greatly from liberalised trade as access to lucrative overseas markets does not come at the expense of local supply but rather pushes demand past what our own consumer base can ever do.