Staring down the barrel of a sluggish economy, mounting unemployment and political dissonance, the South African government has played a shrewd card that could well bring a measure of harmony to public and private economic interaction, as well as buy-in from trade unions and the financial sector.
The master play was in getting business and labour to support an initiative that seeks to bolster the manufacturing industry by increasing domestic demand for South African-made goods, creating new jobs at the same time.
It is also designed to stimulate the small enterprise sector and bring the government and private sectors together in assembling public-private partnerships to tackle much-needed infrastructure projects.
Centred on new legislation with the recent enactment of the Preferential Procurement bill, the programme sets a target of sourcing 75% of supplies from local companies.
South Africa's President Jacob Zuma says it's a powerful move that will help the government meet its job creation targets. It was set in motion with the signing of an accord that commits the government and the private sector to greatly increase the procurement of locally-produced products. The government intends to create 5m jobs by 2020 through investment in infrastructure development, manufacturing and the so-called green economy. It proposes measures to address the rand's strength and loose monetary policy.
"During this negative economic climate, many retrenched workers will try to start small businesses to survive," Zuma said. "Many of these start-up businesses will be of the survivalist type and need the support of both big business and government. We urge big business to provide that mentoring support, as it will be helpful to the economy in the long run."
The government already runs a number of programmes on small business development, skills training and enterprise support services. This is buttressed by additional policies to assist small businesses in financial difficulties. These additional measures will help ensure that "SMMEs in distress are saved before they reach a stage of insolvency and ultimate liquidation," notes Zuma. "From the government's side, we are also tackling government departments' failure to pay suppliers on time, which affects SMMEs negatively." He wants suppliers to be paid within one month of services or goods being delivered.
Staying on the same page
Specifically the local procurement...