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8 December 2011 | Angeline Albert

Electricity pylons, buses and canned vegetables are among the products designated by the South African government in its first wave of preferential procurement.

Yesterday the Department of Trade and Industry (DTI) revealed the first products and sectors that will require set minimum percentages for local procurement. Included in the first wave are power pylons, rail rolling stock, buses, canned vegetables, clothing, textiles, footwear, leather products and set top boxes. More will be selected next year. The DTI says the attempt to increase local sourcing is to reverse the country’s “industrial decline”.

Where relevant, the designations also set out specific recommendations for ensuring competition amongst domestic producers and value for money for the state.

The new regulations will apply to public sector buyers and those buyers working at private firms, trade unions and voluntary organisations that have signed the Local Procurement Accord, which commits these groups to work together to increase local procurement by monitoring and evaluating their progress on agreed local sourcing goals.

“The first designations mark an important milestone in government efforts to arrest and reverse industrial decline with and in support of the private sector,” said a government statement. “The designation instrument serves to strengthen public procurement in support of the multipliers derived from reducing the trade deficit, strengthening and diversifying South Africa’s industrial base and to build up competitive value-adding exports onto the rest of the continent, high growth developing economies and traditional export markets.”

But it added: “We wish to reiterate that all procurement officers are under an obligation to secure the most competitive prices for products which fall in designated sectors,” the government said in a statement.

The government can remove a product or sector’s preferential status if the supply base fails to make progress or there is evidence of anti-competitive behaviour.