A study released by the Localisation Support Fund (LSF) on Wednesday indicated that stronger government procurement could unlock R5.11 billion in the clothing, textile, footwear and leather (CTFL), as well as create thousands of new jobs
LSF said that this could add R7.16 billion to GDP and support around 51 684 direct and multiplier jobs, if local content requirements already set out in policy are more fully applied in practice.
The study was commissioned by the LSF in support of the public procurement workstreams under the CTFL Masterplan and undertaken by industrial development consultancy BMA and consisted of a year-long review of national, provincial and local-government procurement,
The study found that of an estimated R7.55bn in annual government CTFL spend, only 32% is procured from compliant South African manufacturers, leaving a significant opportunity to grow local manufacturing and jobs through government spending.
The report draws on National Treasury's procurement datasets, cross-referenced against local-manufacturer verification registers such as the National Bargaining Council, the National Textile Bargaining Council and the Department of Trade, Industry and Competition's (dtic's) exemption list
The report said that modelling in the study sets out the scale of what is achievable.
“Reaching the CTFL Masterplan's own 60% local-content target for government procurement would nearly double local manufacturing revenue captured and support tens of thousands of more direct and indirect jobs than are supported today. Each additional R1bn redirected to compliant local procurement is estimated to support around 2 450 direct manufacturing jobs and a further 5 050 indirect jobs across the value chain.”
LSF CEO Irshaad Kathrada said that the CTFL industry is an important engine of growth and job creation in South Africa.
“The manufacture of garments remains labour intensive and has long been a source of jobs for women across this country. While considerable work is under way to improve the conditions for localisation across the retail and corporate workwear value chains, government procurement is one of the most powerful levers available to translate that potential into commercial outcomes.”
Kathrada added that bridging just a portion of the R5bn opportunity in government procurement can support the creation of thousands of jobs across the country.
“The introduction of the Public Procurement Act gives South Africa an important opportunity to rethink how it uses the might of government spending to support industrial growth, and we urge the government to finalise the regulations so that this work can begin. Government procurement cannot be passive in South Africa's re-industrialisation, and the recommendations in this report provide a practical starting point. We look forward to working with government, industry and labour to take this agenda forward,” he said.
Simon Eppel of the Southern African Clothing and Textile Workers' Union (SACTWU) said that there is enormous scope for government purchasing to much more impactfully create decent jobs in decent factories, if it is properly designed and properly verified.
“This isn't wishful thinking. The research clearly shows it. We are losing rands and jobs because the juggernaut of the State is hoping for outcomes rather than deliberately engineering them. The LSF research points the way to solving this problem.”
Chantel Naidoo, General Secretary of the National Bargaining Council said that compliant manufacturers under the National Bargaining Council – Clothing Manufacturing Industry, are those manufacturers who are registered with the Council and who are in compliance with its collective agreements.
“This is the non-negotiable pre-requisite for any manufacturer claiming to be a legitimate and lawful ‘local’ supplier. A list of compliant manufactures and holders of current compliance certificates may be found on the Council's website, or the Council may be contacted directly to verify the compliance status of a specific clothing manufacturer.”
yogashen.pillay@nationalmg.co.za