'Offsets' programme defies critics
Karen Pretorius
19 November 2004
Cape Town - The government's industrial participation programme is defying the sceptics. Since launch, the programme has brought in investments and sales credits worth US$2-billion, facilitated over 125 projects, and created or sustained 7 000 direct jobs.
In terms of the programme, when the government makes purchases abroad of more than US$10-million, suppliers incur an obligation to reinvest a portion of the costs in the country.
Examples include the government's strategic defence procurement package and purchases made by state enterprises Telkom, South African Airways, Eskom, Transnet and PetroSA.
Department of Trade and Industry (DTI) deputy director-general Lionel October, briefed Parliament's portfolio committee on trade and industry this week, said the programme - also referred to as "offsets" - became obligatory in 1996 and focused on transport, energy, and the information and telecommunications sector.
"Whenever we buy
something, we say to those multinationals that we would like them to assist in the country, to assist our local industry to export and access international markets", October said.
Since the programme's launch, October said, 125 projects had been facilitated, resulting in investments and sales credits worth US$2-billion, comprising investments of $677-million, export sales of $1-billion, and local sales - including black economic empowerment and small and medium enterprise promotion - of $457-million.
"These projects have created and/or sustained 7 000 direct jobs", October told the committee.
The projects are spread across the country - often focusing on poor and neglected parts of the country - with 55 in Gauteng, 22 in the Western Cape, 19 in the Eastern Cape, 15 in KwaZulu-Natal, six in Limpopo, and three each in the Free State, Mpumalanga and North West. Discussions are at an advanced stage to have a project established in the Northern Cape.
Other
benefits of the programme, October said, are increased international markets for local value-added products and the development of new product ranges in emerging industrial sectors.
The value of obligations currently being monitored by the DTI is approximately US$14-billion - the bulk of these coming from the government's strategic defence package. These obligations are due to be discharged over a period of seven years.
Milestones to be met by multinational companies from which government procures are built into the agreements, while new contracts contain gender and black economic empowerment targets.
The department has regular reviews with the companies involved - review meetings are held every six months - to assess compliance with targets.
October said that although there were "weaknesses" in offset programmes, they were worthwhile for the country. "Multinational companies don't like these offset programmes, they want to just sell the product like
everyone else", he noted.
Source: BuaNews
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