In a bid to assist manufacturers to increase their capacity and improve their competitiveness, the private sector in partnership with Minister of Trade, Industry and Competition Ebrahim Patel launched the Localisation Support Fund (LSF) yesterday.
The LSF describes itself as a non-profit company funded by the private sector, and it is focusing on localising manufacturing in South Africa by unblocking challenges in the sector.
The LSF’s goal is to contribute to the reduction of imports, promotion of competitiveness, and increased capacity of manufacturers to produce optimally mainly for exporting.
The LSF’s mandate is to partner with stakeholders in the industry to facilitate interaction between manufacturers and buyers (supply and demand participants).
It provides funding for industry research and the deployment of technical experts to unlock challenges and accelerate opportunities for growth in the manufacturing sector.
Coca-Cola South Africa and Air Liquide have injected about R340 million in funding to support the initiative.
Patel said the LSF was designed to address the demand and the supply side constraints to industrialisation. He said the localisation concept was similar to industrialisation.
“The economic argument is about expanding the size of the South African economy. The commercial arguments have become more important as corporations recognise the price they pay for disruptions in supply and, conversely, the advantages of a more flexible supply chain.”
He said there were powerful social, economic, and commercial arguments in favour of localisation, including that the growth of manufacturing provided a sustainable way to address job creation and promote prosperity.
Business Unity South Africa CEO Cas Coovadia said Business Unity South Africa supported the LSF.
He said for Localisation Support Fund to make progress there needs to be the necessary support and technical support and progress will be made.
LSF executive head Thami Moatshe said the LSF’s initial projects were focused on the health sector, furniture manufacturing, and energy, specifically renewables.
In an effort to provide greater market visibility for customers, the LSF in the electricity sector is funding specialist research to confirm what renewables manufacturing capacity already exists, as well as to map the transmission and distribution value chains to provide a summary of in-country capabilities.
In furniture, the LSF will nominate a specialist to introduce lean manufacturing principles to the sector, and also provide targeted technical resources to selected manufacturers.
In the health sector, specifically medical devices, Moatshe said the LSF understood the challenges around the manufacturing of medical devices locally as 90% percent were imported, so the LSF was looking at how it could grow this industry.
BUSINESS REPORT