PETER LEON: Localisation is no panacea for SA’s economic woes
The localisation policies and master plans might contravene SA’s international trade law obligations
The SA economy has stagnated over the past decade. The outbreak of Covid-19 18 months ago in itself led to a 7% contraction in GDP in 2020. The government’s answer to this is its 2020 Economic Reconstruction & Recovery Plan (ERRP), which places emphasis on using trade policy — particularly tariffs — to expand domestic production, improve the competitiveness of exports, generate greater investment and ultimately stimulate the productive base of the economy to achieve “equitable and inclusive growth”.
The ERRP seeks to achieve sustainable economic recovery through the use of tax incentives, industrial funding, licensing and, importantly, tariffs. Such measures will be employed to promote greater local procurement in the public sector and localisation in the manufacturing sector. To give effect to this “industrialisation through localisation”, the ERRP looks to reduce the proportion of imported intermediate and finished goods and develop export-competitive sectors. Particula...