Davies: Corruption has disadvantaged local suppliers

Wrongly awarded contracts which prioritised imports over localisation have disadvantaged local suppliers, Trade and Industry Minister Rob Davies has said.

The minister briefed the portfolio committee on trade and industry on Tuesday about the department's response to the State of the Nation Address and the Budget.

Davies detailed the progress the department had made, particularly on localisation. The Department of Trade and Industry (dti) has previously underlined that localisation is an important policy tool for growing the economy, describing it as a potential 'game-changer'.

But government's efforts to support localisation had been thwarted by corruption, Davies said.

Fraud, corruption, state capture

Although new products had been developed and factories launched on the back of rail localisation, there had been significant import leakages due to corruption of the programme.

"We have had too much leakage, to put it lightly in a diplomatic way," Davies said.

"We have had fraud, corruption and state capture which has meant in some cases - contracts have not been given according to the localisation prescripts. All of them have supported imports over local production," Davies said.

This has been to the detriment of suppliers, and supply chains and black-owned companies which could not do business.

"Our commitment is to put that right," Davies said.

Beef up surveillance

Among the efforts made is that the department worked with the Auditor General to set up a system. If contracts do not follow procurement policy then companies will be given a negative audit outcome.

"With the new audit act, you are going to have to answer more robustly than [...] before," he added. "We are looking to beef up our own surveillance and partnerships with business and labour."

Government will engage with these partnerships to identify and address contracts which have been unethically awarded to particular consortiums, he explained.

'It must be put right'

In terms of the rail localisation programme, Davies said it was important to not just get the money back, but contracts that were wrongly given for imports need to be cancelled and issued according to localisation policy.

Davies said although corruption was being uncovered, it was necessary to set things right again.

"We are happy the process is going on, but it is not for me to intervene in these commissions of inquiry or anything like that.

"But where they find things being done wrong they must be put right," he said.

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