By Eamonn Ryan
DTIC outlines how preferential procurement, NIPP and the new Public Procurement Act are strengthening compliance and building long-term industrial capacity. This is part two of a two-part series.
Cathrine Matidza, director: fleet procurement of the Department of Trade, Industry and Competition (DTIC). © RACA Journal
Preferential procurement and policy alignment
South Africa’s procurement regime is anchored in the Constitution and guided by the Preferential Procurement Policy Framework Act (PPPFA). Matidza noted that local content provisions introduced in 2011 followed a landmark Local Procurement Accord, where government, labour and business committed to achieving 70% local procurement by 2019. Although that target remains aspirational, the drive continues.
In 2017, regulations were updated to allow organs of state to self-designate sectors for local procurement. Later constitutional challenges in 2022 caused temporary adjustments, but Matidza emphasised clearly: “The Constitutional Court ruling was not about local content. Local content remains a legitimate and powerful lever that organs of state can still incorporate into procurement policies.”
Local content can also be applied in flexible ways—via goals, evaluation criteria, functionality scoring or contractual conditions – allowing departments to tailor their implementation.
DTIC’s official designation list includes a wide range of products with minimum local content thresholds. Pumps are designated at 70%, though KSB has achieved 100% local content. “You’ve upped the game,” Matidza said, noting that the DTIC may need to review the threshold upward in response to industry performance.
The localisation policy, she noted, has already yielded key benefits:
- Expanded local manufacturing capacity
- New partnerships with international OEMs
- Technology transfer and skills development
When local capacity lags: the role of NIPP
Where domestic production capacity is insufficient, the National Industrial Participation Programme (NIPP) becomes essential. Introduced in 1997, NIPP applies to major government procurements involving imported inputs – requiring foreign suppliers to reinvest in South African industry through technology transfer, skills development or local manufacturing. Sectors benefiting most include aerospace, energy, rail, automotive and pharmaceuticals.
“It’s a critical tool for building capacity where we still rely on imports,” Matidza said. A significant shift came with the 2024 Public Procurement Act, which embeds designation powers directly in law. This elevates localisation from a regulatory tool to a statutory requirement.
“We’ve seen a lot of non-compliance in the past. But with the new Act, we expect stronger enforcement and much better alignment across all spheres of government,” Matidza said.
DTIC is currently reviewing all designated products and preparing updated thresholds to align with the new legislation.
Matidza closed by reiterating that government cannot create all the jobs alone: “The private sector must lead. Government provides the enabling framework. When companies like KSB rise to the challenge, they show what reindustrialisation truly looks like.”
KSB Pumps and Valves already has several new locally designed projects planned for next year. As its partnership with the DTIC deepens, one message stands out: South Africa’s industrial revival will be built at home – one locally manufactured pump and valve at a time.
