The South Africa First campaign that claims to be motivated by the need to "level the playing field" by encouraging government departments, state-owned enterprises and businesses to include local content preference in tenders sounds like a great idea.
As all South African’s must surely agree – "local is lekker". But local is also most definitely not "lekker" if preference for the home-grown product is based on protectionism and manipulation of the free enterprise economy.
As we all know, any attempt to impose controls on a market through statutory or legislative intervention such as import duties and surcharges or through subsidies and tax credits or any other contrived mechanism for that matter, means that somewhere down the line there is a premium to be paid.
The premium can take the form of a higher price, lower quality, unreliable supply or punitive reprisals by international competitors and even by international trade organisations on behalf of countries who are prevented from participating in the local market on equal terms.
While there can be no question that locally assembled computer brands are able to compete effectively with imported first-tier brands in terms of quality, performance and value-for-money, the local products contain no locally-manufactured components.
Geographic isolation from major markets, a local market that is almost infinitesimal by international standards and that may never achieve the economies of scale demanded to justify true manufacturing of commodity IT products, means that pure assembly based on labour-intensive production lines remains the only real economic benefit to be offered by local PC brands to the national economy.
And while we all know how critical it may be to create jobs, it’s a hard and painful fact of life that South African labour is not necessarily the most cost-effective in the world.
The theory that if government, alone, bought locally assembled computers, the local industry would be able to create 10 000 jobs is, unfortunately, idealistic. There is little doubt that the 10 000 jobs would add a premium to the cost of the local product. Not only that, but it’s likely that organised labour would very quickly get in on the act to create a management nightmare along the lines of the "winter of discontent" that we have just emerged from in the public sector.
If the South Africa First campaign is going to make any headway, the deal must be to play on a truly level field and not make any attempt to seek any special favours.
– David Bryant