Buying Local and the AfCFTA

As we mentioned above, part of the discussion at the recent NEDLAC Trade and Industry Council was about SA’s “localisation” policy. We have written extensively about localisation of data, but this is something else altogether. The SA National Reconstruction Plan, for example, identifies 28 products that government procurement must buy locally. Minister Patel also stated that it was the government’s intention to reduce the import of some products by up to 20% over the next 5 years in order to favour local production.  The problem is that such a policy contradicts the idea of the free movement of goods under both the SADC and AfCFTA agreements. However, SA is not the only country with a ‘buy local policy for tenders.

Tough negotiations are happening behind the scenes between African governments to hammer out differences in their localisation and industrial protection policies in respect of the aims of the AfCFTA or the RECs, which seek to liberalise trade between the countries. Almost every country has its own industrial protection and localisation policies, including Special Economic Zones, but in the context of the proposed liberalised trading regimes of the AfCFTA some countries argue that these concessions unfairly position the industries and companies of some countries against their counterparts in other African countries. Some countries, such as Uganda, have already decided not to apply localisation of goods due to conflicts with agreements at AfCFTA and EAC. Another country, Kenya, has launched a National African Continental Free Trade Area Implementation Strategy 2022-2027 to boost opportunities for industrial diversification, investment, and job creation, rather than go the route of protectionism.