SA's local procurement policy to hit Zimbabwe hard

HARARE - Zimbabwe's cabinet has been tasked to come up with strategies to survive South Africa's decision to procure at least 75 percent of raw materials within its borders, Industry minister Welshman Ncube says.

He said the government was already negotiating with South Africa √ɬ¢√¢‚Äö¬¨" accounting for about 56 percent of Zimbabwe's exports in 2011 √ɬ¢√¢‚Äö¬¨" for a favourable implementation of the neighbouring country's Local Procurement Accord  which was ratified in October last year in line with the country's Preferential Procurement Policy Framework Act of 2000.

"We briefed cabinet already on that policy and its implications for Zimbabwe and we will continue to engage the South African government within the context of Southern African Development Community (Sadc)…within the context of the bilateral agreement we have with South Africa to ensure that policy is not applied in a manner which negates South Africa's obligation to trade liberalisation under the Sadc protocol," Ncube said.

The African Development Bank (AfDB) last year said that South Africa's procurement law was likely to have devastating effects on Zimbabwe's industry.

The new regulations also require South African state organs to ensure that only locally produced services, works, goods or locally manufactured products with a stipulated threshold for local production and content are procured.

At the end of 2011, ZimTrade reported that Zimbabwe's exports mainly comprised minerals, unprocessed tobacco and sugar constituting 36,8 percent, 13,5 percent and two percent respectively.

In January this year, Zimbabwe's exports amounted to $400 million.