NAM Cluster– NMBM and BCM

BECC Local Procurement

October 15

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▪ Objectives

▪ BECC Initiative

▪ EC Spend Analysis FY14_15

▪ Opportunities to leverage Procurement

▪ Value chain approach

▪ Manufacturing Sector Overview – Government

Top 10 Commodities

▪ Draft Procurement Demand Strategy

Eastern Cape Economy

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Manufacturing

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Total % of Top 10 Sector % of Total

Top 10 Total 485

% of Top 10 Total 100%

% of Total 82%

Metal 110 23% 19%

Auto 87 18% 15%

Food 59 12% 10%

Construction Materials 51 11% 9%

Clothing 36 7% 6%

Wood 35 7% 6%

Plastics 33 7% 6%

Furniture 29 6% 5%

Chemicals 26 5% 4%

Textiles 19 4% 3%

(Source: Kyle Business Projects, 2013)

MANUFACTURING ENTERPRISES IN THE EASTERN CAPETOP 10 MANUFACTURING SECTORS

Manufacturing

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Total % of Top 10 Sector % of Total

Top 10 Total 56,842

% of Top 10 Total 100%

% of Total 85%

Metal 7,306 13% 11%

Auto 26,705 47% 40%

Food 9,305 16% 14%

Construction Materials 2,289 4% 3%

Clothing 3,903 7% 6%

Wood 1,671 3% 2%

Plastics 1,255 2% 2%

Furniture 1,132 2% 2%

Chemicals 1,806 3% 3%

Textiles 1,470 3% 2%

(Source: Kyle Business Projects, 2013)

MANUFACTURING ENTERPRISES IN THE EASTERN CAPETOP 10 MANUFACTURING SECTORS - EMPLOYMENT

Manufacturing

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-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

2007 2008 2009 2010 2011 2012 2013

Manufacturing GVA: percentage annual growth

Eastern Cape South Africa

Sector Support Initiatives

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1. Eastern Cape Automotive Industry Cluster

2. Non-Automotive Manufacturing (NAM)- and Agro-

Industrial Manufacturing (AIM) Cluster Initiatives;

3. Support to Manufacturing Companies in Distress;

4. Eastern Cape Tooling Initiative;

5. Operation Phakisa – Ocean’s Economy;

6. Buy EC Campaign (BECC) ‘’Creation of a

Demand mechanism to stimulate

manufacturing in the Eastern Cape Province’’.

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BECC Rationale – The Eastern Cape economy is largely driven by the manufacturing sector which

includes Automotive Manufacturing, Non-Automotive Manufacturing (NAM): Textiles-, Electrical-, Electronics-, Furniture-, footwear-, leather-, clothing-, metal-, chemical-, construction subsectors and Agro-Industrial Manufacturing (AIM) – Food and dairy sub-sectors.

– The Automotive manufacturing sector is the most dominant employment creator in the province and hence any external factors affecting this sector impacts the Provincial economy significantly. Additionally, the automotive sectors formal jobs is in decline due to technology enhancements and automation.

– The high dependency on automotive manufacturing as the primary driver for Gross Value Add (GVA) in the Eastern Cape Provincial Economy is deemed as a risk.

To mitigate this risk, the Department established the BECC initiative to enable growth in other industrial sectors through utilizing of provincial procurement as a special vehicle to attract additional investment in the NAM- or AIM sectors and to maintain the current industrial base in the province.

‘’50% of government’s procurement to benefit SMMEs and Cooperatives’’

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• Buy Eastern Cape Campaign have been initiated to create demand side mechanisms and incentives that would increase levels of localised manufacturing.

• To implement local content stipulations in tender specifications in all commodities to enhance preferential procurement from Eastern Cape based SMMEs.

• Creation of localization/ development opportunities.

BECC Initiative

EC Spend Analysis FY14_15

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• In the 2014 /2015 Financial year of a Goods and Services spend identified on the LOGIS system of R9.047 billion (Provincial Dept. Spend).

• 59.96% or R 5.4 billion of the Spend on Goods remains within the Province (i.e. Supplier that reside in Eastern Cape Province).

• 22.60% of Spend on Goods and Service flow to Gauteng.

• 17.44% of Spend on Goods and Services flow to the other 7 Provinces.

Potentiol Opportunities to

Leverage Procurement

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• Medicines

• Construction:- Spend includes raw materials such

as cement, bricks, roof tiles, fencing – wire /

wooden poles ext.

• Learner and Teacher support Material

• Fleet Services

• Protective Clothing and Linen

• School nutrition and hospital food

• School furniture

MANUFACTURING VALUE CHAIN APPROACH

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Consumers

Traders

Government

MANUFACTURING SECTOR OVERVIEW – GOVERNMENT TOP 10 COMMODITIES

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Government commodities Sector # of

Enterprises

Approx.

Employment #

Location

Medicine Pharmaceuti

cal

3 3300 Nelson Mandela Bay Metro

Buffalo City Metro

Building maintenance* Construction 51 2235 Province Wide

Cleaning services* Chemicals 22 1682 Nelson Mandela Bay Metro

Buffalo City Metro

Electricity* Electrical 9 1750 Nelson Mandela Bay Metro

Buffalo City Metro

Stationary Other 0 0 None

Paper Agro-

processing

1 Unavailable OR Tambo

Furniture (School & Office) Furniture 29 1049 Province Wide

Food (Meat, poultry,

beverages, dairy, animal feeds,

catering)

Food related 57 6777 Province wide

Draft Interventions

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• Review of specifications and contracts

management to target capable manufacturing

enterprises in the Eastern Cape

• EC Provincial Procurement Policy Framework -

policy to guide procuring departments on these

strategies

• Supplier development initiatives - Gap

assessments and quality conformance.

• Lobby with SOEs to maximize local manufacturing

participation in their procurement contracts

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Trade and Industry Development

Mr Marius Coetzee

Senior Manager: Manufacturing

Email: Marius.Coetzee@dedea.gov.za

Tel no: +27 (0) 71 865 3826

Beacon Hill

Hockley Close

King Williams town

Tel: 043 605 7001

Email: Research@deaet.ecape.gov.za

www.dedea.gov.za

P/Bag X0054, Bisho, South Africa, 5605

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Thank you