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Abstract
Transnet and Eskom have embarked on a R160.8 billion capital expenditure (capex) programme to improve South Africa's logistics and energy infrastructure over the next 5 years. Although considerable backward linkages will be created in the process of procuring goods and services needed in the construction and operation of the planned projects, a significant portion of investment will be lost because of having to import foreign skills and components that are unavailable locally. It has thus become a government priority to increase local content in the procurement process. Drawing on a series of interviews with leading suppliers involved in the capex programme, this article assesses the impact of such expenditure on the domestic capital goods sector and the constraints that militate against increased local participation.
The author wishes to thank the Department of Public Enterprises for commissioning the study and the Corporate Strategy & Industrial Development research programme at the University of the Witwatersrand where the research was undertaken. This paper was presented at the DPRU/TIPS (Development Policy Research Unit, University of Cape Town/Trade and Industrial Policy Secretariat) conference ‘Accelerated and Shared Growth in South Africa: Determinants, Constraints and Opportunities’, Johannesburg, 18–20 October 2006.
Notes
1This paper reflects the revised capex figures released by the DPE in August 2006.