For Immediate Release: No embargo

The Department of Trade and Industry (the dti) presented its third report on the National Industrial Participation (NIP) programme to the Parliamentary Portfolio Committee on Trade and Industry today.

The NIP programme became obligatory on 1 September 1996 focusing on purchases arising mainly from the transport, energy and information and telecommunications sectors. Since 2000, there has been a major increase in the size of obligations as a result of purchases from the South African Airways and the Strategic Defence Procurement (SDP) package. The size of obligations being monitored at present is in excess of US$14.5 billion.

"The NIP objectives are tailored towards supporting the objectives of the Microeconomic Reform Strategy and the Integrated Manufacturing Strategy [IMS]", said Lionel October, Deputy Director General at the dti. "In particular, the programme has facilitated projects in the various growth sectors identified in the IMS ranging from Information and Communication Technology to metals and minerals beneficiation. More recently, the programme supported skills development in technical as well as engineering disciplines targeted mainly at previously disadvantaged individuals or groups."

"Whilst black economic empowerment is one of the objectives of industrial participation, it is not a requirement for qualifying project," said October [Companies in the non-defence portfolio are granted multiplier NIP credits for BEE ownership and for outsourcing. "BEE participation was not a key focus of the SDP contracts when drafted. The IPS is investigating the feasibility of including BEE participation for all future and current NIP obligations, where possible" he said.

Current projects with black economic empowerment partners include the gold beneficiation project in the Free State a venture between BAE, Harmony and Mususku; the SA Chrome facility in Rustenburg in the North West with Royal Bafokeng as the BEE partner; Ferroman, a venture including Ferrostaal and BEE company South to South; a medical waste bin manufacturing facility in the Cape financed by Thales and whose major shareholder is a BEE company Evertrade Medical and the Alltube facility in Pietermaritzburg with eNnovative Solutions (Pty) Ltd as a BEE partner.

Geographically, the projects are located throughout the most provinces with Western Cape (22 projects), Eastern Cape (19), Limpopo (6), Mpumalanga (3), KwaZulu Natal (15), North West (3), Free State (3) and Gauteng (55).

The performance of the obligors has so far been satisfactory. Boeing has, through projects in the aerospace industry, fulfilled its industrial participation three years ahead of schedule. Airbus, one of the suppliers to SAA, is still in the early stages of fulfilling the obligations having implemented six projects so far. The other companies in the non-defence portfolio with large obligations e.g. Siemens, Ericsson and Alcatel have achieved more credits than their current obligations.

SDP obligors have specific milestones that must be met during years 2003/2004, 2005, 2007 and 2011. These enable a tight monitoring of the performance of each obligor towards the fulfillment of its obligations.

For its first milestone in April 2004, BAE/SAAB achieved 149% of its investment milestone and 93% of its sales milestone target. Agusta achieved 100% of both its investment and sales milestone targets for April 3003 whilst Thales has achieved 93% of its May 2004 investment and sales milestone target. ThyssenKrupp has achieved more than 100% of its sales milestone while its investment milestone will be assessed next year. Ferrostaal’s milestone will be assessed at the end of this year.

"The dti is pleased with the progress to date, with all the obligors substantially meeting or exceeding their milestones, except for Ferrostaal, whose milestone will be assessed at the end of the year," said October.

"To date, the programme has done the dti proud with a number of very successful projects established in most of the provinces, meeting all the criteria of "additionality", and supporting growth, equity and employment," he said.

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